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Giesela, I am in my first year of federal retirement and have about the same size of portfolio as you. I lost 5% in 2018 so you have lots of company. It is my first year of federal retirement but I’m determined not to let the loss freak me out or do something stupid like I did in 2008 and sell equities. I note that you are leery of the market and have half your investments in the TSP G Fund which returned 2.9% this year – basically keeping up with inflation. SS increases 5-6% a year from ages 62 to 66. While I agree with mathjak that taking early SS might be a good idea, an alternative would be to take some money out of the G Fund while letting the SS grow. Better to enjoy your early retirement years rather than living low.
Singles do have less options as well as longevity for singles is shorter . Couples have 2 horses in the race with one bet . So either can out live the other making life expectancy longer than either alone .. so singles may do better filing earlier rather then spend down assets
As a single person, I haven't worked the math for a "couple". For me, it's a pretty easy decision to defer, but plan to keep my mind open as I age. Almost all of my retirement is self-funded, I don't have a sizeable pension or annuity to offset the longevity risk.
There are two other wild cards that need to be considered - potential future cuts to social security (means testing, etc.), and also the tax implications. Again, for me, I come out ahead by waiting; obviously, market performance weighs on this heavily, and I'm a bit of a pessimist on stocks going forward. My SS amount grows approximately 8% for every year I defer it, with almost zero risk. The markets? Some periods have done much better than others, so I would be effectively "timing" the market with my fixed timeframe.
That 8% increase on ss is not a return at all . In fact it can take 20 years to see any return on ss .. it is in no way comparable to an 8% roi .. over a typical retirement time frame markets have actually returned a 9% roi with dividends reinvested.. in fact a 50/50 mix has never had a losing 10 or 20 year period - ever.
Even at 65 there is long term money that won’t be used to eat for 20 to 30 years which is still long term money .
The 8% increase does not include checks not collected , spousal not collected , uncapped Medicare premium increases while delaying , and spending down invested assets to delay ..
So never confuse the 8% social security increase with an actual return
Last edited by mathjak107; 01-13-2019 at 11:43 AM..
As a single person, I haven't worked the math for a "couple". For me, it's a pretty easy decision to defer, but plan to keep my mind open as I age. Almost all of my retirement is self-funded, I don't have a sizeable pension or annuity to offset the longevity risk.
There are two other wild cards that need to be considered - potential future cuts to social security (means testing, etc.), and also the tax implications. Again, for me, I come out ahead by waiting; obviously, market performance weighs on this heavily, and I'm a bit of a pessimist on stocks going forward. My SS amount grows approximately 8% for every year I defer it, with almost zero risk. The markets? Some periods have done much better than others, so I would be effectively "timing" the market with my fixed timeframe.
Yes, taxes.
I take social security I pay taxes on it. The same % taxes?
I start taking my social amount from my morgan account (I am extremely pessimistic on stocks for people like me and figure I might as well draw the MS account down first before they lose it), I pay taxes when it comes out and then pay taxes again as income?
Financial specialists tend to calculate total assets gained vs. monthly income. Based on actuarial estimates you will probably amass a greater total return by taking SS now. Talk to SS. See what they tell you. In my world a larger monthly income is more important because I don't want to give up anything.
Your needs have ss , pension ,alimony rental income ,etc subtracted out . Then the shortfall is stress tested against the assets in the portfolio for a high rate of success of pulling that off..
If you spend down assets delaying the portfolio just provides less to the cause and ss more . But in the end it can be the same..
Income is always a combo of things but monthly income should be the same ..
Last edited by mathjak107; 01-13-2019 at 03:59 PM..
So with 20:20 hindsight I recognize that I made the same error as MS does. Wait until 66 if possible. Unless you are in horrid health or come from a short-lived line, or hang glide or race motorcycles for a living.
Otherwise, in the real world of monthly bills, more money = more money.
ROI (Return On Investment) supports not taking SS at age 62. But as you wisely pointed out, if someone had extenuating circumstances then 62 years of age might be the best option for them. But having a higher set amount later in life is going to be useful to you.
I was talking to a financial advisor about this recently. For many people there is a psychology concern that they can't stand to see a "money burn". Which means, they have difficulty tolerating their portfolio being reduced each year in retirement. So they try to slow that down by taking SS early, even against their better judgement and what they planned. He said to help combat that in retirement planning was to come up with a number in your portfolio's value it won't go below. For example, you retire with $2M, and you never want it to go below $500K. So you work your retirement plan from that. It has to do with whatever makes you feel comfortable.
And for anyone who is concerned about leaving an estate for their family members in retirement, I personally don't worry about that because my feeling is if those people truly loved me, they would want me to feel safe and comfortable in retirement and not have to worry about money because I feel obligated to leave it to them. I repeatedly told my parents when they retired to not worry about leaving anyone anything, because I want them to enjoy their retirement. You worried about everyone else your entire life, retirement is your time.
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Social Security taxes
