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View Poll Results: When did you (or when do you plan to) start taking Social Security benefits?
Age 62 66 55.00%
Age 63 2 1.67%
Age 64 3 2.50%
Age 65 10 8.33%
Age 66 19 15.83%
Age 67 or older 20 16.67%
Voters: 120. You may not vote on this poll

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Old 06-21-2015, 03:23 AM
 
Location: Los Angeles area
14,018 posts, read 17,726,438 times
Reputation: 32304

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Quote:
Originally Posted by Burkmere View Post
Sounds like a CALPERS pension. I work in the public pension arena.
Close. It's a CALSTRS (California State Teachers' Retirement System) pension.
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Old 06-21-2015, 03:40 AM
 
Location: Los Angeles area
14,018 posts, read 17,726,438 times
Reputation: 32304
Quote:
Originally Posted by rdflk View Post
I'm lost..... if it's "not compounded," how is it 2% EACH year?
If you retire with a 2,000 a month pension, and the COLA adjustment is 2%, then how does it ever go up, if it doesn't compound from one year to the next.
2,000 the first year, then 2 percent more the next year, the third year isn't it still 2K plus 2%, and the 10th year the same...2K plus 2%?
Let's take the interest compounding on a bank savings account as an example: The interest is credited to your balance at whatever time interval is specified - let's say once a month. Then you earn interest on the interest - that's compounding.

We do not earn interest on the interest, or more accurately we do not get cost of living calculated on the previous cost of living increases. To put some easy round numbers to it:

Suppose the original pension amount is $50,000 annually. Two percent of $50,000 is $1,000. After one year, the pension is now $51,000. But the next two percent is figured on only the original $50,000, not on $51,000. So each year's COLA is the same $1,000. After ten years, the pension is now paying $60,000, but the COLA for the eleventh year is still calculated on the original $50,000, not on $60,000. Therefore the eleventh year COLA amount is still $1,000, not $1,200 as it would be if it were compounded.

Note: I am not complaining about this, just explaining it. I am quite content with my non-compounded two percent and I'm glad to have it.

By way of contrast, the Social Security COLA's are compounded. That is, each year's percentage increase is calculated on the total amount of our benefits, which include COLA's from previous years.
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Old 06-21-2015, 09:29 AM
 
2,429 posts, read 3,221,988 times
Reputation: 3330
Thanks. I get it. I knew there was something I wasn't understanding.
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Old 06-21-2015, 10:38 AM
 
Location: RVA
2,164 posts, read 1,264,598 times
Reputation: 4451
Good going Biscuitmom, thats the best way to avoid the tax torpedoe of taxed SS and RMDs, with swapping 85% Max taxable income for 100%. Or if you are already at all SS taxed, like I will be, just reducing RMDs for Roth greatly increases flexibility, while increasing that COLA SS.

I am surprised at how many people really look at SS income as "Will I break even?" Or "Whats the best ROI?" I don't think in those terms at all. I only really care about the best spendable income stream, with an adequate savings buffer for unknowns later in life. I know I will have more uses for more money earlier in retirement, so when I take it will totally depend on the markets and the amounts I have in my accounts. The better the market and more I have, the more I will delay, and spend down/convert to Roth. If there's a Zombie Apocalypse, then 62.
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Old 06-21-2015, 11:08 AM
 
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What I haven't decided yet -- and I certainly have time....is....IF I choose to spend down MY assets in order to delay SS....just HOW FAR DOWN am I willing to go. What's my comfort level on how low I'm willing to take MY money. A higher Soc Sec is fine and dandy....but there's nothing like having YOUR OWN money.

I know each person's situation is different...but how low would you take your IRA or 401K.403B/SEP, etc.? Or would you not spend down at all, to delay and get a bigger SS check......500K, 400K, 300K, 200K?
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Old 06-21-2015, 11:18 AM
 
71,471 posts, read 71,652,652 times
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i am in your camp , i rather have as much of my own money under my control as i can.
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Old 06-21-2015, 11:22 AM
 
Location: Florida
4,356 posts, read 3,692,049 times
Reputation: 4084
Quote:
Originally Posted by HappyTexan View Post
At 65/66 you can stop SS, pay back what they paid you interest free and re-apply for full benefits.

Not a joke..you can do it. That's 4 years of payments. If you have that saved up in some investments then you CAN get full benefits at 65/66, if 65/66 is your full retirement age.
I think this option has changed to 1 year a couple of years back. Better recheck before you try it.
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Old 06-21-2015, 11:31 AM
 
Location: Florida
4,356 posts, read 3,692,049 times
Reputation: 4084
Quote:
Originally Posted by Curmudgeon View Post
I lost half my pension in divorce at age 48, retired at 62 and began drawing SS that year as well to make up for the loss in pension funds. My wife retired at 54 and will start drawing SS this year at age 62. Between the two of us we actually bring in more than we really need and it will only get better when my wife's SS begins.

Actuarily it made good sense to start drawing at 62 rather than waiting until 66. Longevity is not a strong suit for men in my family so I decided to get the SS while the getting was good.

Our house payment, including taxes, is manageable and we live frugally but well and comfortably. No complaints. Without the SS I would not have been able to retire when I did.
Your wife maybe able to draw on your SS and let hers grow. Renumber at death you lose one SS check.
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Old 06-21-2015, 12:52 PM
 
2,429 posts, read 3,221,988 times
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Quote:
i am in your camp , i rather have as much of my own money under my control as i can.
Hey, mathjack.....you're the one who got me thinking about the delay strategy. A real education for which I'm grateful Then you went an did a switcheroo on me And your reasoning on that too...has been an education.

As I'm finding out..EITHER decision file early...or ...delay... has pros and cons, and can work out.
As you say.....how much is person willing to gamble on longevity and the state of their health, and how changes in those factor might affect the money spent and needed. Plus add additional considerations of deciding whether we think SUBfactors like taxes and Congressional law changes should be given any weight...and IF so...how much.

For example, IF my SS is going to be taxed whether I file early OR delay...then why give that taxation any weight as a factor. It will happen regardless. SO is it a factor AT ALL really.
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Old 06-21-2015, 01:35 PM
 
71,471 posts, read 71,652,652 times
Reputation: 49058
yep i agree , i was sold on the delay scenario until some very smart people did some studuies including more factors.

this is why it is important to sleep with the enemy as they say . despite what we may think there may be some very good supporting evidence the other side has if we join that side for a while and learn what they know.

i can't tell you how many opinions i changed over the years as i learn more and new studies come to light..
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