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Old 03-11-2016, 11:46 AM
 
13,879 posts, read 7,391,112 times
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Quote:
Originally Posted by deebin View Post
I think one factor is that the earlier you take Social Security, the earlier you will start paying income taxes on it. We can thank the Reagan Administration for that one. Each earlier year reduces your payout.

When I run MY numbers whether to take it at 62, 66 or 70, break even is around 81 years.
Tells me that Social Security is sort of longevity insurance.
I don't follow your reasoning about income taxes. If you defer to age 70, what are your income sources before then and what are your income sources at age 71?

I also don't have a constant break even age. The easy numbers are retiring at 62, retiring at FRA, and retiring at age 70 since those appear on my statement at their web site. I looked at total Social Security distributions at age 80 and 83. 62 to 70 crosses over at age 81. FRA to 70 crosses over at age 83.

Regardless, I agree 100% with your statement that Social Security is sort of longevity insurance. I express it as my insurance in case I get unlucky and outlive my retirement savings. With my genetics, socioeconomic status, and overall health, I have to assume 85 and plan for 90. That doesn't mean I won't drop dead tomorrow but I'd rather not be faced with living in a cardboard box under the railroad bridge at age 85 when all the other late-boomers have exhausted their resources. I kind of have to assume that Medicaid-funded nursing homes are going to be pretty nasty 30 years from now. I want to be in the 20% who can self-fund private LTC. I don't think Mathjack's LTC insurance math is going to be valid in 2045 when there are only 2.75 workers for every retiree. There will simply be too many of us with zero retirement resources.
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Old 03-11-2016, 01:01 PM
 
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Quote:
Originally Posted by selhars View Post
So mathjack have you changed your mind twice or just once. Have you gone from thinking about delaying, to filing sooner, and BACK to delaying??

---------
The U.S. News and Report article I saw explained that "file and suspend" and "restricted application" are two different rules, that might be similar but are different, and they have two different ages to be grandfathered in. I was only talking about one of them.

For FILE AND SUSPEND it said "...for those who are at least 66 or who will turn 66 by April 30, 2016, there is still an opportunity to get in under the old file-and-suspend system."

For RESTRICTED APPLICATIONS it said: "However, those who will turn 62 by the end of the year (2015) will be grandfathered in under the old rules for restricted applications."

I guess that's only HALF correct, or correct as far as it goes but incomplete and misleading, otherwise.
pretty much i went from thinking of taking it next year to fully delaying .
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Old 03-11-2016, 01:02 PM
 
71,509 posts, read 71,674,131 times
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Quote:
Originally Posted by jp03 View Post
Bingo..I think if you are retired and eligible for SS you are GAMBLING not collecting. Heck, what if you die at 77 or even 80? You've lost money..makes no sense really.

Its funny, everybody retires thinking they are gonna live to 90 or 100. Odds of living to 90 at 65 1 in 3...Not saying you shouldn't prepare for it but why gamble on leaving money on the table?
for a couple at 65 the odds of 1 of them making it until 90 is 47% , just under a coin toss according to the latest data from the society of actuaries . that is still pretty high
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Old 03-11-2016, 02:13 PM
 
Location: RVA
2,164 posts, read 1,265,106 times
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Quote:
Originally Posted by jp03 View Post
Bingo..I think if you are retired and eligible for SS you are GAMBLING not collecting. Heck, what if you die at 77 or even 80? You've lost money..makes no sense really.

Its funny, everybody retires thinking they are gonna live to 90 or 100. Odds of living to 90 at 65 1 in 3...Not saying you shouldn't prepare for it but why gamble on leaving money on the table?
Your arguments hold no water. Why on earth would your objective be to get the most out of SS in case you die? You'd be DEAD, so it doesn't matter if you lost money. You are dead, not of this earth, a past person (to paraphrase Monty Python)! If you HAVE to collect early to live, then thats a different story, but that is NOT what this discussion is about. Its about those that have enough savings to live comfortably off it while delaying SS, (and there are plenty out there, especially if you have a good pension), so that if you LIVE, you have a less risky, lower taxed, higher income vs BETTING that your savings will last you in totally unknown market conditions because with the significantly lower SS (you will have locked in for life) , you WILL need to draw on your savings to have the same after tax income, vs the other way around. The only possible loser in the delay scenario are your heirs, and if their inheritance is more important than your quality of life, then you have some screwed up priorities. The objective is not to have the most money left behind if you die early, it is to have the most INCOME over your while life, while you are alive! This is NOT possible for many people, I know that, and if you are one of them, then ignore this thread!

According to the financial calcs I used, by withdrawing 25% of my savings over 5 years (in an amount that would exceed my collect at 62 amount, plus travel and fun money) to delay to after FRA, I wouldn't have to touch my remaining savings EVER (besides the forced to take MRDs) until I'm 87! This works so well for us because we do have pensions, and I have over 35 years maxed out SS, so I need far less than the $24k/yr I Would get at 62, to live very comfortably, and even delaying to just 67 bumps me to $33k/yr, so I'd be banking most of that for 3 years until MRDs, then even more until inflation and medical costs rise to meet my "forced" income.

Does anybody really think that delaying to collect SS is more risky than the stock market??? I mean, I agree there is risk involved, but far less than compared to the stock market in a 5-7 year period.

Last edited by Perryinva; 03-11-2016 at 02:48 PM..
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Old 03-11-2016, 02:23 PM
 
Location: Gilbert, AZ
3,179 posts, read 1,956,881 times
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Quote:
Originally Posted by deebin View Post
I think one factor is that the earlier you take Social Security, the earlier you will start paying income taxes on it.
It's interesting. While working we have all been conditioned with the notion that it's always better to defer taxes, and that's generally the right behavior.

In retirement, though, I see the goal as maximizing after-tax income. In some cases it's possible that deferring taxes ends up being a bad idea. It can be pretty complex to figure it out, quite honestly. I think I've got a reasonable plan, but I wouldn't dare claim it's the best one (yet, anyway).
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Old 03-11-2016, 03:29 PM
 
Location: Gilbert, AZ
3,179 posts, read 1,956,881 times
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It is kind of strange/interesting to see that most people don't view Social Security as insurance, even though that's what it really is.

I'll bet the majority of people take out full coverage on a new car (assumption is a cash purchase for this discussion), even those who could easily cover a total loss of the car. But yet those same people will not wait until 70 to take Social Security, even in the case of two healthy people where the survivor benefit is important to one spouse.

In the case of a couple the odds of living past break even are very high, much higher than the odds of totaling a car. Plus the potential loss of money by taking the SS check too soon is far greater than the cost of replacing a car.
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Old 03-11-2016, 03:39 PM
 
71,509 posts, read 71,674,131 times
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all valid points . we do the same thing when it comes to long term care insurance too.

we generally have life insurance when we are young even though the odds of dying are so slim . yet the odds of needing either in home care or a skilled nursing facility are not a fraction of a % like with life insurance but about 33% . the odds of our home burning down are even less then a fraction of a % .
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Old 03-11-2016, 06:04 PM
 
Location: South Jersey
69 posts, read 52,146 times
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I am fortunate enough to have a future pension that would increase 12% for every year I wait after age 65. That trumps the 8% increase gained by delaying SS. So I plan to take SS at age 65 when I have to start Medicare anyway, and this will allow DW to start receiving spousal benefits. (she's 68).

By living only on the SS from age 65-70, and not taking pension until age 70, this will allow Roth IRA conversions for 5 years at a 15% marginal tax rate, using the SS to pay the taxes on those conversions, thus reducing RMDs, and the 'tax torpedo' at age 70.

For those lucky enough to have a pension it would be worth it to take SS at FRA or in that age range: what's the sense in waiting until age 70, only to get crushed by taxes that would probably negate the extra SS income?
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Old 03-12-2016, 02:59 AM
 
71,509 posts, read 71,674,131 times
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just remember that increase in ss and your pension is not an actual return but just increases . in order to look at it as a return you would have to figure in lost checks you didn't get , any assets that were invested and spent down as well as any spousal benefits you didn't get .
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Old 03-12-2016, 06:00 AM
 
Location: Coastal Georgia
37,096 posts, read 45,604,555 times
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Quote:
Originally Posted by AnnaLee2 View Post
If you saved for retirement, the money was earmarked to be spent for retirement. I hope you aren't running into a problem like mine. I find myself denying myself something simple and cheap just because it isn't important to my survival. Watching every penny over many years made me sick in the head about $5 purchases. Meanwhile, each year so far, I have continued to save part of pension and SS income and haven't touched my retirement saving except to pay taxes on some of it in advance of RMD.
I know how you feel. We do not have pensions, and were forced to take SS early, because we both lost our jobs from downsizing. We have a nest egg, but are afraid to spend any of it, because we don't know how long it will need to last. We are pretty comfortable on SS plus hubby's PT job, unless some big expense comes along.

Those of you who hold out for age 70, are losing a lot of money in the 8 years of eligibility between 62 and 70 in order to make a few hundred more a month.
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