Another delaying Social Security topic (spouses, retired, graduate, payment)

[mathjak107]

it is what it is and it holds true.

in fact figuring a 6% cagr return from a balanced portfolio that is spent down for 8 years while delaying ss if one person in a couple hits 90 odds are you are ahead under far more outcomes than the balanced portfolio would be .

plus ss has no sequence risk and allows a higher spending rate. as an mba student you hopefully understand sequence risk when spending down .

[bigbear99]

Your model, if I understand it correctly, has a 3% inflation adjusted return in real dollars. Pretty modest in today's environment. Sequence risk? What about the risk that SS will be "reformed"?

22 years is a long time at my age, or anyone 62 or over, and this only gets longer with better investment performance. In fact, let's look at real survival data. SSA says a 62 year old can expect to live 22.78 years, just about break even. https://www.ssa.gov/oact/STATS/table4c6.html Too biased for you? Another source says Life Expectancy (Female): 22.7 years Life Expectancy (Male): 19.8 years. http://life-span.healthgrove.com/l/63/62
You have better numbers? Let's show them. Not just take your word.

You still have not said anything about couples...seems irrelevant.

[mathjak107]

there is always risks whether you delay or not. longevity risk , risk to the ss system and market and interest rate risk along with inflation risk are all unknowns but based on what is known ss IS NOT NEUTRAL.

there is a slight edge to delaying.

i certainly did mentioned couples above , with two horses in the race with one bet a 65 year old couple still has pretty much a coin toss chance of one hitting 90 . but to be a head of the game you don't even have to go out that far .

but the difference in money is really not the reason we are delaying .

our reason for delaying is we will be far less dependent on the whims of the markets . our draw falls from 3.50-3.75% to less than 2.50% for what potentially could be decades of time by delaying .

reducing draw reduces sequence risk greatly . we can see 35k swings in a day and we are not aggressively invested at all .

my wife is far more comfortable being less dependent on the markets as we age and is far more comfortable with the income being much more check and less markets . .

[bigbear99]

Not if you'er mail, so it seems.

You still have not said anything about couples...I'm waiting. Can you explain your bold effort to make "around 90" the new 84? Seems like fake news to me.

[mathjak107]

look at the chart i posted above on life expectancy , post #5 . the fact is either one in a couple can outlive the other potentially. that greatly increases life expectancy odds beyond the odds of a female alone . if you don't understand why , google it .

odds of a male seeing 90 -21% odds of a female seeing 90 -33% odds of a couple seeing 90-47%

[bigbear99]

So what? How does it affect my benefit if my spouse outlives me? or vice versa? You need to explain.

Bonus question: How do 21% and 33% add up to 47%. I think Morgan Stanley is wrong. Please explain. And it is NOT the couple seeing 90. the odds for that are a little less than 10%. I think you mean the odds that one of the couple are alive.

[mathjak107]

read what i wrote , i said the odds of one in a couple hitting 90 is 47% .

how does it effect a benefit ? the survivor benefit of the higher earning spouse gets paid out for more years . i may crap out , but my 70 benefit goes to my wife . she statistically can collect that higher benefit for years longer even if i die . if i live than i am the one collecting my 70 benefit longer .

google how couple life expectancy calculates out . you don't add them together .

there is statistically an amount that gets added to the female life expectancy because you have one bet and two horses and the husband can and does outlive the wife .

[matisse12]

Just a reminder that delaying taking Social Security is not always just a matter of being able to afford to do so nor a matter of just wanting to wait for the monthly sum to grow larger -

it can be a decision that becomes unexpected due to a change in one's personal health where holding one's job becomes too difficult physically (or mentally) - a decision to quit a particular job or quit working which one never intended or expected to do at the earlier age. So any planning on the opposite becomes unfulfilled.

[mathjak107]

in order to delay ss safely while not working you need the assets to lay out to do so . it would be a bad idea to delay ss and spend down your assets dangerously low doing so .

in order to delay filing while not working you need to have that choice and being under funded would not really be having a choice

[bigbear99]

mj107, who said anything about adding? Not me. I already know statistics well enough to know how these things are calculated.

Meanwhile, I grant you the survivor issue, but you over-simplified it. The statement should be that if the higher benefit personis likely to be outlived by their spouse, then their spouse would come out ahead by claiming a spousal benefit. However, you now have two income streams to deal with, and I don't have the patience to develop a spreadsheet that tells me what works, since this is very benefit and age dependent.

There may well be rare circumstances where delay makes financial sense, but there are many where it does not. You only modeled a single person annuity stream, where things are break even under normal assumptions, as I've pointed out and your data supports.