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(I have not read the whole thread yet, but I surely will.)
mathjack107 - are you suggesting that one live off their 401(k)/403(b) money until they turn 70? This is what a fee-only financial planner I met with a few months ago suggested, but like others, I'm not so sure about spending down my nest egg.
After meeting with different planners and crunching the numbers myself, that's what I plan to do when I retire at 62 four years from now. As mathjack pointed out there is no guarantee that the markets would return an 8% yearly in fact after what we have been seen lately is highly unlikely. I do have a pension so will not have to use my 401/403 to entirely cover my retirement while I wait for FRA and I also plan on having money in bank to allow me to self fund for a couple of years if markets are down. I suggest you do some planning calculations and set up a bad market scenario and see how it would compare to taking SS early.
having gotten hit with a downturn day 1 of retirement and having even our conservative portfolio fall multiple 6 digits my wife wants to be less dependent on markets and rates .
she was a widow and already had a pile of investments dropped in her lap which ended up taking a beating back in 2000 so she is more gun shy then i am .
but i do agree with her . i rather bet on our longevity as a couple then on the outlook the markets have over the next bunch of years .
every time historically the cape ratio has been in the 80-100% range of high valuations the market averages over the next 8-15 years has been below average . we are still in that high range . the cape is useless in predicting shorter term moves but it is spooky how it has always been right on the money going out 8 years or more .
there is no question higher valuations lead to lower then average returns and lower valuations lead to higher then average returns over the following 8-15 years .
throw in the fact it can be many years before rates come up and delaying ss seems to be the best route for someone retiring today ..
others may have different valuations when they finally retire so the outcome may be different then it shows today .
Good points. Now you have me rethinking my own plan on taking it early as I turn 62 in Sept. I have a pension and some land income to rely on and some equity/investment money (not a ton) and thought the extra 20k a year in social security would give me even more of a cushion, but now I" re-thinking ...especially if I find I can fairly easily live off the above without taking ss at 62. Also, I can just take it month by month after 62..not like I have to jump on it at 62..maybe it's 64...65, etc....
I'll be ruminating on this now....and probably look at it again in Sept. when I "am" 62.
But those "few hundred a month" could make a big difference. That "few hundred" = about $3600 a year. Give or take 20 years= $72000. No small peanuts in my book. Especially if you don't have a pension.
Breakeven is about 15 years. If you have a family history of dying young then you could be ahead by taking it early.
it is only 15 years if you will not be spending down invested assets and counting spousal benefits . someone who has a pension that covers their needs would not have to spend down invested assets so that makes a difference . it can run closer to 22 years if you will be
it is only 15 years if you will not be spending down invested assets and counting spousal benefits . someone who has a pension that covers their needs would not have to spend down invested assets so that makes a difference . it can run closer to 22 years if you will be
I did say "about 15 years". It's definitely not a cookie cutter analysis.
Every person is different.
Exactly! There are so many scenarios of income sources, income requirements, etc, etc, that you have to temper the mathematically and actuarially correct decisions with your reality. Another point is that most every one talks in percentages, not wanting to post their actual numbers. But let's face it, some one who has a huge savings and small SS, will have a totally different opinion than someone with a large SS and small savings. Their SS increases the same percentage, but their a solute amount is hugely different, as are their after tax incomes! The difference in thought patterns regarding SS as insurance vs a new car, is that no one expects to collect on car insurance. Everyone expects to collect on SS. HUGE MENTAL hurdle there. When I showed DW the plots for delaying her SS, it was obvious to me that she should not collect. We didn't need her checks, and in fact, are a tax headache. But she rather emotionally, yet sensibly pointed out that her check would only increase about $300 a month for delaying 4 years, and she wanted to contribute to our income, as she hadn't since she retired 6 years earlier. She feels much better using "her" money funding IRAs and paying for vacations and little house projects, so I can defer "my" money in to Roths and after tax funds. Money IS fungible, but psychologically it is not. SHE knows I want to delay taking more expensive trips so that I could retire earlier, but she doesn't believe I would anyway, so this "forces" us to getting used to spending on ourselves in retirement while still young enough to enjoy it, and makes the decision easier for me to delay, as the difference is about $1000 a month, so then it is an even smarter thing to do. We know we are lucky, and health willing, should have no worries, especially compared to both our immediate families that still mostly use the head in the sand retirement planning.
I don't know what SS considers the average life span, but I am pretty sure given my health history I won't make it that far. Not being ominous, just practical. I will draw SS early and take the hit.
our concerns about when to take ss in order of how i would prioritize:
will savings be spent down dangerously low if delaying ?
do we want more or less dependency on markets and interest rates in light of the fact we are at high valuations and history says the next 8-15 years are likely to be below average performance ?
spousal benefits . with the loss of one ss check and the surviving spouse now filing single , if they have to take a cut because they may end up taking ss pre their fra will a double hit because you also filed early be a financial hardship ?
if you file early will the additional taxable income preclude you from getting an aca subsidy if retiring pre 65 ?
what will your rmd tax situation look like with the higher ss check ? remember , at least now the higher ss payment is only taxed on 85% .
lastly and least important on our list is what if we die ? dead is dead .
most important on our list what if we live ?
Last edited by mathjak107; 03-14-2016 at 05:31 AM..
as long as we are guessing , we can assume broke is broke and no one is getting it or everyone is cut .
as john templon brilliantly said " the two most costliest words in the english language is this time is different .
Last edited by mathjak107; 03-14-2016 at 07:25 AM..
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