So, I did the calculation for retirement at 62...... (single, benefit, family)
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So when you say "just replace it later" do mean replace the income stream or replace the money from the funds you used.?
For example in order for us to delay taking SS for a few years to allow it to grow we would have to take maybe 200-250K from a bigger pot. Now when we DO decide to take SS we won't need to take anything from the "pot" anymore-(except minimum distributions) and we weren't thinking of replenishing the 250K we took- are you saying we should?? (I hope I explained that clearly).
We will begin to replenish the pot and have slowly been in after tax accounts. However as my SS kicks in we will begin big time. We were fortunate and our retirement accounts have grown since we retired as have our after tax accounts. I am just unable to see why we should stop growing net worth if we are able to. That is the key thing if able to. Who knows one day a big hit may come and the larger the pot the more it is able to stay solvent.
....did I do it right. Took the age of 80 as an ending point
Do a google search on "Life Expectancy Calculator." You'll get many pages of results. Use several of them. I suspect you will find that selecting 80 as an end point is too conservative - you will probably live much longer
The problem is that anyone with a decent concept of investing has done well over the last 8 years. There have been no real bears at all, just small corrections, and only 2 at around the 10% plus range. To actually plan on investments doing as well over the last 8 years would be delusional. Investors were saying the same thing in 2000. How many of us lost 50-60% on Technology sure things? Remember Qualcomm dropping from 200+ to 20?
I've been at this for 45 years. I made more money on the 'tech bubble' than I lost. I was pretty much out of tech stocks by 2000 and could later buy the good ones that got cheap. Just like I was pretty much out of common stocks by 2008, which enabled me to get back in 2009 and 2010 and buy at the bottom. Some of those have purchases tripled and more. The S&P has averaged 7-9% over the long term, depending on the calculation, and if I can't match or beat that then I'll be in index funds and ETFs.
So in your case, you feel you can beat the market forever, on average, and plan to capitalize on it. THe. You shiuld be very very wealthy at this point. And when to file SS is not even a consideration, in order to have it as INCOME to survive on. If SS went away tomorrow, it really would only be a dip on your investment stream...something that didn't work out.
You would be a 1%er, statistically....these discussions revolve around those that HAVE to have SS as income or their lifestyle is seriously impacted, ie where saving money after retirement is a surprise, not a plan. I certainly don't PLAN to "replenish my fronted savings" after I collect my delayed SS. If it happens to happen, great! But the fact is that for many years after I collect 67-68-69-70, whenever, I will not need to withdraw from savings to live well at all, beyond what I am forced to take as RMDs. Our lifestyle is planned to be equal to what our pensions, SS, etc. So as long as my accounts earn more than the inflation adjusted RMDs take out, which, I agree, on average, should not be hard to do, then we will have a healthy emergency fund. Ideally, I would love all to be in a Roth, so it would totally be my discretion as to what to withdraw,mbut that wont be possible. If I have $250k in my Roth as planned by then, and a few times that left in deferred accounts after paying for my delayed annuity, then that amount can be in longer term investments as need be. We are not planning on leaving a large inheritance, so net worth growth will certainly be tempered by moderate to lower risk, over maximum gain and higher risk.
So when you say "just replace it later" do mean replace the income stream or replace the money from the funds you used.?
For example in order for us to delay taking SS for a few years to allow it to grow we would have to take maybe 200-250K from a bigger pot. Now when we DO decide to take SS we won't need to take anything from the "pot" anymore-(except minimum distributions) and we weren't thinking of replenishing the 250K we took- are you saying we should?? (I hope I explained that clearly).
I got curious about the two strategies: (1) delay SS and spend savings until SS kicks in at 70, or (2) take SS at FRA, but it will be less than what you would get by waiting until 70. I have always believed #1 is better as that is the common advice, and that is indeed what I am doing so far.
But I decided to check by running a back-test of our exact portfolio and other sources of income. In the back-test I went through a 30-year retirement cycle, calculating the withdrawals from IRAs and investments, and calculated the taxes (a combo of ordinary income and capital gains) we would pay every year. I used historical values for stock and bond returns, and adjust the whole thing for inflation every year. I did this for 55 30-year periods, starting in 1931 and going all the way up to 1986 (which is the last year I can run a 30-year backtest).
What I found was surprising - the total taxes we would pay, on average, will be about 2% lower by delaying SS. The ending assets were about 10% higher, on average, by delaying SS. Basically, delaying SS allowed us to have five years of the 15% bracket, and mostly just capital gains from our taxable account. But then we had 25 years of higher SS and high RMDs which basically washed out those 5 years of being tax advantaged.
So, for us, it does not seem to make a big difference whether we do option #1 or #2 - both will work OK. But this is very specific to our portfolio, our withdrawal rate, our AA and other things we do with our investments. For instance, our taxes will go up significantly at age 70, due to RMDs and starting SS. I adjusted our gross withdrawal rate from savings to pay for those extra taxes. We don't have to do it that way, but that is what we are doing.
Is there any calculator where you can run the numbers comparing retiring early, FRA and then at 70? One that shows the exta checks vs delaying? And can add your spouse into it.
One of The easiest is SSAnalyze. Its actually fun to play with the COL rates, and retirement dates. It's only real problem is that the resolution is one year, instead of a month.
I didn't read this whole thread, but I don't know why you are calculating social security payments yourself when you can make an appointment with your local social security office and have them run the calculations for you.
That is what I would do before making any decisions. Just know that their caluculations do not include COl. Although, that may not make much difference, as lately COl raises have been slim to none.
One of The easiest is SSAnalyze. Its actually fun to play with the COL rates, and retirement dates. It's only real problem is that the resolution is one year, instead of a month.
Any calculator you use has to consider all elements of the puzzle - taxes, how taking SS early (or late) affects your portfolio and its earning power for the remainder of your retirement, and whether SS is a better investment than the stock market. It is not an easy problem as there are tons of variables.
Twobyfour: yes. It is very individually income and tax specific. And 30 years starting when? Every year after that, where you may need it the most, the gap widenes. If I have $20k more from SS, (the difference of which increases every year) at age 70. Y delaying, then for instance, I save 5.75% on just state taxes (tax free SS vs tIRA) so that's $1100 right there. Then, assuming we stay in the 25% bracket, that's $3k less income for federal tax (I will always pay tax on 85% of my SS due to pensions), so there's another $750. So to have the same after tax increase in income of the $1850 saved, it would require about $2000 for pre tax accounts. And that amount increases every year. So basically, I reduce my withdrawals from pretax accounts by $22k per year, in age 70 dollars (assume file at 70). Inflation adjusted, over a 30 year period, even at a measly 1% COLA, that means $675k less I would withdraw and have to have saved and worry about investing properly etc.
So if the cost of that $20k/yr COLA annuity ("lost" SS checks) is, by delaying, say even $180k over that 8 year period from 62 to 70, its not more than 10 years before the annuity is net positive. On paper, sure looks worth it to me....
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