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here is a real return chart based on roi depending how long you live . at age 90 you can see a 5% real return and 6% at 95 .
considering that for a couple seeing age 90 for one of them is 47% , almost a coin toss so that is pretty high odds . those returns rival a balanced fund with no risks like the funds .
mathjak, what is on the x-axis? It looks like years, but years from what event to what other event?
mathjak, what is on the x-axis? It looks like years, but years from what event to what other event?
I am not mathjak, but that is years past 62 (years of delay past first availability).
One reason I am very likely to delay is the "certainty factor". If I withdraw to cover expenses at 64 and buy an annuity to cover 65-69 then I will have my income stream pretty much set in stone (yes, things could happen to affect it). The figures look like enough to fund a suitable retirement and I can just go be retired and quit worrying about it (I will still have some in an account to fiddle with).
But remember that "break even at age 80" graph assumes you are investing your entire SS amount and betting on getting that return without fail, year after year for 18 years, where as the SS "ROI" is set in stone. Personally, I find it far easier to manage my savings KNOWING what the final income outcome exactly will be, vs actively managing my savings for maximum ROI.
AND AS ALWAYS, I'm not living my life assuming I will die at 79 or younger and not "break even". The increased safe guarded income is everything. Leaving more to my heirs is not even on my radar. And from age 70 on, I will not have to touch my savings at all in order to live well. So unlike if I collected at 62, where I have to draw on my savings forever to have the same income, which also requires paying more taxes on increased IRA withdrawals, by delaying to 70 management and withdrawals from my savings are for "what if" hedges, emergency and non essential purchases. I never have to worry that my standard of living will be in danger because of a mismanagement or loss of my savings. I will have used it for exactly what I was saving for...to ensure a comfortable solid, even mostly COLA adjusted income for the rest of my life, and for my wife.
Now, if my entire portfolio was already, say, low or no tax municipal bonds, so the investment unknown factor, RMD reduction, and tax reduction factors were negated or even greatly reduced, then I might go ahead and collect at 62. The emotional "safe sure thing" would be very compelling when the rest of my income was already optimized for taxes and safety. But I wasn't saavy enough to save that way, and all my savings, except about $100k in a Roth, will be fully taxable. Even performing Roth conversions, the bulk will still taxable, and have to be managed.
Last edited by Perryinva; 06-06-2016 at 06:17 AM..
Virtually none. Only statistics off the average. I can't believe I'm the only one.
My guess would be you just are not aware that you know some. If you are as outspoken in person as you are here about what you think people deserve if they have nothing, my guess is people are just choosing not to engage.
Exactly!! The 8% is fixed (as of now), per year from FRA TO 70. It is NOT an 8% ROI, just an increase based on, thankfully (for those that will collect) an outdated life expectancy.
I realize it is not an 8% ROI - you get 8% more each year, but you get it for fewer years. The tradeoff is supposed to be actuarially fair, but as you say, that is based on old life tables.
Yup, outdated life expectancy tables and a current rate that is higher than it would be if it were indexed to current real returns after inflation. The higher you are on the tax tables, and the more you have saved subject to RMDs, the more compelling delaying to 70 becomes, UNTIL you get to the point where SS is not a factor at all in your retirement income requirements, then the more compelling approach would be to collect it early.
But remember that "break even at age 80" graph assumes you are investing your entire SS amount and betting on getting that return without fail, year after year for 18 years, where as the SS "ROI" is set in stone. Personally, I find it far easier to manage my savings KNOWING what the final income outcome exactly will be, vs actively managing my savings for maximum ROI.
AND AS ALWAYS, I'm not living my life assuming I will die at 79 or younger and not "break even". The increased safe guarded income is everything. Leaving more to my heirs is not even on my radar. And from age 70 on, I will not have to touch my savings at all in order to live well. So unlike if I collected at 62, where I have to draw on my savings forever to have the same income, which also requires paying more taxes on increased IRA withdrawals, by delaying to 70 management and withdrawals from my savings are for "what if" hedges, emergency and non essential purchases. I never have to worry that my standard of living will be in danger because of a mismanagement or loss of my savings. I will have used it for exactly what I was saving for...to ensure a comfortable solid, even mostly COLA adjusted income for the rest of my life, and for my wife.
Now, if my entire portfolio was already, say, low or no tax municipal bonds, so the investment unknown factor, RMD reduction, and tax reduction factors were negated or even greatly reduced, then I might go ahead and collect at 62. The emotional "safe sure thing" would be very compelling when the rest of my income was already optimized for taxes and safety. But I wasn't saavy enough to save that way, and all my savings, except about $100k in a Roth, will be fully taxable. Even performing Roth conversions, the bulk will still taxable, and have to be managed.
it isn't based on investing the ss money . it is based on the assets you spend down delaying coming from a balanced portfolio with a 6% return . it does represent what we will be doing once we have to refill the cash we set a side .
that calculation above was also run with TIPS . break even was two years sooner so at best you will be within a year or so with that balanced portfolio compared to the projections .
Last edited by mathjak107; 06-09-2016 at 03:46 AM..
Yup, outdated life expectancy tables and a current rate that is higher than it would be if it were indexed to current real returns after inflation. The higher you are on the tax tables, and the more you have saved subject to RMDs, the more compelling delaying to 70 becomes, UNTIL you get to the point where SS is not a factor at all in your retirement income requirements, then the more compelling approach would be to collect it early.
You have to be pretty rich for $64,000 a year (my expected SS benefit at age 70, plus my wife's benefit) to mean nothing.
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