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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.
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this is not true .. ODDS OF GETTING A HIGHER ROI LIES WITH INVESTING IN A BALANCED PORTFOLIO , TAKING SS EARLY AND NOT SPENDING DOWN ANY EXTRA MONEY DELAYING which now loses compounding ability forever .
odds of a person seeing a 5% real return roi taking ss early and investing in a balanced portfolio is actually higher than an individual living long enough to see it by delaying ,
when it comes to a couple taking ss and investing still has the edge even with a couple having a chance of one outliving the other extending life expectancy . i demonstrated those numbers above .
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if we compare the odds between taking ss early and not spending down a balanced portfolio and losing all future compounding on that money vs life expectancy risk and delaying ss we see the following odds .
to equal each other out , one in a couple needs to live to 90-95 . at 90 it is that point that the roi on ss is about a 5% real return and those odds are 47% , but to see 6% real return , one in a couple has to live to 95 , those odds are just 19%
the odds of a balanced portfolio hitting 5.80 as an average real return (that is after inflation ) are 36% .
so there really is not a big difference in amounts at the end of the day between the two going by statistics as a couple . taking ss early does have slightly better odds of leaving the bigger balance. so it really amounts to are you more comfortable with more market risk or more longevity risk ?
for a single the odds greatly favor early ss and staying invested .
Last edited by mathjak107; 01-14-2019 at 01:44 AM..
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.
I think it is utilizing good judgment for each person to take into account their own psychology and how it will impact their enjoyment of their retirement years. This facet is not addressed enough in discussions on this topic. For some people it is critical to their financial well-being to squeeze every penny out of social security and for some other factors are more important.
most it seems only look at it from the social security end and not the fact that there are other factors involved . delaying has the spending down of invested assets , you have no spousal benefits , you have uncapped medicare premium increases . then there are taxes to figure .
the biggest issue is most people do not have the luxury of delaying properly. that means taking the same draw all the way through day 1 whether you delay or not . they just don't have enough assets to safely front themselves .
it really has little logic to letting the best early healthier years slip by on a reduced income until years later when ss kicks in . so delaying and first getting more money years later is really not a good idea in my opinion . you should want the same continuous draw all the way through if you delay . whether you spend it all or not is a choice you should have .
if everyone was offered another 16-25k a year with the stipulation that they only get the money if they find a way to spend and enjoy it , most of us would have no problem spending it .
in fact if that was the deal every year that would suddenly become part of the lifestyle of most of us .
so i don't actually buy in to the "we don't need the money " statement .. all of us would likely enjoy that money if we allowed ourselves , which is why i say unless you can take the sane draw all the way through whether delaying or not then delaying is not a great option unless forced in to it for some reason .
the reason so few actually delay to 70 is because the trade offs don't usually make it worth doing unless you have the resources to do it and most retirees do not have the resources to delay .
Last edited by mathjak107; 01-14-2019 at 04:27 AM..
My plan is to collect at my earliest eligibility, which would be 62. Currently am 48. Reason being? 65, 67 or 70 is not guaranteed. If I get to 62 I will collect and enjoy my checks for however long they last.
I don't think this decision is as complicated as people make it out to be. To me its simply a matter of comparing income and expenses. Does your current income support your needs and provide the lifestyle that you want? If it doesn't then you need more income (and also reduce your expenses, if possible). If you need more income, and the only way to get it is to file for SS at 62, your decision is made for you.
it is not really a question of "more income " in most cases . if they delay it can be "any income " unless they have a pension , alimony or rental income to support them if they are retired at 62. so the real deal is whether they can safely lay out from assets what they need to live.
which is really why so few actually do delay until 70. they just can't afford the option of delaying .
My plan is to collect at my earliest eligibility, which would be 62. Currently am 48. Reason being? 65, 67 or 70 is not guaranteed. If I get to 62 I will collect and enjoy my checks for however long they last.
62 ain't guaranteed either if you die and odds are if you hit 62 you will go on a whole lot longer
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.
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Originally Posted by mathjak107
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
Mathjak, you replied to Curly Q's 8% comment exactly four minutes after he posted it. What took you so long?
You have to correct so many people on that ROI comparison, I hope you have it saved somewhere and can just C&P it, lol.
Mathjak, you replied to Curly Q's 8% comment exactly four minutes after he posted it. What took you so long?
You have to correct so many people on that ROI comparison, I hope you have it saved somewhere and can just C&P it, lol.
actually i do that to a bunch of things. certain topics are just mis-understood by so many so they keep coming back up over and over ...it is important that those looking to learn don't believe a lot of this mis-information that keeps getting parroted from other mis-informed sources
62 ain't guaranteed either if you die and odds are if you hit 62 you will go on a whole lot longer
The problem with that is that no one person is a statistic and none of us have a crystal ball. Just look at this forum and see those who have died even recently in their 60s and early to mid 70s. Is that the norm, probably not but many people will not make it to their 80s and 90s and many people who are healthy at 62 won't be by 72.
It's not just about getting the money back you put into SS. It's about living the best life you can for as long as you can whether it's 2 years or 30 years. If collecting at 62 will help do that, than go for it.
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