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as i keep saying , the draw should be the same regardless of when you take it if you are delaying properly ..no one who delays should be waiting 8 years to first take more money or in my opinion it is a poor plan
What’s the difference between that and any other kind of deferred gratification? Lots of people live frugally so they can accumulate wealth. This is no different from living frugally for 8 years and investing the money in an annuity. There’s also survivor benefits to consider. If you’re the dominant wage earner, your spouse is going to see a big cash flow hit if you collect at 62 and die at 70. Not everyone is in your set of circumstances where you have a big pile of investable assets.
I generally agree with your viewpoint but it doesn’t apply to everyone. I’m certainly not planning to spend less now than in my 70s. Our difference is that I’m more conservative and want the sure thing age 70 Social Security check. I’m an engineer who spent their career doing worst case contingency planning. I tend to only take risks when it’s my only option. What I care about is not being poor. My age 70 check assures that I won’t ever be poor.
most of us live "frugally so we can save and get to the point we do have enough to retire on .. then we tend to set a retirement lifestyle based on income .
while you always will have some that like staring at their money more then spending it , i think most of us want to have the best retirement we can afford and reap the fruits of a lifetime of scrimping and saving .
in my opinion not enjoying the same choices and spending early on in retirement that you could or should makes little sense to me .. i could never see waiting 8 long years to first bring the budget up to level so you can first start enjoying that money ....
will some live on less early on and roll the dice they are able to make use of the money later ? sure .. but like i said , i can't see doing that when you have the choice to enjoy a full budget day one if you delay and i always specifically point that out as food for thought for those that think that it has to work where you delay and never get to increase spending while you are younger or healthier .
armed with more knowledge if they still choose to live on less and wait it out then great but at least if they read my post they are aware it does not have to work that way. as opposed to the majority who think everyone waits those 8 years to spend more because they don't realize there are alternative ways to enjoy the same budget early on . .
as i keep saying , the draw should be the same regardless of when you take it if you are delaying properly ..no one who delays should be waiting 8 years to first take more money or in my opinion it is a poor plan
So if my friend decides to quit working at 62, in your opinion, should he consider taking Social Security even though he does not necessarily need it? His wife also works in a job she loves and has no plan to retire until after 70. She earns over $100,000 so her benefit is high in itself. They believe they can live on her income alone for a while.
I guess the question is, if they should need income after he stops work, should they tap their 401k or SS first? Jay
...my opinion is it is best to take the same draw rate if you can regardless of when you file if you have the assets to have that choice ... whether delaying or early is better has lots of considerations
Well ya- there's a lot of factors that go into it. If you have to pull out of an investment fund that's making 12% to live on, so you can wait to collect SS till 70, you might as well just take SS earlier.
I'm sure mathjak will respond, but my understanding (of his points) is that it's not a question of "IF." Rather, assuming we are talking about a retired worker with no income, the money to live on from 62-70 IS coming from somewhere... and that money would (or could) have been invested in something, with some level of return. Since those existing funds are being spent down (and returns lost), in order to delay SS, that is a cost that is frequently overlooked in these comparisons of 62 versus 70.
In full disclosure, I am one who ignored that aspect until now, and have been locked in on the rationale that says "where else can you get 8% guaranteed per year... of course you should delay SS." This thread has been educational, and is making me re-evaluate the strategy, even if I haven't changed my mind quite yet. So thanks for that!
Last edited by HeelaMonster; 06-13-2019 at 09:21 AM..
So if my friend decides to quit working at 62, in your opinion, should he consider taking Social Security even though he does not necessarily need it? His wife also works in a job she loves and has no plan to retire until after 70. She earns over $100,000 so her benefit is high in itself. They believe they can live on her income alone for a while.
I guess the question is, if they should need income after he stops work, should they tap their 401k or SS first? Jay
Tell him to get TurboTax and run different scenarios, he’ll see how much he gets to keep with taking it early at 62.
I'm sure mathjak will respond, but my understanding (of his points) is that it's not a question of "IF." Rather, assuming we are talking about a retired worker with no income, the money to live on from 62-70 IS coming from somewhere... and that money would (or could) have been invested in something, with some level of return. Since those existing funds are being spent down (and returns lost), in order to delay SS, that is a cost that is frequently overlooked in these comparisons of 62 versus 70.
In full disclosure, I am one who ignored that aspect until now, and have been locked in on the rationale that says "where else can you get 8% per year... of course you should delay." This thread has been educational, and is making me re-evaluate the strategy, even if I haven't changed my mind quite yet. So thanks for that!
I just need room to convert my Roth. Simple reason. I get into a higher bracket once I take SS or once one of us goes first. I could be looking at 32% bracket if I’m not careful.
I just need room to convert my Roth. Simple reason. I get into a higher bracket once I take SS or once one of us goes first. I could be looking at 32% bracket if I’m not careful.
Yep. I'm going to risk sounding like a "mathjak acolyte" .... but that is yet another twist I learned here (or maybe it was the other IRA thread).
The opportunity to draw down (or convert) taxable accounts, making use of the $24k exemption to avoid tax altogether (or $48k and still keep taxes low), is another good reason to delay SS. Reading up on this outside the forum, I have seen age 62-70 referred to as the "golden window" for this tax strategy. I have already converted all traditional IRAs to Roth, but have a big chunk in employer-sponsored retirement accounts, funded with pre-tax dollars, that will be taxed at withdrawal.... and being able to draw them down during these 8 years, reducing the eventual RMD, has some real appeal.
What’s the difference between that and any other kind of deferred gratification? Lots of people live frugally so they can accumulate wealth. This is no different from living frugally for 8 years and investing the money in an annuity. There’s also survivor benefits to consider. If you’re the dominant wage earner, your spouse is going to see a big cash flow hit if you collect at 62 and die at 70. Not everyone is in your set of circumstances where you have a big pile of investable assets.
I generally agree with your viewpoint but it doesn’t apply to everyone. I’m certainly not planning to spend less now than in my 70s. Our difference is that I’m more conservative and want the sure thing age 70 Social Security check. I’m an engineer who spent their career doing worst case contingency planning. I tend to only take risks when it’s my only option. What I care about is not being poor. My age 70 check assures that I won’t ever be poor.
not everyone will have enough assets to safely lay out , take the draw up front and enjoy the same level of spending early on . it is those people who need to really look at their situation and retirement spending because they either have to live on less to delay or then they have no choice to delay and need the money up front taking ss earlier . .
delaying for most will not be an option without taking a pay cut early on and waiting to spend more . most of us don't like pay cuts .
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.... but that is yet another twist I learned here (or maybe it was the other IRA thread). 
