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You have said this a number of times. But just to clarify to those who may not understand, if I have this right what you are saying is if you take the money you are surrending in an annuity and simply spend it at the rate the annuity and reduced SS will be paying you, allowing you to delay SS, you will he better off mathmatically in the long run with the larger COLA adjusted tax free SS benefit.
Me? I have pretty much decided to look closely at filing when I finally retire, maybe age 65 or so, as I am uncomfortable drawing down a 401 that won't be a million dollars. If I am retired at 62 it won't be by choice and I may need to form another plan.
Just add up the total dollars you got from ss over the 8 years . Lets say it was 120k .
If you tried to plunk down 120k for an annuity it would generate less cash flow than delaying ss over those years. It would not be cola adjusted nor pass to a spouse.
For what you give up in checks ss is the best annuity product money can buy
you can suspend at any age wih in 12 months of filing to start ss and give back the money to reset the clock .
but you have no option to stop ss after 12 months , until your fra . my wife is doing that now . she filed at 62 and collected to fra . now she can suspend it and let it grow to 70 . no money gets paid back and nothing is retro like in the first year .
you can't stop your benefit until you are at least fra except for the 12 month pay back period the first year you file early . .
Mathjak, if the top earner decides to suspend at age 68 and gain another 8% a year until 70 (16% total), I understand that the spouse's benefit would also be suspended as of the May 2016 change.
Let's say the spouse's benefit is a combo of the spouse's earned benefit and spousal benefit:
1. Could the spouse go back and claim their own earned benefit while suspended or would nothing be claimed during the suspension?
2. Would the spousal benefit rise and then be 50% of the top earner's benefit at age 70?
3. So technically the couple would gain 16% on the top earner's benefit and half that sum (8%) for the spouse for a 24% increase total for the couple following a 2 year suspension. Is this correct?
My relative has found the SS office to give incorrect info on several occasions unfortunately and is totally frustrated. Thanks for any help.
I am retiring 12/31/17 when I am 62. I plan on putting in for my SS to start the month after I retire.
I hear horror stories about how long it takes for a federal pension to be calculated and started, so hopefully the SS will tide me over until I get my pension.
Interesting thread. Appreciate all the viewpoints presented. There are certainly times where it is warranted to start drawing SS as soon as available, yet I'm surprised how many here are voicing that opinion. Expected more to lean towards waiting ... like I said, interesting thread.
For me, I plan on doing whatever I can to delay drawing SS until age 70. While I realize there are no guarantees, I work hard (exercise/nutrition/etc) to take care of myself for excellent physical health; barring the unforeseen I expect to live well past the break-even point. People are living longer & my health age is 15-20 years below my actual age so I expect to be on the good end of the lifespan curve.
In the meantime, I live well below my means yet don't want for anything. I drive a boring car that runs great, keep my expenses low & don't carry any debt. I go out with friends when I want, travel frugally yet frequently when time allows. A few people mentioned having that mindset ingrained so as to not create problems when retirement arrives - that's me, similar to the Dave Ramsey or Mr. Money Mustache approach. Even if SS at age 70 means a nice bump in income, that doesn't mean it gets spent unless necessary (or I choose to do something extravagant which is likely a one time thing). I'm not suddenly going to start spending a bunch more.
When Social Security arrives, in my mind it will be more of an insurance policy than anything. I've tried to save & plan as if it's not going to exist. If necessary I will spend it on healthcare or unforeseen costs, otherwise I will save what I don't spend for important situations. I am definitely one of those people who don't have to spend it just cuz I've got it. That said, if I really want something I get it - however, I force myself to wait by planning ahead & sacrificing something else (i.e. eating out, frivolous expenses, etc) to save until I can pay for it outright. After saving, I bought my car new with cash when I happened to find a deal where I could get a new car for a used-car price. (Sticker was ~$20K, I got it for just over $11K, w/TTL $12.6K; it's been fantastic for almost 8 years - always a used car guy previously.) It's amazing how much leverage saving into a reserve fund gives you rather than having a large car payment every month. Yes, there is the odd deal that jumps up & presents itself, but if I do that I sacrifice to save what I paid up front until my reserve is replenished.
How much should one plan on spending towards Medicare & drug plan payments? That's a discussion I'll likely have with family when I travel to visit sometime soon ...
Sometimes paying off your mortgage early or paying for new cars with cash isn't the best choice. We are debt free, and there is a good feeling about living debt free. Our 15 year mortgage was paid off in ten years. However, there is a price to pay to live debt free. For example, we took out money from the market to pay for two new cars with cash. If we paid off the cars with very low interest loans, we would have been better off economically. If the money was left in the market for five years, the value in those stock blocks would have doubled. We essentially paid double for our new cars considering the return we could have received in the market.
Over more than a 20 year span our return in the market is about 8%. Some years are much higher, as high as 36%, some years are a loss. The last major downturn in 2007 - 2008, we were down hundreds of thousands of dollars. It's a little depressing when your losses are approaching the total value of your home! But the market came back, plus more. Because we left our money in the market we did not lose. Over more than the past two decades, our retirement accounts double in value every 8 to 10 years on average. The number of years for the retirement accounts to double in value will likely increase somewhat when we stop contributing to the retirement accounts when we are both retired. The rapid growth of the retirement accounts is another reason to refrain from withdrawing from the retirement accounts, and collect the Social Security benefits when we retire, not waiting till age 70. After living well below our means for decades, it's hard to spend a lot of money, but we'll need to spend more, since we can't take the money with you when you die.
An annuity is a low risk investment, but has a very low yield. If you have a very low risk tolerance, maybe the low return rate of an annuity your only choice that's acceptable to you. However, if you take the Social Security benefit when you retire, instead of waiting till age 70, you can generate a lot of income from your Social Security benefit in the market if the money is carefully invested, which will effectively increase the 'break even' point in time farther into the future, in our case, into our mid or late 80's.
As you said, there are no guarantees. If you wait to collect your Social Security benefits, you might lose. You might die early from a number of causes, including accidents. You are gambling that you will live till your early or mid 80's, depending on your numbers. Your health could take a serious downturn, causing you to have no quality of life, then the higher Social Security money then has no value to you, unless you choose to continue living with a very low quality of life. If you end up in a nursing home, the nursing home takes the higher Social Security benefit and you lose. The Social Security benefits could be cut to pay for all the illegals. You might say if you die early, you won't miss the money, but you would have lost an opportunity in your life to have used the money to improve your life, instead of leaving the money on the table.
If you collect the Social Security benefits when you retire, instead of waiting, you are certain to receive the money each month instead of gambling to get the possible higher Social Security benefit that might or might not occur.
I am still waiting to hear the ramifications of dying. All who can afford to delay take the same income right from day 1 and just use the bigger ss check to replace it down the road.
In fact they can spend more and enjoy more money day 1 of an early retirement because draw rates can be higher delaying.
Make a list of pro's and cons of dying before breaking even vs delaying especially if married.
I think you will find a very lop sided list as long as you can afford to have the choice of delaying .
I can think of only 1 negative to filing early if i and my spouse die early. Heirs get a bit less. But i can think of many many resons delaying is a plus
Mathjak, if the top earner decides to suspend at age 68 and gain another 8% a year until 70 (16% total), I understand that the spouse's benefit would also be suspended as of the May 2016 change.
Let's say the spouse's benefit is a combo of the spouse's earned benefit and spousal benefit:
1. Could the spouse go back and claim their own earned benefit while suspended or would nothing be claimed during the suspension?
2. Would the spousal benefit rise and then be 50% of the top earner's benefit at age 70?
3. So technically the couple would gain 16% on the top earner's benefit and half that sum (8%) for the spouse for a 24% increase total for the couple following a 2 year suspension. Is this correct?
My relative has found the SS office to give incorrect info on several occasions unfortunately and is totally frustrated. Thanks for any help.
On our way out , we are on vacation in nashville. I will address these later unless someone else chimes in
......For example, we took out money from the market to pay for two new cars with cash. If we paid off the cars with very low interest loans, we would have been better off economically. If the money was left in the market for five years, the value in those stock blocks would have doubled.
.
Or dropped in half if the stocks tanked. What's the point of that? Everyone is a perfect Monday morning quarterback!
Quote:
Originally Posted by davephan
......The last major downturn in 2007 - 2008, we were down hundreds of thousands of dollars. It's a little depressing when your losses are approaching the total value of your home! .
Even more depressing if THAT is the source of your income. You risk that scenario for your entire life, vs only the 8 hears you are delaying.
Quote:
Originally Posted by davephan
......After living well below our means for decades, it's hard to spend a lot of money, but we'll need to spend more, since we can't take the money with you when you die.
.
You got that right. So why gamble entirely on the stock market. There is this little thing called diversification of risk you may have heard of....
Quote:
Originally Posted by davephan
....An annuity is a low risk investment, but has a very low yield. If you have a very low risk tolerance, maybe the low return rate of an annuity your only choice that's acceptable to you. However, if you take the Social Security benefit when you retire, instead of waiting till age 70, you can generate a lot of income from your Social Security benefit in the market if the money is carefully invested, .
Ahh so you are saying that ANY kind if annuity is a poor investment for the future...and if the SS funds are NOT well in ested and you lose allmor most of it? We proponents if delaying ALREADY have a lot in the stock market. All ones eggs in the same basket???Really?
Quote:
Originally Posted by davephan
You are gambling that you will live till your early or mid 80's, depending on your numbers. Your health could take a serious downturn, causing you to have no quality of life, then the higher Social Security money then has no value to you, unless you choose to continue living with a very low quality of life. If you end up in a nursing home, the nursing home takes the higher Social Security benefit and you lose.
.
But you are gambling that you WILL die early and should spend accordingly? If you become me tally deficient or unable toni best carefully, then whay happens to your stock trading? If you have the maximum SS benefit,nthe owrst that can happen is you...ummm...still have the maximum SS benefit..
Quote:
Originally Posted by davephan
The Social Security benefits could be cut to pay for all the illegals. You might say if you die early, you won't miss the money, but you would have lost an opportunity in your life to have used the money to improve your life, instead of leaving the money on the table..
Total supposition. It matters not one iota if you are dead and you leave loney on the table.
Or dropped in half if the stocks tanked. What's the point of that? Everyone is a perfect Monday morning quarterback!
Even more depressing if THAT is the source of your income. You risk that scenario for your entire life, vs only the 8 hears you are delaying.
You got that right. So why gamble entirely on the stock market. There is this little thing called diversification of risk you may have heard of....
Ahh so you are saying that ANY kind if annuity is a poor investment for the future...and if the SS funds are NOT well in ested and you lose allmor most of it? We proponents if delaying ALREADY have a lot in the stock market. All ones eggs in the same basket???Really?
But you are gambling that you WILL die early and should spend accordingly? If you become me tally deficient or unable toni best carefully, then whay happens to your stock trading? If you have the maximum SS benefit,nthe owrst that can happen is you...ummm...still have the maximum SS benefit..
Total supposition. It matters not one iota if you are dead and you leave loney on the table.
Lonely baloney money. Never answer a post while waiting for lunch without your glasses!!!LOL.
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