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Old 04-10-2016, 03:10 PM
 
Location: NC Piedmont
3,911 posts, read 2,879,340 times
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Quote:
Originally Posted by TuborgP View Post
This is one topic that will have a continuing new supply of folks interested along with a residual population willing to discuss even well after they have made and implemented their decision. It is a truly eternal discussion or at least lets hope it still is fifty years from now.
The ebb and flow takes the threads various places. I like where this one has gone. I have learned more from this thread than from any other single thread on the subject. I think it is because the "why it makes sense to take it early" position has some proponents with sound arguments. I still don't think it makes sense for me to take it really early, though I still waver between 65 (locking in Medicare rate), FRA (66+8mo for me) or 70. Lots of water still has to pass under the bridge (I am just over 6 years from target retirement date) before I have to decide.
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Old 04-10-2016, 03:57 PM
 
Location: Gilbert, AZ
3,182 posts, read 1,961,125 times
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Quote:
Originally Posted by GeoffD View Post
For me,the optimal age would have been maximum retirement benefits and Medicare at around age 40.

This work thing interferes with my leisure time.
180 Trillion Leisure Hours Lost To Work Last Year - The Onion - America's Finest News Source
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Old 04-10-2016, 04:22 PM
 
Location: Gilbert, AZ
3,182 posts, read 1,961,125 times
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Getting back to the original question...

If a person is only concerned with maximizing their safe spending level, and they have no good reason to expect a shortened lifespan, I'll argue it's best to put off SS as long as funds will reasonably allow. Just to be clear, I'm not talking about working longer. The question is only about when to start SS benefits.

Here is an illustration to make the point.

Let's say "Bob" will get a $2000/mo check at age 62. Not bad, but if he waits until 63 that check will grow about 6.1%, to $2122/mo. So he has increased his income by $1464/yr ($122 x 12).

Of course, there is the matter of how to pay the bills that first year. Bob will have to take money from his account to cover the missing SS check. Using the new and improved amount of $2122/mo, he needs to set aside that amount times twelve, or $25464. His retirement account will be that much smaller, and since Bob is using a 4% withdrawal guideline, his spending is reduced by $25464 x 0.04 = $1018.

So the net result is the following. His SS check increased by $1464/yr and his portfolio income decreased by $1018/yr, for a net improvement of $446. And of course this is for just one year. If he has enough cash to defer for five years, the improvement will be $2230/yr.
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Old 04-10-2016, 04:37 PM
 
Location: Somewhere in deep in Maine
3,658 posts, read 2,812,119 times
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The optimal age is when you need the money to survive retirement. I took mine at 62 so I could retire.
The wife waited until we needed another car to tow the boat, and too hers at 64. This year she gets medicare which will dramatically reduce her cobra payments, and while not increasing out income, will increased our usable income even with the $200 supplemental policy.
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Old 04-10-2016, 10:07 PM
 
Location: RVA
2,167 posts, read 1,266,787 times
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@hikernut: good straight forward way to look at it. Since the plan is to work until 63, and my 62 age SS is roughly $2k, for around $150k I can increase my SS as described in absolute dollars plus all those dollars are taxed at 85% of the total vs 100% taken from my tIRA while also reducing RMDs. Sounds pretty worthwhile to me.
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Old 04-11-2016, 02:12 AM
 
6,353 posts, read 5,161,362 times
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Quote:
Originally Posted by mathjak107 View Post
1965/1966 was a horrible sequence of events and the prefect storm . we have seen nothing like it including the great depression and the world wars .
I think you mean 1966-1982. Nothing really happened in 1965-66 other than that the market reached a top that would not be exceeded for a generation.
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Old 04-11-2016, 03:37 AM
 
71,626 posts, read 71,751,865 times
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I have it correct . Those are the two starting dates for what was the worst time frames in history to retire in to . For a retiree who retired in 1965 or 1966 they picked the time frame that will be the worst on record.

The entire 4% safe withdrawal rate is based on those two starting dates they were so terrible.

The 30 year time frames for those two dates look normal but the first 15 years decimated retirees with poor markets , poor bond returns and inflation that went from 1% to double digits in a few short years
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Old 04-11-2016, 05:47 AM
 
Location: RVA
2,167 posts, read 1,266,787 times
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So look at someone like myself, where due to pensions, and wifes SS, I will automatically be at the cusp of the 25% tax bracket when I retire, regardless. If we assume for just that year we have increased SS by $1500, then that $1500 as 85% taxed yields a take home of (1500x.15+(.85x1500x.75) = $1181, vs $1125 or an additional $56/yr increase difference.

If we look at delaying to 70 where it is $43k income vs $24k (all in age 62 dollars), then it becomes a difference of $19k, with an additional take home of (.15x19000+(.85x19000x.75)= $14963 vs 14250 = $713 due to less taxes paid, in your pocket, an amount that increases by 85% of the COLA increase every year. So to maintain the same spendable income, you can take an additional ~$1000 per year the first year,mless out of fully taxed savings, vs if you had filed at 62. (Assuming you would be living on SS plus savings withdrawals). And be required to take even less out each year due to that. (Since this is all in age 62 dollars, when you actually get to 70, it will be more than $1000 to start)

Also besides reducing my RMDs by roughly (.038 x $15000)=$5700, it gives me time at a lower bracket to further roll tIRA in to Roth.
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Old 04-11-2016, 07:24 AM
 
Location: NC Piedmont
3,911 posts, read 2,879,340 times
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My FA once mentioned to me that he has a few "super saver" clients that don't make very much money but have lived frugally and put away as much as they could for retirement for their entire careers that he has doing conversions and just putting away regular savings the last few years because they will be at a higher tax rate during retirement than they are now. An interesting aside from that is that the common thing you hear in this forum about these frugal people not spending in retirement doesn't seem to be anywhere near universally true, at least not if they have a concrete plan and know their savings support a nice income.
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Old 04-11-2016, 07:37 AM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by ReachTheBeach View Post
My FA once mentioned to me that he has a few "super saver" clients that don't make very much money but have lived frugally and put away as much as they could for retirement for their entire careers that he has doing conversions and just putting away regular savings the last few years because they will be at a higher tax rate during retirement than they are now. An interesting aside from that is that the common thing you hear in this forum about these frugal people not spending in retirement doesn't seem to be anywhere near universally true, at least not if they have a concrete plan and know their savings support a nice income.
If you have a large enough cash flow being frugal is off the table in the minds of some. I made a comment years ago about being frugal and was told in here that I made to much to be frugal. Go figure. However we are no longer by any stretch frugal.
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