When did you start taking Social Security Benefits?

[mathjak107]

Average returns mean next to nothing at all when spending down. It is all about sequence risk.

The same average return can have a 15 year difference in how long the money will last just based on the order those gains and losses came in and that is with the exact same average return..

That is what makes retirement planning so difficult and unpredictable , average returns do not count.

[rdflk]

And to think I thought I MIGHT have a good idea.... (But I suppose my first hint it wouldn't work is that no one has thought of it before

...I was thinking of a scenario where a person takes SS benefit at 62...and keeps working, and therefore puts money back into their benefit calculation....so they would get the 75% benefit at 62, and build the benefit higher by continuing to work, so that when the person finally does retire, their benefit is higher than their age 62 benefit has been for two reasons: 1) because if they've earned more than the earning threshold SS has withheld the 1 for 2 portion of their benefit and put it back into their calculation -- And 2) because they've continued to work and contribute. The re-calculation will make the benefit higher.

(Two caveats though: of course reduced benefit at 62 would also be taxed, so that's a factor. But also if you make too much money by the time they hold back 1 for 2 for over earnings...some people wouldn't get any benefit anyway...it would ALL be withheld.)

So much for that plan.

[mathjak107]

ss is based on your 35 highest earning years so if you are earning so little as to not give the money back under the earnings test there is a pretty good chance that little bit will count towards nothing.

[reed303]

People should also understand that the "highest 35 years" used to compute benefits are not necessarily the highest "actual" dollars for those years. The 35 are counted after applying an inflation (wage index) factor.

So what looks like a low $ early year could count for more than a later higher $ year. I have several years in my record that work this way. For instance, $4800* in 1963 & 1964 (# 31 & 32 of 35) are worth more than $33,000 in 2008 & 2009 (#35 & 36 of 35).

If you want to do the math, the SSA chart to figure your own is at http://www.socialsecurity.gov/pubs/EN-05-10070.pdf

* Incidentally, $4800 was the max wage number those years :-)

[Perryinva]

There are plenty of alternative spend down income models, that have you restart each year as if it was your retirement start. Those models of course do not claim ANY consistent income amount over the life of your retirement, but instead assume that your funding via fixed streams is adequate for the vast majority or all of your required expenses and the income model amounts determine how much each year you have for discretionary funds. Personally, I like that type of model, because it is the most flexible to your circumstances, but it can only apply to retirees that have more than adequately planned, or were lucky in career and job choices. Remember that most of the fixed/COLA steady income models all assume you want no loss of principle or even want an increase of principle at your death. I most certainly will not live a less than desired retirement in order to leave a huge sum to my heirs. But thats just me.