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Old 04-08-2016, 07:22 PM
 
29,829 posts, read 34,918,975 times
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Quote:
Originally Posted by GeoffD View Post
I don't think so. The numbers are actuarially sound. If they weren't, it wouldn't be the endless debate about it. You also need to be quite affluent to be able to delay until 70 but retiring before that. If you're still working up until age 70, you're still contributing to the Social Security system and likely don't increase your age 70 benefit.
You just identified the reason why there is Progressive thinking to do away with it. Not for actuarial reasons but it tends to be used by the wealthy and contributes to income inequality in old age.
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Old 04-08-2016, 08:43 PM
 
Location: Baltimore, MD
3,746 posts, read 4,226,506 times
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Quote:
Originally Posted by TuborgP View Post
You just identified the reason why there is Progressive thinking to do away with it. Not for actuarial reasons but it tends to be used by the wealthy and contributes to income inequality in old age.
I've not read anything about doing away with delayed credits. It is true, however, that there is an unanticipated spike in longevity for high earning males. Supposedly, those men will be drawing a greater amount in benefits than originally expected and that, in turn, negatively impacts the Trust Fund or something or other.

Conversely, females who did not graduate from high school have unexpectedly experienced a drop in their life expectancy.

And the dudes in McDowell County, WV, better grab their benefits at 62 because their life expectancy is 64!!!
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Old 04-08-2016, 09:33 PM
 
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Just my 2 cents....I haven't read through this entire thread, but


consider Medicare, and when you will qualify. In most cases, you don't qualify until you turn 65. Prior to that, you must maintain medical insurance another way. If you continue to work, you get insured through whatever work plan you have.


If you retire before 65, you need to plan your options. You might be able to carry a "gap" type policy to cover you between those years.


You could also consider Cobra, which will carry you for a total of 18 months. Beware, Cobra is extremely expensive. We carried it awhile back, was about $1800/month The amount varies depending on the amount your employer pays for your medical.


Obviously, retiring early can be costly if you retire more than 1-2 years prior to medicare kicking in.
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Old 04-08-2016, 11:08 PM
 
6,663 posts, read 3,772,005 times
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Quote:
Originally Posted by golfingduo View Post
We all have asked this question in regards to our own situation. There is no easy answer. There is only a best for you answer but this particular link and piece suggests taking it sooner rather than later is the better choice but also points out the benefits of waiting as some professionals suggests.

The piece opens with this and it is quite telling as to how in depth the report will go.



Free Retirement Advice on when to Collect Social Security.

I read the report over a few days twice and found it quite informative. In fact I plan on sending it to my financial advisor so that he can use it in the future. It is well written and I think it has facts and figures to back up its advice. I remember and I am sorry I don't remember the C-D member name (my apologies) advocated just that with numbers of their own. Since this question has not been put here on the retirement forum exactly as I wrote it, maybe those who search for this information will find it and find it helpful.

If you run the numbers to assume you die at, say, 75....the amount you receive from SS should be about the same, regardless of when you began receiving it. It's when you live longer that things change.

I ran the numbers thru a retirement calculator (an unusual one, but a good one), and it indicated I'd do better if claimed SS earlier. That was because I didn't have to use as much of my own money, so it could continue earning interest, which compounded each year. Which I guess was more than the increase in SS for delaying it each year. I also expect I will live longer than the normal life expectancy (age 90 to 93). (I had already retired, when I ran those numbers.)

I also tend to think that the govt is not going to tell me to do something that may mean it will have to pay more (the govt pushes people to delay receiving SS). It is in the govt's interest to have as many people as possible delay receiving SS, knowing that a certain percentage will die before the normal life expectancy, thereby saving SS money.

But I don't know, really.
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Old 04-08-2016, 11:20 PM
 
6,663 posts, read 3,772,005 times
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Quote:
Originally Posted by mathjak107 View Post
it all depensds on the assumptions made . this isn't the first time someone crunched all the factors they can think of . kitces did it a while ago .

on the other hand kitces's study shows delaying is far and away the better choice hitting stock like returns on what amounts to a gov't bond if even one person in a couple makes it to 90 . a 47% chance which is still pretty high odds . if i was a single male i would not look at those real returns as being countable ..

there is a difference in assumptions that conflict the 2 calculations . . i have to say i agree with kitce's work up more .


https://www.kitces.com/blog/how-dela...money-can-buy/


results of kitces study show 5% real returns are gained by age 90 , still coin toss odds for a couple and 6% if you make it until 95 . real returns are after we subtract inflation . 5 to 6% are stock like real returns with NO SEQUENCE RISK allowing higher spending through retirement just because you do not have to factor in down years on the ss portion ..

using fidelity's new social security optimizer there were big difference for us delaying when spousal benefits were included . we had not only higher differences in draw and balance but much less dependency on markets and interest rates along with reduced sequence risk , all very important factors and in fact market dependency is the main reasons we are trying to delay . .

this is kitces's conclusion and assume 3% inflation and spending down a balanced portfolio to delay until 70 .
I didn't read your link, but if I understand your post, the study doesn't take into consideration the recipient's OTHER money. That is, if you receive SS early and don't need it to live on, does it consider the normal gain you'll be getting on that? Or if you use it, the money of your own that you don't need to spend can now be getting returns. The returns will be compounded every year. You get 5% one year, then 5% of the initial amount and the prior year's 5% gain, and so on. Compounding. But then SS is compounded, isn't it? I'm not sure.

I ran numbers through a retirement calculator on an investment site that takes into account all assets and monies available, and the different years you claim SS. It comes back every time with the fact that my money will last longer, the earlier I claim SS. Of course, I'm talking about someone who has already retired, so would have to use retirement savings more, if I don't claim SS.
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Old 04-09-2016, 01:32 AM
 
71,909 posts, read 71,971,035 times
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yes it figured invested assets . it figured it in the reverse , if you delay you will be spending down a balanced portfolio over the 8 years .

you need money to live on if you delay so that money you are spending from other sources is effectively "invested money or could have been invested money that is being used .

whether you spend the incoming ss to live if you file early or bank the ss and spend other income is just switching pockets and still amounts to the above .

ss is not compounded .

i have never seen a retirement calculator show better results taking ss early unless it makes some pretty high assumptions about returns and income that can be pretty risky to count on .

try firecalc or the fidelity planner , both are top choices .

the long-term real return on equities has been “only” about 7%, which represents a 7% equity risk premium over an alternative risk-free rate. Which means for equities to generate a comparable risk premium over the value of delaying Social Security, equity real returns would need to be 8.3% after 20 years, 11% after 25 years, 12% after 30 years, and 13% after 34 years. Arguably, these are questionable real returns to expect in any environment, and even more questionable in the context of today’s above-average valuations.

Last edited by mathjak107; 04-09-2016 at 02:49 AM..
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Old 04-09-2016, 03:00 AM
 
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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/
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Old 04-09-2016, 03:29 AM
 
Location: NC Piedmont
3,911 posts, read 2,887,120 times
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Quote:
Originally Posted by MaryleeII View Post
Just my 2 cents....I haven't read through this entire thread, but


consider Medicare, and when you will qualify. In most cases, you don't qualify until you turn 65. Prior to that, you must maintain medical insurance another way. If you continue to work, you get insured through whatever work plan you have.


If you retire before 65, you need to plan your options. You might be able to carry a "gap" type policy to cover you between those years.


You could also consider Cobra, which will carry you for a total of 18 months. Beware, Cobra is extremely expensive. We carried it awhile back, was about $1800/month The amount varies depending on the amount your employer pays for your medical.


Obviously, retiring early can be costly if you retire more than 1-2 years prior to medicare kicking in.
I have mixed feelings about getting subsidized ACA (Obamacare) insurance but it is an option. Only current income is considered, so some people retiring early use some after tax savings and/or keep spending as low as possible to limit taxable draws and keep income low enough to get insured pretty cheaply. I said "mixed feelings" because that really wasn't the intent of low income subsidies.
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Old 04-09-2016, 03:37 AM
 
71,909 posts, read 71,971,035 times
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like everything the gov't or irs gives us , our fair share of anything is whatever we can legally figure out we have to pay using the tools and laws they left in place and are smart enough to use .

there would have been no second thought to making the subsidy's asset dependent just like medicaid if they wanted to .

they didn't because not all assets can be converted to liquidity . someone with a million dollars in equity in a property can't pay for health insurance with the living room .

so they realized not everything can be considered spendable for insurance so they purposely left the aca plans based on income not assets or even cash flow since many retirees live off cash set a side initially in a cash bucket . . .

just like with medicaid , the states do not want a bunch of retirees with no money to spend because either health insurance or medicaid required them to practically be impoverished to get help .

so all these tools and methods are left in place to be utilized by those smart enough to use the tools and laws left in place .

as you saw with the recent cut off of social security spousal ploys , once the authority's decide something is not used in the intended manner they can and will terminate it if they really wanted folks not to use them . .

Last edited by mathjak107; 04-09-2016 at 04:41 AM..
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Old 04-09-2016, 04:13 AM
 
Location: Central Massachusetts
4,800 posts, read 4,860,228 times
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Quote:
Originally Posted by Q44 View Post
I haven't posted in a very long time but this topic has come up so often recently that I've started rereading all of my retirement and social security guides. A lot of people make a lot of really good arguments for delaying and many of the arguments for taking early tend to fall back on "what if I die" or "I want what's owed me now". I keep hoping for a reason to draw early based on a good financial argument.

So here goes - I'm 57 and planning on retiring in 4 years at 61. As much as I'd rather not get too detailed I'll use numbers very close to the actual and would like to see if there's any reason I should delay. Our SS at 62 should be over $38k per year(I'm a max). Combined pensions are $32k per year for a husband and wife total of 70k. Pensions have no COLA but are full survivor adjusted. FireCalc has our expenses at $50k a year. Then there's the 800 pound gorilla, the 401k is closing in on the $1M mark. We figured we could draw 30k per year to add to our discretionary income and still stay in a lower tax bracket.

I've done calculations using the Kitces scenario and if we delay till 70 and FRA (wife), (using an inflation adjusted amount), and we both make it to 92 . . . Yeah we could end losing money depending on returns and inflation. When I prorate that amount over a possible 30 year retirement it doesn't scream "delay!" to me. I see my nest egg being used for discretionary spending till the point inflation raises our expenses to equal our SS and pensions. For 30 plus years I've tried to build the ideal three-legged stool where we're not more dependent on any one part.

So if you had a starting off point of $70k per year and a sizeable nest egg what would you choose, 62 or delay?
To give you my perception I would not take at 62 or 70. Honestly I would probably look at the time you are signing up for Medicare. It isn't that you need it for anything but it is at a point where you could use that income to pay for the Medicare parts B and D.
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