Here's the difference in SS benefits between 62 and 67 for me. (50+, relations)
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There was no reason for me to wait until 70. Even waiting my social security was less than half of that of my husband. I am a bit older than him. I took it at my full retirement age. We have pensions and other investments. He retired at 63 1/2. His company paid for a year of cobra for each of us. We only had to pay a few months of cobra for him before Medicare. We did not spend down anything to wait until 66, our full retirement ages, to file. I got the spousal adder when he turned 66. My family is long lived. His is not. Break even points were not in our calculations. Hold harmless and ease of Medicare payments were. Social security is about 25 percent of our income now. We did not need it to live comfortably, but more money is always nice to have.
With respect to spending down assets, as long as SS is enough to cover the basics like food, utilities, insurance, etc... I think one should keep enough assets to cover the big "lumpy" expenses that could arise. These are things like home repairs (foundation, sewer connection, roof, etc), or big dental bills. Sure, this isn't easy to estimate, but that's how I would look at it. Without some amount of liquid assets, when one of these events happens the only recourse would be to take a loan (if possible) or sell something.
My age 70 Social Security check will be $43,524 in 2018 dollars. Make me 62. Make my IRA balance $400k. Assume it’s invested in something safe that tracks inflation. I pull out $50k per year. I’m paying taxes on $38k after the $12k standard deduction. 12% bracket money. Say I live somewhere with low or no state income taxes at that income level. I’m spending about $45k per year. At age 70, I start collecting my COLA protected Social Security check and have a trace amount left in my IRA account that rounds it up to that same $45k.
You’ve written a number of times that you wouldn’t spend the IRA to zero. From a worst case analysis point of view, spending it to near zero is the most conservative thing to do since you get the inflation protection for life. My girlfriend has similar career high income with a slightly lower Social Security check coming. Survivor benefits aren’t a consideration. We would be living on what would be a mostly tax free combined $80k+. No RMDs triggering the tax torpedo. I don’t have to sweat a big market correction and sequencing problem.
I have other assets so my numbers are better than that but I don’t see the problem with zeroing out my tax deferred portfolio to bridge myself to age 70.
What happens if you split up? Looks like you will be living right on the edge with no buffer for unexpected expenses. I know this is just a what-if, but many people would be more comfortable with taking the relationship risk than the market risk. Not me.
i don't like to see more than 35- 40% of assets spent down delaying .
For me, spending it down, while keeping it in a risk free vehicle, would be more painful than watching the market drop 50%. At least there’s the chance, if not the probability, of a market recovery.
while i was delaying ss i only kept 1 year in cash for spending . the rest was in a 50/50 mix . i would just rebalance yearly to refill cash . it is not like i would just put 8 years of spending in cash instruments
There was no reason for me to wait until 70. Even waiting my social security was less than half of that of my husband. I am a bit older than him. I took it at my full retirement age. We have pensions and other investments. He retired at 63 1/2. His company paid for a year of cobra for each of us. We only had to pay a few months of cobra for him before Medicare. We did not spend down anything to wait until 66, our full retirement ages, to file. I got the spousal adder when he turned 66. My family is long lived. His is not. Break even points were not in our calculations. Hold harmless and ease of Medicare payments were. Social security is about 25 percent of our income now. We did not need it to live comfortably, but more money is always nice to have.
same here , ss is about 25% of income . i took it at 65 and my wife 62 . i retired at 62
i don't like to see more than 35- 40% of assets spent down delaying .
Ok. So let’s say I’m 62, 1 million net worth, $400k in IRA, the other part 50% in a house and 50% other liquid or at least saleable assets. I hit 70 with the IRA mostly drained, a paid for house, $300k that could be spent, and that $43,524 COLA protected Social Security benefit. I could also sell the house if I age out of being able to live there.
i only count liquid assets when i look at what i consider safe to lay out . you can choose to count what you like .
the house should be reflected in a lower draw needed as opposed to renting when you live in it . . you would need to layout your regular draw plus the additional ss for 8 years .
if it was me i would not be comfortable with my balance , you did not say how much in total would be coming out for 8 years delaying .
i only count liquid assets when i look at what i consider safe to lay out . you can choose to count what you like .
the house should be reflected in a lower draw needed as opposed to renting when you live in it . . you would need to layout your regular draw plus the additional ss for 8 years .
if it was me i would not be comfortable with my balance , you did not say how much in total would be coming out for 8 years delaying .
For arguments sake, let’s say I’m shooting for a COLA-protected cash flow of $50k. From age 70 onwards, Social Security would be most of it. I’d only need 15% more to top it up. Ignoring the house since I don’t plan to sell it, I see no reason why I couldn’t stop working at 62, burn the IRA over 8 years in the most tax efficient way, and hit age 70 with a big slush fund to handle any unexpected expenses. With those hypothetical numbers, I can spend an inflation indexed $50k forever with just about zero risk.
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