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Old 03-30-2016, 11:13 AM
 
Location: Central IL
15,250 posts, read 8,572,788 times
Reputation: 35701

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Quote:
Originally Posted by Perryinva View Post
The point would be that if you have enough saved to use your savings, instead of SS until tour 65, then start SS, run the amounts in SSAnalyze and see what your benefits would be. You may find out, like most do, that living on JUST your higher SS benefit which is entirely tax free, yields more money in your pocket to spend, meaning you will not have to touch what's left of your savings at all, allowing it to grow back to and surpass what it was. If you can't properly use or are unsure of how the financial calculators work, find someone that can. You just have to have enough saved to live on until you collect, and to still have an amount left over that can grow back when you collect. In fact, if all you have is SS to live on, you may find that all your withdrawals are non taxed because you are below the threshold, allowing you to roll over everything to a Roth, for when you do start collecting, and it has recovered to a nice size, allowing you to withdraw any amount for a large purchase, and not worry at all,mever about taxes.

You just have to get over the nonsense about "What if I die before I collect?" It won't matter, you will be dead. Your heirs get less. Boohoo for them. If you have a spouse, they end up with a higher SS income, for their life.

The ONLY negative is that during the time period while your savings is recovering, you DO have less for an emergency.

In my eyes, I've been saving all my life to allow me to live off that savings so I can retire early, while delaying my SS to guarantee me a higher stress free income for me or my widowed wife the rest of our lives. It's all about the higher guaranteed stress free income if you live, not about making sure you "get whats owed you from the gubmint" & having more left behind if you die. But that seems to be the way many Americans are wired.
Totally agree with this. You need to decide when to collect based on the "hit" to your other savings and how much you can afford to spend down, keeping in mind the increased benefit to come. Forget about how you "have to" get what you put in before you die.
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Old 03-31-2016, 11:23 AM
 
1,985 posts, read 1,312,685 times
Reputation: 3400
Quote:
Originally Posted by Perryinva View Post
The point would be that if you have enough saved to use your savings, instead of SS until tour 65, then start SS, run the amounts in SSAnalyze and see what your benefits would be. You may find out, like most do, that living on JUST your higher SS benefit which is entirely tax free, yields more money in your pocket to spend, meaning you will not have to touch what's left of your savings at all, allowing it to grow back to and surpass what it was. If you can't properly use or are unsure of how the financial calculators work, find someone that can. You just have to have enough saved to live on until you collect, and to still have an amount left over that can grow back when you collect. In fact, if all you have is SS to live on, you may find that all your withdrawals are non taxed because you are below the threshold, allowing you to roll over everything to a Roth, for when you do start collecting, and it has recovered to a nice size, allowing you to withdraw any amount for a large purchase, and not worry at all,mever about taxes.

You just have to get over the nonsense about "What if I die before I collect?" It won't matter, you will be dead. Your heirs get less. Boohoo for them. If you have a spouse, they end up with a higher SS income, for their life.

The ONLY negative is that during the time period while your savings is recovering, you DO have less for an emergency.

In my eyes, I've been saving all my life to allow me to live off that savings so I can retire early, while delaying my SS to guarantee me a higher stress free income for me or my widowed wife the rest of our lives. It's all about the higher guaranteed stress free income if you live, not about making sure you "get whats owed you from the gubmint" & having more left behind if you die. But that seems to be the way many Americans are wired.
This is my plan also. People throw numbers around based on a break even point due to a certain life expectancy. But if you are already 62 when you are thinking about filing, the life expectancy for someone already that age is now into your low 80s...... it's not 77 anymore.


I'd rather wait as long as I can and file and take advantage of the 8% increase per year. That's probably a better return than my 401K will get. The SS payout is almost double if I wait to 70 instead of 62. I'll spend my savings down and still retire when I want. If you die you don't need the money, and my spouse will have more.
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Old 03-31-2016, 12:03 PM
 
Location: Nebraska
363 posts, read 244,324 times
Reputation: 721
I'm only 52, with 5 year until I can retire with full pension. But I always think, I should hold on, work another 5 or 10 years. Then some days I think, NO...I will retire at 57, then collect SS at 62, just in case.
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Old 03-31-2016, 04:23 PM
 
Location: Jamestown, NY
7,841 posts, read 7,345,965 times
Reputation: 13779
Quote:
Originally Posted by dbsteel View Post
This is my plan also. People throw numbers around based on a break even point due to a certain life expectancy. But if you are already 62 when you are thinking about filing, the life expectancy for someone already that age is now into your low 80s...... it's not 77 anymore.


I'd rather wait as long as I can and file and take advantage of the 8% increase per year. That's probably a better return than my 401K will get. The SS payout is almost double if I wait to 70 instead of 62. I'll spend my savings down and still retire when I want. If you die you don't need the money, and my spouse will have more.

Mine as well. I turned 66 in January, filed for SS, and today was my last day of work. I don't really care if I don't live enough to "recoup" that "lost" SS. Because I waited, my retirement income between SS and pension will be a tad more than my salary minus what I put into my 403b ... and I won't have to touch that money until I'm 70 1/2 unless I want to do so.

That works out a whole lot better for me than attempting to live on less than 60% of what I'll be getting now. It's the difference between shopping at LL Bean or Walmart. It's the difference between eventually selling my house and buying into a nice senior co-op or having to live in a crappy apartment with stairs and a coin-operated laundry. For me, it's totally worth it to work a few years longer in order to have a much more comfortable life for however long I live.
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Old 03-31-2016, 04:31 PM
 
8,875 posts, read 5,156,823 times
Reputation: 10174
Quote:
Originally Posted by Linda_d View Post
Mine as well. I turned 66 in January, filed for SS, and today was my last day of work. I don't really care if I don't live enough to "recoup" that "lost" SS. Because I waited, my retirement income between SS and pension will be a tad more than my salary minus what I put into my 403b ... and I won't have to touch that money until I'm 70 1/2 unless I want to do so.

That works out a whole lot better for me than attempting to live on less than 60% of what I'll be getting now. It's the difference between shopping at LL Bean or Walmart. It's the difference between eventually selling my house and buying into a nice senior co-op or having to live in a crappy apartment with stairs and a coin-operated laundry. For me, it's totally worth it to work a few years longer in order to have a much more comfortable life for however long I live.
Congrats to you.
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Old 03-31-2016, 04:43 PM
 
71,946 posts, read 71,971,035 times
Reputation: 49506
Quote:
Originally Posted by dbsteel View Post
This is my plan also. People throw numbers around based on a break even point due to a certain life expectancy. But if you are already 62 when you are thinking about filing, the life expectancy for someone already that age is now into your low 80s...... it's not 77 anymore.


I'd rather wait as long as I can and file and take advantage of the 8% increase per year. That's probably a better return than my 401K will get. The SS payout is almost double if I wait to 70 instead of 62. I'll spend my savings down and still retire when I want. If you die you don't need the money, and my spouse will have more.
you are not getting an 8% return though , your are just getting an 8% increase . it is not the same as an 8% return on your 401k because once you figure in the checks you gave up , spousal benefits you didn't get and invested assets spent down delaying , you first get to zero percent return 22 years later .

delaying has you increasing rather quickly after that break even point but it takes living until about 90 to see a 5% real return . which aint bad .

photo 2 shows the return on ss assuming your portfolio you are spending down generates about 6% that runs about 22 years


1

2
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Old 03-31-2016, 07:08 PM
 
Location: Chesapeake Bay
6,048 posts, read 3,881,093 times
Reputation: 3502
Quote:
Originally Posted by mathjak107 View Post
you are not getting an 8% return though , your are just getting an 8% increase . it is not the same as an 8% return on your 401k because once you figure in the checks you gave up , spousal benefits you didn't get and invested assets spent down delaying , you first get to zero percent return 22 years later .

delaying has you increasing rather quickly after that break even point but it takes living until about 90 to see a 5% real return . which aint bad .

photo 2 shows the return on ss assuming your portfolio you are spending down generates about 6% that runs about 22 years


1

2
And so, 22 years. I was a bit more pessimistic in doing this calculation years ago and had estimated at least 24 years as the true break even point. Assuming a portfolio spend down which equaled the yearly early social security amount, then paying it back out of the increased social security starting at at age 70 plus then paying back the associated portfolio earnings losses.

In short, my conclusion was that a true break even point would likely never be reached.
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Old 04-01-2016, 12:42 AM
 
Location: RVA
2,174 posts, read 1,273,469 times
Reputation: 4497
Break evens are hypothetical. As long as your income exceeds your expenses, inflation adjusted, you are ahead. There is no one correct answer. It all depends on what you perceive the risk of your income to be. If you live longer, do you want your income guaranteed or the savings that would generate it, which might be at risk? Until you get there, you will not know which was really the right choice, but I know which way I'm currently leaning.
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Old 04-01-2016, 02:54 AM
 
71,946 posts, read 71,971,035 times
Reputation: 49506
Quote:
Originally Posted by Weichert View Post
And so, 22 years. I was a bit more pessimistic in doing this calculation years ago and had estimated at least 24 years as the true break even point. Assuming a portfolio spend down which equaled the yearly early social security amount, then paying it back out of the increased social security starting at at age 70 plus then paying back the associated portfolio earnings losses.

In short, my conclusion was that a true break even point would likely never be reached.
you do not know if that portfolio would have any gains so that is the wild card . you are trading market and interest rate risk for longevity risk if you delay .

kitces assumed 6% as a return for a balanced portfolio in his work constructing the chart above .

the more realistic return today for a balanced portfolio is about 4% over the next 8 years from these valuations and rates if you were retiring today ..

with dividends at 2% and dividends tracking interest rates as well as accounting for an average of about 1/3 the markets gains ,you are talking about 6% from markets and 2-3% from bonds and 1% on cash in todays dollars .

that puts break even around 82 . odds are very good if a couple you will easily see that by one of you , in fact it is likely a given so everything beyond that is gravy .
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Old 04-01-2016, 05:35 AM
 
Location: Chesapeake Bay
6,048 posts, read 3,881,093 times
Reputation: 3502
Quote:
Originally Posted by mathjak107 View Post
you do not know if that portfolio would have any gains so that is the wild card . you are trading market and interest rate risk for longevity risk if you delay .

kitces assumed 6% as a return for a balanced portfolio in his work constructing the chart above .

the more realistic return today for a balanced portfolio is about 4% over the next 8 years from these valuations and rates if you were retiring today ..

with dividends at 2% and dividends tracking interest rates as well as accounting for an average of about 1/3 the markets gains ,you are talking about 6% from markets and 2-3% from bonds and 1% on cash in todays dollars .

that puts break even around 82 . odds are very good if a couple you will easily see that by one of you , in fact it is likely a given so everything beyond that is gravy .
It just depends on whether you want to wait that long for a true break even point. I just wasn't interested once I realized it was more than 20 years. For me that time interval was simply too great. Anything could happen in that interim.

Even so, social security is a very good deal. I am still amazed at how much we actually do receive from it though we took it earlier.
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