Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Many of the people replying here also replied to my post in the thread regarding when to apply for SS. Even though we'd probably do OK regardless of when we apply (62, FRA, 70) you all made some excellent points that have us thinking about delaying after all.
The ability to maximize Roth conversions by drawing additional funds in a lower bracket.
As a max earner with a working spouse the 8 year cost in withdrawals is about 300k, in return we get an additional 30k per year +8 years of colas, and colas for life on the larger amount. Our SS alone at 70 would be higher than our SS and pension at 62. We would still have more than two-thirds of original savings (hopefully).
Add in the pensions and we're drawing more using just SS and the pensions than we would using those 2 plus withdrawals. On top of that, even though we would be paying tax on SS, we would as folks pointed out only be paying on 85% of a larger source of income. Plus even in tax crazy NY, social security is not subjected to income tax.
Simplifying retrement finances. Having monthly fixed income coming in, with a nest egg that is hopefully growing - especially if we can convert it all to a Roth by then. I'd be happy to not have to keep watching the balance sheet and be really happy knowing my wife has (higher) income to depend on if I check out early.
Even though we have a good plan if we draw at 62, every Pro says it pays to delay providing you're in good health and can afford to delay. Every article, every book, they can't all be wrong.
Last point you folks made. You can always start by delaying and if the market tanks you can apply for SS. If your investments are doing well while drawing and delaying so much the better. The decision to delay is not binding.
Last point you folks made. You can always start by delaying and if the market tanks you can apply for SS. If your investments are doing well while drawing and delaying so much the better. The decision to delay is not binding.
Put your money to support the delay in something safe... a ladder of Treasuries if you like. There's actually less reliance on the markets with the delayed approach. You have a smaller account invested in stocks/bonds, a stash of safe securities to substitute for SS in the early years, and eventually you have a bigger SS check coming.
So in summary... you get a bigger spendable income, with less reliance on the stock market.
I think this is a very important point we could all use more education an reassurance about. I remember a great aunt who was adamant that you should NEVER dip into principal! Well, that makes sense if you want to keep the ENTIRE amount for inheritances.
BUT, if you "only" want the principal to last until you are safely "passed" then yes, you can go a bit into the principal and spend it down a little. Obviously that is a bit more anxiety producing as you don't know for a fact how long you'll live. But also, we aren't robots...you can spend less to begin with and increase depending on the markets or your situation.
If you've scrimped to save for retirement and you don't FULLY intend to give it ALL away, then you should enjoy what you have. It is a decision you can make and then spend accordingly without being overly anxious because you know the numbers behind the calculations.
good luck trying not to dip in to principal . there will always be both negative return years on stocks as well as negative real returns on fixed income .
there is no spending method that will give you enough to live on that does not use principal .
your draw would have to be so tiny that you would need another source of income like a pension to do it .
even higher rates likely wouldn't do it since higher rates go hand in hand with higher inflation and that can mean negative real returns
Last edited by mathjak107; 04-13-2016 at 02:08 AM..
Many of the people replying here also replied to my post in the thread regarding when to apply for SS. Even though we'd probably do OK regardless of when we apply (62, FRA, 70) you all made some excellent points that have us thinking about delaying after all.
The ability to maximize Roth conversions by drawing additional funds in a lower bracket.
As a max earner with a working spouse the 8 year cost in withdrawals is about 300k, in return we get an additional 30k per year +8 years of colas, and colas for life on the larger amount. Our SS alone at 70 would be higher than our SS and pension at 62. We would still have more than two-thirds of original savings (hopefully).
Add in the pensions and we're drawing more using just SS and the pensions than we would using those 2 plus withdrawals. On top of that, even though we would be paying tax on SS, we would as folks pointed out only be paying on 85% of a larger source of income. Plus even in tax crazy NY, social security is not subjected to income tax.
Simplifying retrement finances. Having monthly fixed income coming in, with a nest egg that is hopefully growing - especially if we can convert it all to a Roth by then. I'd be happy to not have to keep watching the balance sheet and be really happy knowing my wife has (higher) income to depend on if I check out early.
Even though we have a good plan if we draw at 62, every Pro says it pays to delay providing you're in good health and can afford to delay. Every article, every book, they can't all be wrong.
Last point you folks made. You can always start by delaying and if the market tanks you can apply for SS. If your investments are doing well while drawing and delaying so much the better. The decision to delay is not binding.
i thought about taking ss if the markets tanked but the more i thought about it the more it was the wrong thing to do .
spending down assets doing nothing vs stopping the growth on ss which may be the best deal and growth you are getting would be counter productive .with such high valuations odds are the next 8 -10 years will give us a return that is below average from stocks . it always has done that when valuations are high when you retire .
the good news is you always have choices along the way . being able to have the money for choices is very important in life and something i learned early on as a teen .
it stuck with me for life and my quest to be successful financially was never because money buys happiness , it was always because having money buys choices
Last edited by mathjak107; 04-13-2016 at 03:32 AM..
That's another point well taken. Money is a useful tool, nothing more. It is easier to consider it just that, when you have enough, and it's not a source of worry or a cause of hardship. No one says "Love of a job that also pays well is the root of all evil" or "Ownership of a complete toolkit that allows you to make a living is the root of all evil", it's greed or coveting money that is. The difference is monstrous. In the PBS special that Belladl posted about, some powerful adult realities that I always suspected, but never knew were researched, were pointed out.
The first one was that people tend to always think that what decision they make is right, simply because it feels intuitively good or right, regardless of any actual proof or real reasoning. Similar to the sun & planets revolving around the earth (though that one at least had perspective). They seldom are.
The next was the difficulty most people have living for a more abstract future. The now and immediate future are overwhelmingly dominant.
There were others like fight and run, and refusing to see the math that if you live a longer retirement, that you have to earn more or work longer for the same retirement as someone that lives shorter, I did know about, but it boils down to that we are not naturally wired to make abstract decisions without analysis and facts presented plainly, and execution is usually not easy. It is used against us all the time, like the smell of fresh baked cookies at an open house, free food and incidentals when shopping, or car salesmen selling based on emotion (which is how the vast majority of cars are purchased) instead of price you can actually afford or use. A brain wired like an engineer's, where younmake decisions daily on facts and math, has an easier time executing money as a tool than artistic and soft science types, where the career objective is not financial or number based. Many great compassionate doctors are horrible financial decision makers.
When money is a worry, it takes on different importance. It becomes evil, or even the opposite, the perceived answer to everything. How many times do we read a poster saying they live on $2k a month, and if only they had $4k they'd be rich, and so on up the income ladder. When you really can control your life and money is just a tool, it is easier to use it as such. In the "Millionaire Next Door", those are the successful no frills, financially sound ones, living not below their means, like we always say, but actually AT their correct means, which just happens to be far less than ones gut tells you should be right. Emotions cloud judgement, and seeing in the outside people "just like you" living it up, when you are trying to be more responsible confuses your brain. The common "Well how are THEY doing it then?", is an old joke. The answer that we usually learn too late, is they aren't. They are robbing Peter later, to pay Paul, now.
People that have the fewest funds typically fall back on statements like "They worship money", or "Their life revolves around material things", which while sometimes true, is typically not true for the millionaire next door type. They ARE millionaires because they don't worship money and didn't buy a lot of useless material things.
And this explains so much of the "I want whats owed me, now" and the "have to break even" mentality that is so hard to shake. We just aren't naturally wired for it.
Last edited by Perryinva; 04-13-2016 at 06:06 AM..
That's another point well taken. Money is a useful tool, nothing more. It is easier to consider it just that, when you have enough, and it's not a source of worry or a cause of hardship. No one says "Love of a job that also pays well is the root of all evil" or "Ownership of a complete toolkit that allows you to make a living is the root of all evil", it's greed or coveting money that is. The difference is monstrous. In the PBS special that Belladl posted about, some powerful adult realities that I always suspected, but never knew were researched, were pointed out.
The first one was that people tend to always think that what decision they make is right, simply because it feels intuitively good or right, regardless of any actual proof or real reasoning. Similar to the sun & planets revolving around the earth (though that one at least had perspective). They seldom are.
The next was the difficulty most people have living for a more abstract future. The now and immediate future are overwhelmingly dominant.
There were others like fight and run, and refusing to see the math that if you live a longer retirement, that you have to earn more or work longer for the same retirement as someone that lives shorter, I did know about, but it boils down to that we are not naturally wired to make abstract decisions without analysis and facts presented plainly, and execution is usually not easy. It is used against us all the time, like the smell of fresh baked cookies at an open house, free food and incidentals when shopping, or car salesmen selling based on emotion (which is how the vast majority of cars are purchased) instead of price you can actually afford or use. A brain wired like an engineer's, where younmake decisions daily on facts and math, has an easier time executing money as a tool than artistic and soft science types, where the career objective is not financial or number based. Many great compassionate doctors are horrible financial decision makers.
When money is a worry, it takes on different importance. It becomes evil, or even the opposite, the perceived answer to everything. How many times do we read a poster saying they live on $2k a month, and if only they had $4k they'd be rich, and so on up the income ladder. When you really can control your life and money is just a tool, it is easier to use it as such. In the "Millionaire Next Door", those are the successful no frills, financially sound ones, living not below their means, like we always say, but actually AT their correct means, which just happens to be far less than ones gut tells you should be right. Emotions cloud judgement, and seeing in the outside people "just like you" living it up, when you are trying to be more responsible confuses your brain. The common "Well how are THEY doing it then?", is an old joke. The answer that we usually learn too late, is they aren't. They are robbing Peter later, to pay Paul, now.
People that have the fewest funds typically fall back on statements like "They worship money", or "Their life revolves around material things", which while sometimes true, is typically not true for the millionaire next door type. They ARE millionaires because they don't worship money and didn't buy a lot of useless material things.
And this explains so much of the "I want whats owed me, now" and the "have to break even" mentality that is so hard to shake. We just aren't naturally wired for it.
everyone has to decide their priority's and what works best for them . retirement planning can be as simple or as complex as you want it to be .
a lot of advisers are doing lifestyle planning for retirees .
basically working out draw rates front loading things so they can do many of the things they want to do early on with a planned slow down in spending later on .
they integrate ss , taxes and assets in to one comprehensive package
Tap your tax-deferred accounts first, and have all your remaining tax deferred accounts rolled into a Roth when you start collecting SS. Otherwise you will end up paying federal income tax on up to 85% of your SS, which can be a big financial hit. Thanks to pensions and tax deferred savings, that little gotcha costs my wife and I $8000/year. I didn't know about it when I was planning for retirement.
actually it isn't money that is usually the root of all evil , more often then not it is lack of money that is
The quote is actually "The love of money is the root of all evil."
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
