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Agreed that waiting till beyond FRA is good sense. And filing at 70 is best- unless you are not working during the 8 years of delay. If you're not, you will end up drawing years of additional living expenses out of some other investments that you would not have had to if you had filed earlier. Case in point; looks like my numbers are similar to yours, but I will walk at FRA, and we will file at 67, not at 70. If we file at 70, we will have burned through $84K in other investments to compensate for the same yearly draw we would have had if we filed at 67. Granted, filing at 70 would make a few thousand per year more income, but it would then take us until age 82 for our 'age 70 file' income to surpass our 'age 67-file' income+$84000; it's just not worth it to us, and I assume, to others that had similar math.
YMMV
I look at it this way: after 70, most people's spending goes down just because they get old and require/desire less things. So what you collect after 70 doesn't make that much difference (as long as you've put away enough non-SS money, best not unnecessarily spent between 67 and 70). It's in your 60's where you'll most likely spend the last decade of your relatively "big spending" years. At 65 I'm already spending way less than I did at 60, simply because I've neither the energy or interest to get into elaborate things...downsized home, one car instead of two, not interested in a big remodel job anymore, tossed all my big tools and yard equipment, threw out the pressure cooker I bought 4 years ago, wear three things instead of 15 things..etc.
Most people's 70's are not like that life portrayed in the pharmaceutical commercials. You'll see.
The actual number is 6% of all wage earners hit the $118,500 Social Securitycap. That percentage has been consistent for decades. That's different from median household income where the vast majority in the top-20% are dual income.
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With only 6% of all wage earners hitting the cap, I have to wonder how raising or eliminating it is going to make the huge difference in closing the SS funding gap that so many people claim. I am not opposed to raising or eliminating the cap, but I see it as one adjustment among several, whereas some advocates act like that's all that would have to be done.
The limits on the amount of additional Social Security revenue are even clearer when we consider that many of the 6% must exceed the cap by only a small amount. It's not like 6% of all wage earners make a million dollars a year in wages/salaries.
You have to remember that is of all wage earners. The median is under $30k largely due to part time wages. Anyway, we are a bigger portion of the "actual full time and will put in a lot of good years" crowd than the 6% figure might indicate. We make most of the discretionary money so we are supposed to pay most of the taxes; this is not a hard concept to understand. It is a hard concept to like. I don't like it but I cannot logically reject it. I want to feel like they really should start with people making more; I have special circumstances because blah, blah, blah. They are not so special.
I look at it this way: after 70, most people's spending goes down just because they get old and require/desire less things. So what you collect after 70 doesn't make that much difference (as long as you've put away enough non-SS money, best not unnecessarily spent between 67 and 70). It's in your 60's where you'll most likely spend the last decade of your relatively "big spending" years. At 65 I'm already spending way less than I did at 60, ....... You'll see.
You are only accounting for discrectionary extra spending. That is not what delaying collecting SS to 70 is about. I agree that the best time for the expensive discrectionary stuff is early in your retirement as, like you said, that's the youngest and most energetic you will ever be. I've saved during my working career to spend on what I Want in those earlier retirement years AND still afford to delay to 70, with money to spare as savings afterwards that I will have no need to touch, and indeed add to because of the excess income I will have. I saved the bulk of it to USE it, not have it sitting in an account for some nebulous unknown so my heirs can gleefully spend it after I die. My savings is to be USED to provide the most for me (and DW, by extension) while I am alive. Delaying to 70 is by far the best annuity that money can buy. There is no argument about that. The argument is whether you have enough money to buy that annuity. Not using ample savings to purchase it because you don't want to reduce it by $84k is not a reaso ...unless you would only have $100k left. That is a judgement call.
So whether $84k is a lot or a little percentage of your savings determines whether it makes sense to delay the extra 3 years. That is what I mean by "assuming you can afford it". Having just enough to delay is not enough. The point should always be to maximize your income, as that will always protect you, unless you are concerned with leaving money to heirs. If you still have at least 200 or 300k left in savings, it makes more sense to USE $84k to delay to 70. If you thought it was smart enough to delay from 62 to FRA for the increased 6% a year, then how is it not even smarter to delay for 8% a year from FRA to 70? THAT is where the big payoff comes from.
Your assessment makes it sound like you will be forced to spend more if you have more income and less savings. You don't spend any different (or should not) regardless, because one doesn't spend assuming they will die, one spends assuming they will need the money forever.
In a different thread, I point out that most people don't realize that SS projected numbers are in todays dollars, with no inflation assumed. The actual check received at 70 will be far larger than the predicted amount, where as the age 62 check will be right on. I would never suggest to drain all your savings to delay to 70, everyone should have an emergenct fund to handle them. But unless you are planning to die at 80, or less, and have all your money spent by then, then you will be in better shape financially over all having more excess income for the rest of your life, than you will be by having just enough income and a measly extra $84k invested for a few years. By the time you are in your late 70s, unless you are an exceptionally successful and active investor, you will WANT just as large a steady effortless income that you can can get, which will always allow you to bank the excess, if you don't need it all, and a conservative savings for just in case, that you never have to touch,m instead of having a smaller income and a slightly larger savings that you have to draw from for income, and actively manage in your old age. Savings can disappear in a heartbeat, through tragedy or unforeseen expenses. The higher income will be there for life. ...You'll see.
Last edited by Perryinva; 06-08-2016 at 04:08 AM..
I look at it this way: after 70, most people's spending goes down just because they get old and require/desire less things. So what you collect after 70 doesn't make that much difference (as long as you've put away enough non-SS money, best not unnecessarily spent between 67 and 70). It's in your 60's where you'll most likely spend the last decade of your relatively "big spending" years. At 65 I'm already spending way less than I did at 60, simply because I've neither the energy or interest to get into elaborate things...downsized home, one car instead of two, not interested in a big remodel job anymore, tossed all my big tools and yard equipment, threw out the pressure cooker I bought 4 years ago, wear three things instead of 15 things..etc.
Most people's 70's are not like that life portrayed in the pharmaceutical commercials. You'll see.
Everything is so dependent on individual circumstances, and this board has a real broad series of user cases; it is a real gem for getting different viewpoints. Some people have lots of money put away for retirement, some have none. I am in the lower-middle. If I spent the $84K I alluded to in my post, I would be basically out of money except for SS. I know I probably won't spend much in my latter years, but I am also very aware of what a simple health-care scare can cost (beyond medicare), and I want at least something to fall back on for help. I had a heart-related scare due to overwork for a contractor a few years ago; 4 hours in the ER was over $9,400. It was a simple event, not like a costly event that happened to my MIL. Keeping my fingers crossed that mine 'may' not happen again, but if it does, we don't have family or anyone else to turn for help with care or $$, so we are planning the best we can. Luckily, we don't use any pharmaceuticals at all; we do have good health.
For now.
Last edited by MichiganGreg; 06-08-2016 at 04:13 AM..
I look at it this way: after 70, most people's spending goes down just because they get old and require/desire less things. So what you collect after 70 doesn't make that much difference (as long as you've put away enough non-SS money, best not unnecessarily spent between 67 and 70). It's in your 60's where you'll most likely spend the last decade of your relatively "big spending" years. At 65 I'm already spending way less than I did at 60, simply because I've neither the energy or interest to get into elaborate things...downsized home, one car instead of two, not interested in a big remodel job anymore, tossed all my big tools and yard equipment, threw out the pressure cooker I bought 4 years ago, wear three things instead of 15 things..etc.
Most people's 70's are not like that life portrayed in the pharmaceutical commercials. You'll see.
you can spend a lot more earlier by delaying . you can spend down farther while waiting for ss because the almost 70% bigger check you get from 62 to 70 as an example will refill what you spent down earlier .
because of sequence risk you need to keep a lot more powder dry and unspent when utilizing the markets and interest rates then you do using more ss which has no sequence risk .
we have a much bigger budget allocated now while we are younger just because we will refill later with bigger ss checks , a possible drop in spending and reduced sequence risk requiring smaller draw rates .
our budget is 1k a month more day 1 in retirement by delaying as opposed to taking ss at 62 .
...But unless you are planning to die at 80, or less, and have all your money spent by then, then you will be in better shape financially over all having more excess income for the rest of your life, than you will be by having just enough income and a measly extra $84k invested for a few years.
Sure would be nice if it were possible.
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