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View Poll Results: At what age did you start receiving social security?
Before 62 13 8.84%
62 63 42.86%
63 6 4.08%
64 7 4.76%
65 11 7.48%
66 22 14.97%
67 4 2.72%
68 4 2.72%
69 1 0.68%
70 13 8.84%
After 70 3 2.04%
Voters: 147. You may not vote on this poll

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Old 08-27-2017, 11:56 AM
 
Location: SoCal
13,189 posts, read 6,301,958 times
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Honestly, the rich don't really worry about SS. Let's not get carried away here.
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Old 08-27-2017, 06:00 PM
 
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Quote:
Originally Posted by BabyJuly View Post
Mathjack
I have a new question about SS.

I believe I can afford to delay SS to FRA, if I needed to. I just turned 59 and my FRA is 66 and 8 months (almost 8 years). I have the cash and non-retirement investment assets to draw down and pay myself an income of 50K per year. I don't work.
However, I had ideas of taking SS when I am 65, eligible for Medicare, and will also receive a small pension of $465 per month. I'd also start distributions from my Retirement accounts.

My question is about the effect of not working on my SS estimated benefits.
Beginning this year, 2017, my earned income will be 0.

SS has calculated my numbers based upon me making estimated taxable earnings of $118, 500 per year until FRA:
Age 62: $2021 per month
Age 66 8 mos, FRA: $2867
Age 70: $3663

Should I expect to not receive these SS numbers, now that my income will be 0 for now on? Would taking SS at age 65 be significantly less than at 66 and 8 months?

I definitely am not planning to wait until age 70. Dad died at 76, Mom at 69. Grandparents all died in their 70s.
Thanks!
i didn't work for almost 3 years before filing and my difference was just a few dollars . it was so small i don'y even remember what it was
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Old 08-27-2017, 06:05 PM
 
71,457 posts, read 71,629,249 times
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Quote:
Originally Posted by Cabound1 View Post
I honestly don't even know where to go with this, but I'll offer this....

I absolutely agree that it is a moot issue for those who cannot live on a 62 year old payout and whatever other income streams they have. And that's probably the biggest group of people in the US. They have to delay.

Let's go to the other side....those who approach 62 with your 750k number in liquid, investable assets and can easily live on the returns that 750k provides. Note I did not specifically mention annuities, just income producing liquid assets.

That is the group that it makes sense not delaying until 70, imo. And incidentally, that is the group that I was referring to in my original posts. Sorry if that wasn't clear. For those people it IS about the break even point because they are essentially asking a question about how to grow their nest egg. The question is basically "will I live past the break even point" . If the bet is no I won't, take SS and die with a bigger nest egg than if you had delayed. And if you look at some of the charts mathjak provided (maybe in another thread?) the breakeven point , even with the very conservative assumptions the Wall St gang has incentives to provide, the break even point is mid eighties.

Btw, I used to be part of that wall st gang. The numbers they provide are mathematically accurate, no disputing that. But whether explicitly stated or not, the calculations often involve confidence intervals, i.e., 95% chance of this happening, 90% chance of that happening, etc. If you are part of that second group I mentioned, where failure to make the right bet simply means a smaller nest egg and no lifestyle implications, why wouldn't you take a bet that has a greater than 50/50 chance of success?
try running the numbers in something like firecalc . delay ss 8 years while spending down and depending on what your social security is you will be surprised how many rolling time frames an amount like 750k saved would have failed already . you can't just throw numbers out without knowing what the income draw is or the social security amount

if you need to lay out 40% of savings to delay you can't afford to do it . our amount at 70 would require over 800k just to delay . so you need a whole lot more to safely delay than what you need to lay out .

delaying can be very costly unless you have alternate sources of income besides your portfolio ..
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Old 08-27-2017, 06:07 PM
 
Location: RVA
2,163 posts, read 1,264,175 times
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Once you hit 60, your projected SS stays the same if you have 35 years of good or top earnings. 59 and change is close enough. Expect very small differences from the projections besides COLA.
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Old 08-27-2017, 06:13 PM
 
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usually our final years are our biggest so for many it does count on you bouncing out a few lower years . but in my case it made only a few dollars difference .

i basically did not continue to earn anywhere near what i was the last 3 years before filing but it had little effect
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Old 08-27-2017, 06:26 PM
 
1,048 posts, read 512,583 times
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Quote:
Originally Posted by mathjak107 View Post
try running the numbers in something like firecalc . delay ss 8 years while spending down and depending on what your social security is you will be surprised how many rolling time frames an amount like 750k saved would have failed already . you can't just throw numbers out without knowing what the income draw is or the social security amount

if you need to lay out 40% of savings to delay you can't afford to do it . our amount at 70 would require over 800k just to delay . so you need a whole lot more to safely delay than what you need to lay out .

delaying can be very costly unless you have alternate sources of income besides your portfolio ..
Yeah, exactly, "delaying can be costly'", as you said.
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Old 08-27-2017, 06:33 PM
 
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that does not mean it may not be worth it . it only means you need the dough to layout safely or it is not an option .

a 70% bigger check at 70 rather than taking it at 62 reduces draw from your own money drastically for what could be decades .

it removes a lot of sequence risk so all things being equal you do not need to keep as much extra powder dry when ss is the source like you do when you have to allow for worst case outcomes from markets . so delaying will allow a higher draw rate than trying to do it on your own all things being equal .

so the advantages to delaying are considerably less market risk needed .

higher draw rate since ss has no sequence risk .

higher survivor benefits not dependent on markets .

a bigger social security check is taxed on 85% max , your rmd's are taxed full if you did not spend them down .

less inflation risk since ss is inflation adjusted and markets and bonds can plunge if inflation gets to high .

more options for couples to utilize if eligible by delaying .

taking it early requires less spending down but you take on more market risk and less longevity risk .
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Old 08-27-2017, 06:34 PM
 
1,048 posts, read 512,583 times
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Quote:
Originally Posted by mathjak107 View Post
try running the numbers in something like firecalc . delay ss 8 years while spending down and depending on what your social security is you will be surprised how many rolling time frames an amount like 750k saved would have failed already . you can't just throw numbers out without knowing what the income draw is or the social security amount

if you need to lay out 40% of savings to delay you can't afford to do it . our amount at 70 would require over 800k just to delay . so you need a whole lot more to safely delay than what you need to lay out .

delaying can be very costly unless you have alternate sources of income besides your portfolio ..
I actually wrote very similar software to firecalc before moving on to Silicon Valley.

As I've said, there is no disputing the math that Wall st spews out is accurate. What is in dispute is the assumptions and motivation behind those numbers.
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Old 08-27-2017, 06:39 PM
 
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like i said , a good planner does not give you a number . it stress tests the numbers you want to use to see how you would have stood up to the worst outcomes already .

all you have to do is decide how many times failing in the past is acceptable to you . the industry uses 90% success as the min .
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Old 08-27-2017, 07:12 PM
 
Location: RVA
2,163 posts, read 1,264,175 times
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Quote:
Originally Posted by Cabound1 View Post
I honestly don't even know where to go with this, but I'll offer this....

......For those people it IS about the break even point because they are essentially asking a question about how to grow their nest egg. The question is basically "will I live past the break even point" . If the bet is no I won't, take SS and die with a bigger nest egg than if you had delayed. And if you look at some of the charts mathjak provided (maybe in another thread?) the breakeven point , even with the very conservative assumptions the Wall St gang has incentives to provide, the break even point is mid eighties.

Btw, I used to be part of that wall st gang. The numbers they provide are mathematically accurate, no disputing that. But whether explicitly stated or not, the calculations often involve confidence intervals, i.e., 95% chance of this happening, 90% chance of that happening, etc. If you are part of that second group I mentioned, where failure to make the right bet simply means a smaller nest egg and no lifestyle implications, why wouldn't you take a bet that has a greater than 50/50 chance of success?
Well this is where we fundamentally disagree. I am also one of those people, with a decent pension that will easily pay all my living expenses and then some. I have more than $750k saved in various pre and post tax accounts including Roths. And I can say it absolutely is not about growing my nest egg. It is all about the guaranteed net income. If we have zero nest egg at 70 and beyond thanks to a market meltdown, ponzi scheme, whatever, we will always have at least $9k/mo income of which about $5600/mo will be COLA SS, by delaying to just 69. Delayed filing allows me to minimize my taxes and live with complete confidence at that $9k/mo level plus whatever I expect the RMD amounts to be at 70.5, AFTER drawing down to live on. Because of my birthday, I will not go to 70, but a few months before, but the majority of the heavy lifting will already be done.

At early-retirement.org, where the average income is much much higher than here, there is an entire cohort that lives strictly off a SWR designed around their retirement age and savings. Virtually NONE of them live on anywhere near 4% SWR, as they know they need their nest egg for 45-50 years, not the 25-30 we bandy about here. There are many retired at 40-45, with $3-10Mil, and draw 2-2.5%. Way WAY above my league. To them, principle growth and earnings are an everyday affair. If THEY don't have the confidence that they can draw 4% based on a 7-8% average market return, why on earth would I chance my future on reduced guaranteed income based on the hope that I could grow a measly $24k/yr for 8 years in to something thst produces what the SS annuity guarantees? For instance, take a high age 62 SS of $2k/mo, compounded at even 6.5% monthly for 8 years is $250k. Using the 4% rule of thumb, that generates $10k/yr, taxable. At age 70, SS would be an added $1400/mo or $16,800/yr, of which only $14280 is taxed, and all is free of state tax. If markets are normal, I could easily still have $700-800k after drawing down, which will mean taxed RMDs of about $30k/yr. If I file at 62, and make that extra $250k, I would have to regularly draw an additional $10k just to equal, after taxes, the delayed amount, plus the $10k that the extra $250k "makes", just to have the same net income. So now $20k more, inflation susceptible, of my income is dependent on my portfolio, for the rest of my life.

Like I said, I cannot look at this as maximizing savings. Break even is a useless concept to me. Maximizing savings is what I had to do to GET the amount I wanted to enable draw down and generate the extra income/safety for retirement. Once in retirement, income is what matters if I live. If I die, last, it matters not what I had saved. If I die first, my wife will only care about the income because she would never invest in the market.

And yes, Matt, I should have clarified that the $750k number I threw out is savings NOT needed to produce income to live on, but rather safety net or nest egg savings. I was talking ONLY the amounts needed to delay filing, not needed to live on and also delay filing.

And as always if you decide to delay, and change your mind, you can always file, and get 6 months retroactive payments as a lump sum. I also do not pretend to really know my state of mind 10 years from now. When I am 67, DW will be 72 and may have a short time to live, and my emotions may get the better of me and I may simply file then. Or I may find out that the income we have far exceeds what we need, and we want to gift a large amount. Who knows. But delaying gives me options.

Last edited by Perryinva; 08-27-2017 at 07:31 PM..
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