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Old 04-13-2016, 07:33 AM
 
Location: NC Piedmont
3,911 posts, read 2,884,049 times
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Quote:
Originally Posted by bpollen View Post
I read an article that said it IS part of the intent of the ACA to help older people who don't get employer-sponsored ins., so they don't use all their retirement savings for medical care or premiums.

So whether one is unemployed by choice or not, that's what the ACA is there for. The ACA provisions could easily have prevented that, simply by including an exception, for example, for those who have a certain amount in a retirement account.

You can even sell your house and pocket modest gains, after buying another house (to buy down), and not have it affect your ACA subsidy (because the gains don't go into the Adjusted Taxable Income amount).

This would also be the case for those who are younger and still employed, but make an income low enough to qualify for a partial subsidy. They can have a healthy retirement account saved up and invested, without interfering with getting a subsidy for the ACA.

I imagine the thinking is... what good is the ACA for the country, if it means that people will have to deplete their life savings in order to qualify for a partial subsidy. Then you'll have a large segment of seniors who will have no retirement accounts with which to buy Medigap, pay for things that Medicare doesn't pay for, and try to get by on Social Security alone. And it would discourage saving for one's retirement.
My FA encourages me to think that way also, if I get in a situation where that might make sense (and I might). He pointed out that I would be making my plan more solid by actually being low income for a year or so on my terms to limit the risk that I would end up having to live on a low income longer term later. I think that risk (of becoming low income later) is pretty low and that I would be taking advantage of a loop hole, but that is just a personal opinion that doesn't seem to be widely shared.
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Old 04-15-2016, 04:22 PM
 
6,653 posts, read 3,764,565 times
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Quote:
Originally Posted by mathjak107 View Post
interesting view by kitces .

this is the gist of his view , you can read the full story below


Despite a growing body of research suggesting that most retirees would benefit by delaying the onset of Social Security payments, the majority who are eligible still elect to begin receiving them as early as possible. In no small part, this appears to be attributable to a “take the money and run” mentality from retirees, who simply don’t see the value of delaying as being worth the risk of foregoing benefits. And without a doubt, there is a material risk that the retiree will not live to the so-called “breakeven point” where the delay in benefits is worthwhile.

However, what most retirees fail to recognize is that while there is a risk to delaying benefits and never fully recovering them, the upside for living past the breakeven point isn’t just that the money is made back; it’s that the retiree can make exponentially more. And in fact, these asymmetric results – where the retiree only risks a little by delaying, but stands to gain far more in the long run – are further magnified in situations where the client lives dramatically past life expectancy, experiences high inflation, and/or gets unfavorable portfolio returns – which are, in fact, three of the greatest risks to almost every retiree.

As a result, the reality is that delaying Social Security benefits may actually be one of the best triple-hedges available to any retiree – simultaneously protecting against poor returns, high inflation, and longevity!

https://www.kitces.com/blog/the-asym...ltimate-hedge/
Did you read my emails with the numbers and stating that a retirement calculator at Marketwatch.com indicated to me that I would do better financially by taking SS earlier. My situation is: Retired already, using own money for living expenses. That is VERY different from someone who is still working, so that is maybe the difference in expert recommendations.

If receiving SS means you don't use that equivalent amount of your own retirement savings, then you come out ahead by getting SS, since your personal savings will earn interest, then earn interest on top of interest, compounding each year, outpacing SS, if you assume a base 5% earnings (from, say, the PIMIX mutual fund).

I believe that what most experts (and the SS Admin) are referring to, when recommending delaying SS, is to STAY WORKING when delaying SS. That makes sense. The key is to postpone using your retirement savings as long as possible.
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Old 04-15-2016, 04:56 PM
 
Location: Central Massachusetts
4,800 posts, read 4,856,396 times
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Quote:
Originally Posted by bpollen View Post
Did you read my emails with the numbers and stating that a retirement calculator at Marketwatch.com indicated to me that I would do better financially by taking SS earlier. My situation is: Retired already, using own money for living expenses. That is VERY different from someone who is still working, so that is maybe the difference in expert recommendations.

If receiving SS means you don't use that equivalent amount of your own retirement savings, then you come out ahead by getting SS, since your personal savings will earn interest, then earn interest on top of interest, compounding each year, outpacing SS, if you assume a base 5% earnings (from, say, the PIMIX mutual fund).

I believe that what most experts (and the SS Admin) are referring to, when recommending delaying SS, is to STAY WORKING when delaying SS. That makes sense. The key is to postpone using your retirement savings as long as possible.

I concur. If you are relying solely on your investments now your best bet is to pick SS at the earliest point. The only reason not to is if your portfolio is over 7 figures and you are needing to live on under 50k. Or you have pensions that provide income that are over 24k and you have a decent performing portfolio.
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Old 04-15-2016, 05:08 PM
 
71,811 posts, read 71,896,917 times
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that was my thinking but then i realized with stocks performing poorly last year , my first year retired and so far this year and valuations high and pointing to below average gains over the near term as far out as 8 years then delaying ss is my best option . it has never played out any different that when stocks have high valuations at the point you retire the next 8-15 years have always had less then average performance at about the 8 year mark as the years average out .

we can have great up years but they typically will have poor years and by 8 years like water they level out to below average from these starting valuations .i rather bet on our longevity as a couple then those kind of markets .
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Old 04-15-2016, 05:25 PM
 
Location: NC Piedmont
3,911 posts, read 2,884,049 times
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Quote:
Originally Posted by mathjak107 View Post
that was my thinking but then i realized with stocks performing poorly last year , my first year retired and so far this year and valuations high and pointing to below average gains over the near term as far out as 8 years then delaying ss is my best option . it has never played out any different that when stocks have high valuations at the point you retire the next 8-15 years have always had less then average performance at about the 8 year mark as the years average out .

we can have great up years but they typically will have poor years and by 8 years like water they level out to below average from these starting valuations .i rather bet on our longevity as a couple then those kind of markets .
Emphasis mine. The debate is over something that is a gamble. If you make it into the 60s as a happy couple in good health, I think smart money goes with delaying SS. It will not always be the best decision but it will be more times than it isn't.
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Old 04-15-2016, 05:34 PM
 
Location: RVA
2,172 posts, read 1,271,519 times
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Quote:
Originally Posted by bpollen View Post
Did you read my emails....

I believe that what most experts (and the SS Admin) are referring to, when recommending delaying SS, is to STAY WORKING when delaying SS. That makes sense. The key is to postpone using your retirement savings as long as possible.
I did read your posts. And,no, that is not at all what most experts mean when they say to delay. Working as long as possible is a strategy if you have insufficient income to live how you wish in retirement. It is normally common sense to not collect SS while working a job that supports you. Based on your logic, there would NEVER be a good reason to delay. If Joe Regular Income Job Average can make more money by collecting at 62 and investing it, then Joe Rich Guy Investor can do even better, ergo, there is never a reason to delay collecting. You are referring to vague ideas that "seem right". Yet, many studies easily illustrate clear financial reasons to delay collecting and use savings to live off, and that more educated, ie also higher income earners, are the ones that take advantage of it. You are saying that your use of a calculator, that you want to give you the results you hope for, is more accurate than one that has no reason to be influenced either way, and has a thorough review by countless financial advisors that do this for a living.

Did you read what I wrote in the thread? It appears not. Collecting early only makes sense if you can't afford to delay, OR you die earlier, or there are no tax advantages to not being forced to withdraw your savings every year, ie you are in a low taxable income bracket,mbut not low income, and you will be single for life, so not concerned at all with a spousal survivor. I don't know your circumstances or income sources,nor tax situation so yes,min your case it for sure may be smarter to collect early, but not for the reasons you list.


If you believe that you will get 5% after inflation, risk free each and every year forever, from day one, on a common mutual fund then you are a guru and the only one doing it. To guarantee a higher income, taxed at a lower rate, inflation adjusted for as long as you live, nothing beats the SS delayed annuity. In order to beat it by claiming early, you have to spend down assuming you will be dead by 80ish. If you ONLY withdraw a SWR in case you live longer,you need more withdrawal, ie, a larger savings pot, whose principal you must protect for your while life, to add to your much smaller SS check.

There is nothing personal about this, it's just plain math and risk aversion for the aged, with survivor benefits.

Plug in inflation of 2% and earnings of 3% and see what your marketwatch calculator reads...

Last edited by Perryinva; 04-15-2016 at 05:46 PM..
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Old 04-15-2016, 05:52 PM
 
Location: Gilbert, AZ
3,194 posts, read 1,967,999 times
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Quote:
Originally Posted by bpollen View Post
Did you read my emails with the numbers and stating that a retirement calculator at Marketwatch.com indicated to me that I would do better financially by taking SS earlier. My situation is: Retired already, using own money for living expenses. That is VERY different from someone who is still working, so that is maybe the difference in expert recommendations.

If receiving SS means you don't use that equivalent amount of your own retirement savings, then you come out ahead by getting SS, since your personal savings will earn interest, then earn interest on top of interest, compounding each year, outpacing SS, if you assume a base 5% earnings (from, say, the PIMIX mutual fund).

I believe that what most experts (and the SS Admin) are referring to, when recommending delaying SS, is to STAY WORKING when delaying SS. That makes sense. The key is to postpone using your retirement savings as long as possible.
No, it's not a matter of working longer. The only question is when to start taking the SS check. One is stopping work at the same age in either case.

We can argue that there (at least) two categories of people here. The first group is wealthy enough that it does not need SS at all pay the bills during retirement. SS benefits are just found money that they can invest, give to their children or charity, etc. I can imagine these people taking the money early and investing it in some long-term assets that can get a good return, even if the assets are volatile.

The second group are people who have some significant assets, but SS is still an important part of their retirement income. These people are better off delaying SS as long as assets will reasonably allow, unless perhaps they have good reason to expect a shorter than typical lifespan.

For the case of living off assets, you cannot use a simple calculator that assumes the same return each and every year unless there is some safe and guaranteed investment with that characteristic. Today there is no such vehicle that will give 5% each and every year with certainty, so making this assumption in your calculation will give a result that is too optimistic.
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Old 04-15-2016, 06:34 PM
 
71,811 posts, read 71,896,917 times
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using a simple reverse amortization calculator to see how long the money lasts can differ by up to 15 years once the same avearge return comes in different sequences .

most knowledgeable experts do not refer to delaying as a good choice only if you work . most who i consider experts consider delaying the best deal out there if you can afford to delay .
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Old 04-15-2016, 10:30 PM
 
6,653 posts, read 3,764,565 times
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Quote:
Originally Posted by nicet4 View Post

I am also liking the idea of 70 because if I can make it two more years when I do retire I will actually be receiving a raise above what I am earning now if you consider our combined ss benefit and the small pensions we will get. Knowing I am going to get a "raise" the day I retire takes a lot of stress out of the decision to quit work.

Another thing, what do people smarter than me think about putting off drawing benefits?



Why are the more educated among us the ones who appear to wait?
Because they have a higher income and can afford to wait. They don't need the money for expenses. They want the money for funsies.

They are also lucky enough to still be employed, so that means they DO benefit from not drawing SS money they don't need, since they don't have to use their personal retirement accounts to pay the bills.

It's not that they're smarter. It's that their situation is different from those who make more money in the longrun by taking it earlier. And there ARE situations where that is the case.
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Old 04-15-2016, 10:34 PM
 
6,653 posts, read 3,764,565 times
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Quote:
Originally Posted by mathjak107 View Post
glad you wouldn't use the calculator by fidelity because they are in the business of making money but that has zero to do with it . the data is straight forward and fully explained and has nothing to do with their products
It has EVERYTHING to do with it. It's those investment cos. that have people afraid they can't retire if they don't have a million dollars in their accounts. (Gee, I wonder why investment cos. want people to have more money to invest than they need?) People do not need $1M to retire, unless they plan on living a high-end life. Most seniors do not, and could not, and never did.

So unless I have a ton of $$$, Fidelity is going to say "You can't retire yet!!! Not enough money!!And for goodness sake, don't take SS NOW! It might enable you to retire!"

Fidelity also has higher fees than norm for most of its funds.

If I used a site for calculator, it'd be Vanguard. But Marketwatch is the most thorough one I've ever used, and I've used a lot.
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