For every year that you postpone Social Security benefits, your total Social Security Benefits will increase by 8% (55, conversation)

[mathjak107]

use Firecalc. That will help you plan for the worst outcomes like that hurricane. It will let you see how much it would take you to have to gotten through the worst of times with the allocation you intend to use .

Whether you can attain that saved amount is another story. Assuming average returns vs the same average returns but changing the order of those gains and losses can have a 15 year difference in how long the money will last between the best and worst outcome. All with the same average return.

I always found trying to calculate what I will have or need off in the future a waste of time .

From 1987 to 2003 the s&p 500 saw 17 years averaging almost 14% cagr. What do you think you would have guessed your balance would be 15 years later? Very different from the actual 1.88% real return cagr you got that is for sure.

Pretty much we all do the best we can and when we get to retirement we back in to the lifestyle based on what we have to work with

[rocafeller05]

Yes I use FIRECalc and it shows a 100% success rate. But getting to that total portfolio amount is the big unknown. As long as I can get a 4% avarage return over next 20 years I will be there.

[mathjak107]

You can’t guess . You will never know in advance where you will be . Don’t waste your time . It is not nominal returns that mean anything , it is real returns after inflation .

2000 to 2015 saw 1.88% cagr as an average real return so don’ t bother . Just do your best and when you get there close to retirement you will see down the road what you have to work with.

I certainly did not have 2 major down turns in one decade in my projection.

All our budgets work at the end of the day because we back in to what we have to work with

[TuborgP]

Originally Posted by mathjak107

You can’t guess . You will never know in advance where you will be . Don’t waste your time . It is not nominal returns that mean anything , it is real returns after inflation .

2000 to 2015 saw 1.88% cagr as an average real return so don’ t bother . Just do your best and when you get there close to retirement you will see down the road what you have to work with.

I certainly did not have 2 major down turns in one decade in my projection.

All our budgets work at the end of the day because we back in to what we have to work with

The great thing is that at this point we are beyond our FireCalc retirement projections. So 100% barring structural systemic problems is exceeded in real dollar amounts.

[Tonyafd]

Originally Posted by Old Woman

For every year that you postpone Social Security benefits, your total Social Security Benefits will increase by 8%

I cut and pasted this from one of the countless articles about the advantages of waiting until you are 70 to collect Social Security.

If someone who did not understand money and retirement would read this, they would assume that their lifetime Social Security income will be at least 64% higher if they wait until they are 70 vs 62 to collect Social Security Benefits.

This is false. What is true is that by waiting until you are seventy to collect, your monthly Social Security Check will be at least 64% higher. What most people don't intellectualize is the reason the SS check is higher if you wait until 70 to collect is that you did not get ninety-six (96) SS checks from 62-70.

If you actually get more Social Security money by waiting till you are 70 is a wild card based on how long you live and what you lost in interest, dividends, and returns by raiding your portfolio to cover your lost money because you waited to collect SS from age 62-70.

I've heard 6% a year to 66 (assuming that you are the right age), 8% between 66 and 70.

[mathjak107]

we already mentioned that to her .

[Perryinva]

Originally Posted by eastcoastguyz

Aren't the kids full grown adults that should be out of the house and have jobs themselves by then? Don't worry about kids. You have lived your entire lives taking care of them, retirement is your time. I wouldn't have wanted my parents to worry a second about not enjoying themselves in retirement because they were concerned what they were going to leave me. After all, they did their job, I graduated college, have a house with two cars and a good income and my own money. Retired people need to take care of themselves first. If you really love these people, they should love you back and want you to spend it all on yourself. Not save as much as possible so they can do something stupid with it like put an addition to their home which makes no market sense, or waste it on expensive vacations trying to pretend they are rich and famous.

It is a silly game to be concerned if you will live long enough to get the full benefits of SS. The point to wait until age 70 is that is the max you can get, and it is only 8 freaking years from age 62. That's no reason not to wait, unless you have real issues such as health, so you take it early. You want a more secure future and that's the reason to wait until age 70 because it's guaranteed. Sure you could take it at age 62 and have this fantasy about the great returns you could get investing that money, but do you actually have a real history of making savvy investments? If so, then why do you need this tiny amount of money early if you are such a wizard of wall street to begin with? You are such a wizard at this, you should be one of the people not taking SS at all.

Excellent, just excellent! Solid rep for that. Though, besides besides health, you do have to have adequate assets to afford delayed filing, which is to say, purchasing a COLA annuity equal to your net increase is affordable to you and part of your NW & AA.

A few tiny point that are often overlooked, and haven’t been mentioned in this otherwise repetitious thread, is people like the OP too often miss that projected amounts are always in todays dollars. So even though my age 70 projected amount at age 60 may be $45k, with age 62 being $25k, based on my current PIA, with even moderate inflation, the actual checks at that time could easily be $50k. And that increase is all tax advantaged only having from 0-85% of it taxed vs all of it coming from a deferred account. That is one cheap annuity, especially with survivor benefits, OP.

And many of us want to reduce our taxable deferred savings to reduce taxed RMDs at 70 1/2. I sure as heck know none of my step kids with have the wherewithal or brains to help me if I or DW need LTC, so the higher guaranteed income is the smartest long term bet. Knowing that I WILL have that higher income later means I can spend more from day one of retirement, because I will need so much less to withdraw from investments fornthe same net income.

If I die earlier, well, I’m dead, and won’t really care if I broke even or not. I’d rather spend/use more from day one by filing later.

[mathjak107]

also , no one should ever buy an annuity product without delaying ss as a first choice .

you can never buy an commercially available annuity for anywhere near the cost of what you lay out that pays as much , is cola adjusted and passes to a spouse as ss gives you . it is also tax advantaged too as only up to 85% of it is taxed as a max unlike an annuity .

delying ss is the best annuity money can buy if you wanted an annuity .

[townshend]

I am turning 66 this year so I was due and received a reminder in the mail: "Retirement Information for Medicare Beneficiaries."

Note: I haven't and do not plan to take Social Security on my 66th birthday. My current plan is to wait, and take it no earlier than 67, and perhaps later even later.

I have several comments/questions.

1) I have been schooled that between age 66-70, you benefit will grow by 8% a year (plus cost-of-living adjustments). I am looking at the handout I referred to above. In a chart, it shows how a benefit of $1,300, which one would receive at 66 and 4 months, grows if one delays taking SS to ages 67, 68, 69, and 70:

66 1,300
67 1,369
68 1,473
69 1,577
70 1,681

* is used to denote amounts arrived at by my calculations

Let's take the amount at age 67: 1,369. If that amount is multipled by 8%, one gets *$109.52. Added to $1,369, the total projected amount would be *$1,478.52. This is close to the amount of the benefit at age 68 (off by about $5.00).

Or take the benefit predicted at age 69: 1473 x 8% = *$117.84; total benefit: *$1590.84
Now we are off by about $13.00.

Finally, the benefit predicted at age 70: 1577 X 8% = 126.16; total benefit: *$1,703.15.
Now we are off by about $22.00.

Questions:
1. Why are my calculations different than those offered in the chart? And is there some sort of compounding error in play?
I recognize that the actual benefits can vary based on whether one continues to work or not, depending on how much is earned (or not), depending on cost-of-living increases, etc.

I just thought that in this hypothetical example, applying 8% to the previous year's estimated benefit would work; but it doesn't.

2. In reading the handout, it states the following: "Your benefit can increase as much as 8 percent a year up to age 70" (italics added).

I must have misunderstood this in the past -- to mean that your benefit will increase by 8% a year up to age 70. But that clearly not what the handout says.

3. The other point I want to make is that the estimates found at the SS site are always based on your last earnings record.
The site provides an estimate at full retirement age, and then another estimate of my benefit at age 70.

And the estimate at age 70 is based on the assumption that I will earn the same amount every year up to age 70 (in my case, that I earned my 65th year).

At least in my case, and I suspect many others, the estimated benefit at age 70 is worthless. I worked full-time for only six months during my 65th year, and then I worked part-time.

Are the vast majority of SS beneficiaries delaying taking SS until age 70 working full-time right up to that date, and not only working full-time, but making the exact same amount (or higher) than they made in their 65th year?

If they are, then that estimate serves a useful purpose. But I suspect that this is not the case, in which case there is no reason to make such a prediction -- in the later years of one's working life, there are too many variables (switching from full-time to part-time, switching from full-time to not working at all; losing one's job and taking another lower paying job; working intermittently, etc.).

[mathjak107]

i didn't check your math but make sure you are not compounding the 8% ... the 8% is always based on the fra amount ... so it is 8% of the fra amount that gets added each year not 8% on the 8% the year before compounded.