U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 06-12-2019, 08:28 AM
 
472 posts, read 93,715 times
Reputation: 332

Advertisements

Quote:
Originally Posted by Perryinva View Post
[TRUNCATED FOR SPACE...] We know we are fortunate in our lives so far, and are grateful for every day. But at the same time, we are realistically setting up our income to maintain our lifestyle as we age, which includes tax mitigation, with risk reduction as age increases. No one can predict the future, but you HAVE to assume some things, and cover as many bets as reasonably as possible. What is different for everyone is what “reasonable” is.
Perry, just wanted to acknowledge a good, solid post... and your others in this thread, as well. I appreciate your logic and underlying philosophy (perhaps because they reflect my own).
Reply With Quote Quick reply to this message

 
Old 06-12-2019, 08:31 AM
 
71,471 posts, read 71,652,652 times
Reputation: 49058
Quote:
Originally Posted by dbsteel View Post
The only reason is, the breakover point is around 78. So if you wait, and live past 78, you win. A lot of people do actually live past 78.

The monthly increase from 62 to 70 is huge.
Not quite the case if you need to spend invested assets or money that could be invested to delay until 70....break even is about 22 years not counting any spousal you can’t get until you file..
Reply With Quote Quick reply to this message
 
Old 06-12-2019, 08:42 AM
 
472 posts, read 93,715 times
Reputation: 332
Quote:
Originally Posted by MassVt View Post
Without wading through 26 pages of material, I would say that the need for health insurance is a primary reason why many delay until age 65, when Medicare kicks in. Having to pay an insurance premium all by yourself, without any employer help, can be very costly..
I think you are correct, about the reason many people delay retirement until a certain age... but that is a different question than delaying social security, with a different set of motivations and answers. People often view these as one and the same.... but one thing you will have missed in 26 pages is Mathjak reminding us that the OP is focused on the latter, and not on the question of how long we keep working (so I'll save him the trouble this one time).
Reply With Quote Quick reply to this message
 
Old 06-12-2019, 08:49 AM
 
Location: Ypsilanti, MI
2,435 posts, read 3,659,178 times
Reputation: 4778
Quote:
Originally Posted by mathjak107 View Post
It still may not matter ... the bigger check delaying ss can require much less draw from the portfolio from 70 on pretty much equaling the same balance left for heirs as a smaller check from ss but more coming out of the portfolio year after year taking it early..

It is not a delaying or not delaying that determines the balance for heirs but markets , sequences , rates and inflation vs longevity

I ran a couple quick Excel scenarios to see what would happen, and got some interesting, or frightening, results.


Assumptions:
Two Best Friends, Neighbors, Co-workers. Equal Portfolios. Equal post-retirement Lifestyle of $40K per year. Both retire at age 62. One elects to draw SS immediately and the other delays till age 70. Inflation of 2% per year on living expenses. Growth in SS benefits of 1% per year. Each receives an equal 4% annual return on their portfolio. Age 62 benefits are initially $20K annually, growing to $21.7K by age 70, and the Delayer starts their draw at $37.9K annually at age 70 (calculated by applying the current age 70 versus 62 multiplier to the future Early Draw benefits at age 70).


First Scenario: Beginning portfolios of $1M

Both individuals enjoy a great retirement. The age 62 person initially has a larger balance in their portfolio. By age 85 both portfolios are equal at ~$1.5M. After age 85 the Delayer has a larger year-end portfolio, $1.95M at age 95 versus the friend's $1.7M


Second Scenario: Beginning portfolios of $250K *

The Early Drawer is broke at age 75 but the Delayer goes broke at age 68! Two years prior to the planned start of SS benefits!

Scenario 2a is a quick tweak of the lifestyle expenditures down to $30K annually. This shows the Early Claimer going broke at age 88, whereas the Late Claimer never goes broke with their portfolio increasing in value every year after age 70.


* - Special attention should be placed on the fact the $250k portfolio is nearly 50% larger than the current average US pre-retirement portfolio of $172K! So both hypothetical individuals may have entered retirement thinking they were in great shape financially, with no need for any significant retirement belt-tightening of expenses.

Last edited by MI-Roger; 06-12-2019 at 09:17 AM..
Reply With Quote Quick reply to this message
 
Old 06-12-2019, 08:52 AM
 
121 posts, read 20,531 times
Reputation: 140
Quote:
Originally Posted by reneeh63 View Post
Why does everyone doing this math think they are the first and only person to have ever thought like this?

Maybe it's a bad idea for guys with heart trouble, but as a healthy woman I think my odds of living to 80+ are pretty high and I'd rather take the higher benefit (along with associated COLAs). Who knows what the market will do....
You do realize that you can die anytime.
Reply With Quote Quick reply to this message
 
Old 06-12-2019, 09:23 AM
 
Location: Emerald Coast, FL
5,322 posts, read 8,357,780 times
Reputation: 8665
There are many scenarios and ways they can play out of course. I was going to delay until 70, since I have a sufficient portfolio to easily support me until then. However, since I'm working until 65, it was not smart to take SS at 62 because a) I didn't need it, b) the amount wouldn't be enough to be really useful, and c) I'd pay higher taxes.

I now plan to take SS at full retirement age (66). It will suffice to pay all of my housing and related expenses (mortgage, taxes, insurance, HOA), and therefore I will need far less from my retirement savings during that time. Those will continue to grow (currently at 17% annually), so they are better left invested with reinvested dividends and payouts until I really need the money for something.

I expect a long life given family history, so convention thinking would suggest waiting. I can do considerably better by keeping my Roth money invested from 66 to 70 instead of using it for expenses. Of course there are no guarantees on how long I'll actually live, but my projections for my situation come out better or about the same by taking SS at 66 instead of 70.
Reply With Quote Quick reply to this message
 
Old 06-12-2019, 09:24 AM
 
71,471 posts, read 71,652,652 times
Reputation: 49058
Quote:
Originally Posted by MI-Roger View Post
I ran a couple quick Excel scenarios to see what would happen, and got some interesting, or frightening, results.


Assumptions:
Two Best Friends, Neighbors, Co-workers. Equal Portfolios. Equal post-retirement Lifestyle of $40K per year. Both retire at age 62. One elects to draw SS immediately and the other delays till age 70. Inflation of 2% per year on living expenses. Growth in SS benefits of 1% per year. Each receives an equal 4% annual return on their portfolio. Age 62 benefits are initially $20K annually, growing to $21.7K by age 70, and the Delayer starts their draw at $37.9K annually at age 70 (calculated by applying the current age 70 versus 62 multiplier to the future Early Draw benefits at age 70).


First Scenario: Beginning portfolios of $1M

Both individuals enjoy a great retirement. The age 62 person initially has a larger balance in their portfolio. By age 85 both portfolios are equal at ~$1.5M. After age 85 the Delayer has a larger year-end portfolio, $1.95M at age 95 versus the friend's $1.7M


Second Scenario: Beginning portfolios of $250K *

The Early Drawer is broke at age 75 but the Delayer goes broke at age 68! Two years prior to the planned start of SS benefits!

Scenario 2a is a quick tweak of the lifestyle expenditures down to $30K annually. This shows the Early Claimer going broke at age 88, whereas the Late Claimer never goes broke with their portfolio increasing in value every year after age 70.


* - Special attention should be placed on the fact the $250k portfolio is nearly 50% larger than the current average US pre-retirement portfolio of $172K! So both hypothetical individuals may have entered retirement thinking they were in great shape financially, with no need for any significant retirement belt-tightening of expenses.
Typically balanced portfolio’s have returned 5-6% inflation adjusted over most of history ...big difference in results
Reply With Quote Quick reply to this message
 
Old 06-12-2019, 09:31 AM
 
Location: SoCal
13,191 posts, read 6,308,074 times
Reputation: 9810
Quote:
Originally Posted by TaoistDude View Post
There are many scenarios and ways they can play out of course. I was going to delay until 70, since I have a sufficient portfolio to easily support me until then. However, since I'm working until 65, it was not smart to take SS at 62 because a) I didn't need it, b) the amount wouldn't be enough to be really useful, and c) I'd pay higher taxes.

I now plan to take SS at full retirement age (66). It will suffice to pay all of my housing and related expenses (mortgage, taxes, insurance, HOA), and therefore I will need far less from my retirement savings during that time. Those will continue to grow (currently at 17% annually), so they are better left invested with reinvested dividends and payouts until I really need the money for something.

I expect a long life given family history, so convention thinking would suggest waiting. I can do considerably better by keeping my Roth money invested from 66 to 70 instead of using it for expenses. Of course there are no guarantees on how long I'll actually live, but my projections for my situation come out better or about the same by taking SS at 66 instead of 70.
I think at least wait until FRA to take it is much better than taking SS at 62.
Reply With Quote Quick reply to this message
 
Old 06-12-2019, 09:37 AM
 
472 posts, read 93,715 times
Reputation: 332
Very interesting, thanks for running these scenarios and taking the time to explain! Two quick questions to clarify....

Quote:
Originally Posted by MI-Roger View Post
Two Best Friends, Neighbors, Co-workers. Equal Portfolios. Equal post-retirement Lifestyle of $40K per year. Both retire at age 62. One elects to draw SS immediately and the other delays till age 70. Inflation of 2% per year on living expenses. Growth in SS benefits of 1% per year. Each receives an equal 4% annual return on their portfolio. Age 62 benefits are initially $20K annually, growing to $21.7K by age 70, and the Delayer starts their draw at $37.9K annually at age 70 (calculated by applying the current age 70 versus 62 multiplier to the future Early Draw benefits at age 70).
I'm confused by this single line in the assumptions. Did you really mean "the Delayer starts their draw at $37.9K annually... at age 62?" If not, what was the delayer doing from age 62-70?

Quote:
Originally Posted by MI-Roger View Post
First Scenario: Beginning portfolios of $1M

Both individuals enjoy a great retirement. The age 62 person initially has a larger balance in their portfolio. By age 85 both portfolios are equal at ~$1.5M. After age 85 the Delayer has a larger year-end portfolio, $1.95M at age 95 versus the friend's $1.7M
Presumably that refers to the "early drawer," since they are both age 62... Correct?
Reply With Quote Quick reply to this message
 
Old 06-12-2019, 09:50 AM
 
Location: Rust'n in Tustin
2,171 posts, read 2,370,179 times
Reputation: 3791
What good does having more money at 85 do me? I'd rather have it at 62 when I'm young enough to enjoy it.

I've got rental homes, and 950k in the stock market. A bird in the hand...
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Follow City-Data.com founder on our Forum or

All times are GMT -6.

© 2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top