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Old 04-26-2010, 03:08 PM
 
137 posts, read 458,911 times
Reputation: 194

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Please help me wrap my mind around this, its just not making sense to me. My plan in regards to my cash ussage in retirement has been the following:

1. Retire at 62, draw SS right away and live off that best I can.
2. If more money is needed tap into IRA's next.
3. Lastly save my current 401K as long as I can so its continually compounding interest.

I was on the AARP site and they said the following:

7. Be smart about Social Security. Draw from your 401(k) or IRA first, and claim Social Security benefits later. If you can wait until 70, your check will be about 76 percent higher than if you had started at 62, and will improve the protection for your spouse as well.

Do-It-Yourself Financial Freedom - 12 Steps for a Safe Retirement - AARP Bulletin Today

I'm confused by this a little. I understand that if I waited to start drawing my SS until I was say 72 (if I could manage that even) my SS benifit would nearly double. That said, if I assummed I'd live to 78, my potential payout from Social Security would be a greater amount if I started drawing at 62 rather than at 72.

Am I missing something?
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Old 04-26-2010, 03:36 PM
 
435 posts, read 1,034,952 times
Reputation: 396
Here's a link to a Social Security calculator that lets you see how early or delayed retirement will affect your benefits.
Early or Late Retirement

When to draw depends in part on life expectancy. I did some calculations a few years ago that showed my break-even point -- if I lived beyond that, I'd be ahead by waiting to draw.

My mother's greatest fear was outliving her savings. She and dad lived through the Depression and didn't trust the stock market, so they kept their savings in U.S. Savings Bonds. My mom was over 100 when she died, almost but not quite outliving her money. Because women in my family tend to live a long time, I'm waiting until 70 to draw Social Security.
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Old 04-26-2010, 03:40 PM
 
Location: The South
767 posts, read 2,095,323 times
Reputation: 696
You are betting you will be alive and SS will still be paying at 72.
Whats that old saying "A bird in the hand, etc"?
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Old 04-26-2010, 04:46 PM
 
31,027 posts, read 37,064,404 times
Reputation: 13325
Quote:
Originally Posted by cheapsk8 View Post
Please help me wrap my mind around this, its just not making sense to me. My plan in regards to my cash ussage in retirement has been the following:

1. Retire at 62, draw SS right away and live off that best I can.
2. If more money is needed tap into IRA's next.
3. Lastly save my current 401K as long as I can so its continually compounding interest.

I was on the AARP site and they said the following:

7. Be smart about Social Security. Draw from your 401(k) or IRA first, and claim Social Security benefits later. If you can wait until 70, your check will be about 76 percent higher than if you had started at 62, and will improve the protection for your spouse as well.

Do-It-Yourself Financial Freedom - 12 Steps for a Safe Retirement - AARP Bulletin Today

I'm confused by this a little. I understand that if I waited to start drawing my SS until I was say 72 (if I could manage that even) my SS benifit would nearly double. That said, if I assummed I'd live to 78, my potential payout from Social Security would be a greater amount if I started drawing at 62 rather than at 72.

Am I missing something?
And if you live to 87? 90? 94? Your spouse outlives you? Like many things it is your situation and your best conjecture guess. Family health can be part of the calculation and how much longevity there is in your family. There is also the question of the return on your portfolio vs the increase in SS based on waiting. Also you can legacy on your portfolio to your kids not your SS.
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Old 04-26-2010, 05:55 PM
 
85,803 posts, read 83,304,960 times
Reputation: 61518
current thinking is if you have the resourses(assets) to delay taking it, instead of say withdrawing 4% of your inflation adjusted nest egg each year take say 6% right from day 1... why?

because if you live long enough to collect you have the comfort of knowing your nest egg will be replenished with about 30% to 50% more in payments later on refilling the extra dough your pulling out now so you have more money each year while your still healthy and able to enjoy alot of things you may not be able to do later on..

think of it as almost as if your buying an annuity with the money you lay out between 62 and 65 or 70 that will give you or your spouse a lifetime of higher payments...

your nest egg will be refilled starting at age 65-70 with a much larger stream of money and that will go on forever...

to me its not about dying with the biggest pile of money but rather living the best darn life we can while we can.


to me retirement isnt about surviving and getting by... its about enjoying the fruits of a lifetime of work,savings and sacrafice and living better now then before
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Old 04-26-2010, 08:04 PM
 
31,027 posts, read 37,064,404 times
Reputation: 13325
Quote:
Originally Posted by cheapsk8 View Post
Please help me wrap my mind around this, its just not making sense to me. My plan in regards to my cash ussage in retirement has been the following:

1. Retire at 62, draw SS right away and live off that best I can.
2. If more money is needed tap into IRA's next.
3. Lastly save my current 401K as long as I can so its continually compounding interest.

I was on the AARP site and they said the following:

7. Be smart about Social Security. Draw from your 401(k) or IRA first, and claim Social Security benefits later. If you can wait until 70, your check will be about 76 percent higher than if you had started at 62, and will improve the protection for your spouse as well.

Do-It-Yourself Financial Freedom - 12 Steps for a Safe Retirement - AARP Bulletin Today

I'm confused by this a little. I understand that if I waited to start drawing my SS until I was say 72 (if I could manage that even) my SS benifit would nearly double. That said, if I assummed I'd live to 78, my potential payout from Social Security would be a greater amount if I started drawing at 62 rather than at 72.

Am I missing something?
Part of the problem is the article under the SS part doesn't differentiate based on marital status other than using the word spouse. If you are the higher income and your spouse the lower it can make a difference. There suggestion is very general and with everything, what is best for you is very specific and based on your situation.
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Old 04-26-2010, 09:21 PM
 
48,508 posts, read 88,612,073 times
Reputation: 18188
Definite its different for different people and their needs ;wants and circumstnces.A couple that have two different accounts is entirely different;fro one that has one accoutn for example.Imy case the SS money is pretty well o top of what my wife and I draw in pesions plus investments.My wife receive the same if I die. I took mine and we will decide in 4 years if to take hers or let it ride. It isn;t tho a decison of just thew amont because SS terms can change and like to in near future.
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Old 04-28-2010, 12:10 PM
 
Location: WA
5,538 posts, read 22,618,445 times
Reputation: 6293
My plan is very different. I plan to spend my IRA not SS between 60 and 70 taking what I need in the budget while keeping the taxes below 8-9%. I want to minimize the loss of control when RMD starts at 70 and maximize SS payments at 70.

We can only guess our longevity, future SS rules, investment returns, and the type and amount of taxes in the future but all the simulations I have done leads me to a plan that is inverse from the OP proposal.
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Old 04-28-2010, 12:26 PM
 
85,803 posts, read 83,304,960 times
Reputation: 61518
As i said earlier in posts ill probley take ss at 62.. pay it back at 69 or so assuming my wife and i live that long..

id then take the income deductiuon for the payback and use it to offsett roth conversions and then re-apply for the higher ss payments for life
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Old 04-28-2010, 07:12 PM
 
6,322 posts, read 14,149,758 times
Reputation: 10507
Took our SS at 62 and 63, plus have two good pensions along with a military pension. Law requires withdrawals from 401K at 70.5. After a bout with cancer, you never know how long anyone will live. so decided to take the SS now.
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