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Those statistics cut both ways. There's a 58% chance a 65 year old man won't live to 85. There's a 38% chance a man will die before 80 and never even break even with the SS he may have received if he started at 62. Would you want those odds? That's like playing Russian Roulette with two bullets in a 5 shot revolver.
What these statistics miss is the issue of quality of life. At 62 I was healthy and robust and strong. At 70 I'm not. There's no way to know which way it will go. If I make it to 80 that would be great, but if I do, getting a few dollars less in my SS check than I could have by delaying the payout would be the last thing on my mind.
Quote:
Originally Posted by mathjak107
men do not die on average at 79 for purposes of looking at ss . that is starting from birth which is flawed for what you are trying to show .
there is a 42% chance a 65 year old man will live to 85 and a 62% chance of seeing 80 ., a 54% chance a woman will see 85 and an 89% chance of seeing 80 .there is a 73% chance one in a couple will see 85 . so if married the odds are very very high someone will see 85 since each one can outlive the other .
there is almost a 50% chance one in a couple will see 90 .
i would not want to bet against those odds .
in fact, as michael kitces pointed out , a child born in 2014 has a life expectancy (average age at death) of 79. However, the median age of death for the same child is 83, and the modal (most common) age at death is 89! Given the shape of the distribution of ages at death (negatively skewed), it’s simply a mathematical fact that the mean is going to be lower than the median or the mode.
break even is the least of the reasons why someone would or should delay ss , dead is dead . what if i live and the ramifications of living and especially the effect on my spouse are the better questions .
delaying ss is the best annuity money can buy . if only one in a couple lives to 90 they see a 5% real return , which can beat a balanced portfolio with zero risk . that is after inflation . that is an incredible return from what amounts to a gov't bond .
you spend more day 1 delaying ss . in fact delaying allows you spend a bit more starting day 1 since social security has no sequence risk .
so you lay out the social security you are not receiving yet at 62 and then at 70 the composition of your income shifts as 70% less a year is drawn for your savings and that 70% a year extra refills what you laid out .
no one waits until 70 if they delay to see the additional money . if you have to do that , then you can't afford to delay ss . .
no he is not thinking about it the way delaying is utilized by those who depend on their portfolio's for their income .
unless it is extra gravy no one who delays should be waiting until 70 to see their first increase , that makes little sense and in poll after poll not the way it is done .
in fact that is the op's gripe in the thread below , that he is laying out the ss money he isn't collecting yet day 1 so he can maintain his full budget while delaying ..
no he is not thinking about it the way delaying is utilized by those who depend on their portfolio's for their income
hard for me to figure out this sentence mathjack. But I assume you mean - not thinking as those who depend on their portfolios think.
OK, that's exactly what I said, he's not thinking wrong, just differently than you do. See, you seem to sometimes make judgments on these issues that make sense to you, but may not to someone else who has a different point of view.
you said: "no one waits until 70 if they delay to see the additional money . if you have to do that , then you can't afford to delay ss . ."
lets do a 180 on that and consider.......If your portfolio is such that you could cover your expenses, why not go ahead and collect SS early? You could enjoy the increased affluence and investment earnings through ages 62 to 82 while you're young and still traveling etc. Surely your portfolio can cover any shortfall you might have in SS dollars should you outlive the break even point.
Simply a different set of priorities, no right or wrong
Dave
hard for me to figure out this sentence mathjack. But I assume you mean - not thinking as those who depend on their portfolios think.
OK, that's exactly what I said, he's not thinking wrong, just differently than you do. See, you seem to sometimes make judgments on these issues that make sense to you, but may not to someone else who has a different point of view.
you said: "no one waits until 70 if they delay to see the additional money . if you have to do that , then you can't afford to delay ss . ."
lets do a 180 on that and consider.......If your portfolio is such that you could cover your expenses, why not go ahead and collect SS early? You could enjoy the increased affluence and investment earnings through ages 62 to 82 while you're young and still traveling etc. Surely your portfolio can cover any shortfall you might have in SS dollars should you outlive the break even point.
Simply a different set of priorities, no right or wrong
Dave
There is no right or wrong. There is only degrees of acceptance of risk coupled with the need for specific income.
In your 180 degree scenario, SS is not needed to live on. So I why not collect it early? Then why not collect it late? In that specific scenario, the ONLY VALID consideration is life expectancy and risk tolerance. If one had more money than one needs regardless of SS, then collect early and invest, vs collect late for a guaranteed larger SS is simply risk aversion. Chance investing vs a larger annuity.
Delaying to file is specifically for those that want a higher COLA adjusted income for life annuity. Period. It has nothing to do with break even or expected life length. If I know I will have $50,000 a year, for life, COLA adjusted, plus survivor benefits, then I can start spending my money from day one (say retirement at 62), as if I have that income right now, as long as I can fund it. The LONGEST I have to cover that is 8 years (in my example), so if I have $400k to dispose of in savings to cover that, and still would have adequate savings after that when I start collecting at 70, then I have zero risk for the COLA $50k for life.
On the ofher hand, if I collect early, and get $24k SS at 62, when I hit 70, that $24k has become only $28k. So, to live the same way I would have with a $50k SS annuity, then I need to fund the 8 year difference of $200k, AND I have to cover a COLA income difference of $22k...forever. So every year, I need my investments, as my health and mental faculties decline, to generate more and more. If I am so wealthy, it makes no difference, then only my heirs would care. Few of us are that wealthy. If I do not have enough saved to cover the extra $200k delay cost (which is a maximum amount based on the earliest one could collect and the most one could collect for someone age 59-60 today), or what ever percentage of maximum it is, then it is a moot point. If I have enough, then it is just a matter of accepting that as the cost to live with that higher income level, with the lowest risk.
There is zero difference in comparing that to someone that knows they will be dead at 75, and spending appropriately, and not collecting at 62 would be ignorant.
Mathjak... Do you have any thoughts one when you will start drawing SS?
I'm 64 and still working. Big decision on when to semi-walk away and take the money. I'm sure it will be 66 but debate about waiting to 70.
we were going to try to delay to 70 and go for the prize since that allowed the biggest bang for the buck . but since markets did so well since we retired i may take it at 65 as a balance .
the longer the bull continues the more likely we are to have a recession at some point . the longest expansion we ever had in history was 10 years so we are pretty close to that . .
so i would like to be less dependent on markets for that downturn . we don't really need to worry about maxing our ss dollars . .
i do some consulting work too so the year before you are fra special earning rules apply . i can earn a whole lot more at 65 without giving any money back .
that was the biggest reason i would not file any earlier , my little bit of work i do would have gone over the limit ..
hard for me to figure out this sentence mathjack. But I assume you mean - not thinking as those who depend on their portfolios think.
OK, that's exactly what I said, he's not thinking wrong, just differently than you do. See, you seem to sometimes make judgments on these issues that make sense to you, but may not to someone else who has a different point of view.
you said: "no one waits until 70 if they delay to see the additional money . if you have to do that , then you can't afford to delay ss . ."
lets do a 180 on that and consider.......If your portfolio is such that you could cover your expenses, why not go ahead and collect SS early? You could enjoy the increased affluence and investment earnings through ages 62 to 82 while you're young and still traveling etc. Surely your portfolio can cover any shortfall you might have in SS dollars should you outlive the break even point.
Simply a different set of priorities, no right or wrong
Dave
there is a twist to what you are saying.. you can't just increase your early draw taking ss early if you are living off of a safe withdrawal rate .
delaying always allows a higher "SAFE WITHDRAWAL RATE " day 1 of retirement when laying the money out of your own pocket than taking ss early and adding in your safe withdrawal rate .
a safe withdrawal rate is always going to be based on your amount invested ,allocations and number of years in retirement .
so as an example lets take someone who has 500k , 30 years and a 50/50 mix .
they can safely pull 4% or 20k a year inflation adjusted . that is the max until down the road when you can see how things are going and whether a raise is in order .
lets say they intend to get 20k taking ss early , so their budget at the gate is 60k .
that is all they can safely draw - based on modern retirement theory . they can safely count on a max of 60k a year initial spending budget no matter what so they can't just exceed that amount and take more . .
sequence risk and protecting against worst outcomes initially requires them to keep a lot of dry powder and that is why it is called a safe withdrawal rate so they really have goal posts that they have to stay with in .
but if they delayed until 70 the check would be 70% larger and has no sequence risk at all and requires no dry powder kept in the pool for worst case scenario's .
so in this case they can actually draw more than 20k day 1 safely , if you do the actual math because when ss kicks in the draw from their investments falls by 70% as ss makes up the bigger portion of income , sequence risk falls off a cliff drawing 70% less out and less dry powder needs to be kept .
so the math is not the same taking it early because you are more dependent on markets and have more sequence risk to deal with for a lifetime vs just 8 years delaying and then sequence risk takes a dive and that is the twist . . your draw day 1 will always be larger delaying ss and laying the 8 years checks out up front than not delaying it and taking your full safe withdrawal rate and early ss , and you can't make up that difference pulling more from savings since it will no longer be a safe withdrawal rate if you try to match it up . .
you can run the actual scenarios in firecalc or fidelity's calculator which accounts for sequence risk and see the difference in both safe withdrawal amounts delaying vs taking it early .
Last edited by mathjak107; 05-21-2017 at 03:52 AM..
A real SWR assumes a constant "other" income, whether SS or pension or rents..whatever. By adjusting your SWR to your SS amount from delayed filing, then all you need is to cover your SS amount as added from day of retirement. Once collecting,mthat added is dropped, of course.. One of the nice things about delaying is you can change your mind and collect 6 months in arrears, if you have to.
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