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.
Take it when its offered as you may not live till 70 or be in such poor health the extra money derived by waiting is meaningless.
Or you may live to be 95 and spend the last 30 of those years trying to live on 75% of the benefit that you would have earned had you only waited just a few more years to start collecting.
For my example, I will assume that my fictitious character "Todd" is single, has a 401K with $500,000 and needs $3,500 a month to live his lifestyle. Due to inflation, "Todd" will need $4,000 a month from age 70 to 80 per month and $5,000 a month from age 80 to 90. I will also assume a 7% growth rate of the 401K -- of course this could be a lot better or worse.
But what lifestyle is Todd trying to maintain in his 80s and 90s? How many people that age do you see still traveling, going out , purchasing consumers products in that same way they did in their 60s when they first retired and were still able to be mobile and do things?
It seems to me that Todd should be planning to spend more of his wealth early on when he can actually do something with it rather than hoard it for sitting around in some retirement home when he is 85. I am not saying blow everything early and only live on a SS check, but worrying about break even points and having the same income when you are 85 as compared to 65 doesn't make sense to me.
If Todd is concerned about having a decent retirement home to live in at an elderly age, he should make sure he has good long term care insurance and a decent income yes, but not the same amount he had in his younger years.
Or you may live to be 95 and spend the last 30 of those years trying to live on 75% of the benefit that you would have earned had you only waited just a few more years to start collecting.
Except that if you do the math, you are better off waiting to take funds from your retirement plans and letting those dollars grow....
Kind of depends on the age and health of the spouse, but the effect of waiting on basic benefits is indeed passed on in the event of there being spousal survivor benefits.
we have had many discussions on survivor benefits. many folks were shocked to find out that if the benefits are taken early by the main bread winner the surviving spouse if younger may get a double hair cut if they have to file early too so they can make ends meet.
the main bread winner gets a reduced benefit for filing early and the surviving spouse gets a reduced benefit off the already reduced benefit if they file also before fra.
a spouse filing for survivor benefits at age 60 from a spouse who filed at 62 for their benefits can see a 47% reduction from what it would have been had the spouse taken it at fra instead.
not a problem if you have the assets for your spouse , but many times it is those that file at 62 for whatever reason who can least afford the benefit cut
Last edited by mathjak107; 06-10-2013 at 08:47 AM..
I am not saying blow everything early and only live on a SS check, but worrying about break even points and having the same income when you are 85 as compared to 65 doesn't make sense to me.
There are basically three phases of retirement -- active, inactive, and dependent. The question is over how best to cover the needs of all three, and the premise is that one still has at least the option of other sources of income at 62 and 66 that will be diminished or nonexistent by 70 or 75. If SS money is not a necessary component of support in the early years of retirement, it may very well make sense to delay those benefits to a time when other forms of support have fallen away.
Quote:
Originally Posted by kanhawk
If Todd is concerned about having a decent retirement home to live in at an elderly age, he should make sure he has good long term care insurance and a decent income yes, but not the same amount he had in his younger years.
Nobody wants to live in a retirement home, and almost no one can afford to acquire LTC coverage at retirement age. The last chance at affordable LTC premiums typically comes when one is in his or her early to mid-50's.
There is a good chance spending stays the same as we age , it just shifts from spending on yourself to spending on family.
The more significant shift as one ages may be from discretionary spending to spending on health care. Spending on family is a part of discretionary spending.
Quote:
Originally Posted by mathjak107
Like water, money always seeks its own level. If the money is available it will be spent in one way or another.
Those who are fortunate enough to face the problem very often do try to unload everything they don't actually need for themselves onto somebody else. Family, church/etc. or other charity, total strangers. You just never know what a codger might come up with. They're quite a clever sort in this particular way.
Last edited by oaktonite; 06-10-2013 at 09:16 AM..
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.
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.
