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ideally if one delays ss and they need ss and their other money to live the lifestyle they want then they will need to lay out the social security they are not collecting .
it would make no sense for me to hypothetically wait 8 years to spend more and live the life i wanted with a full budget .
in theory one’s budget should stay constant all the way through, it should merely shift from more your own money in the beginning to more Social Security money once it kicks in.
The danger, though, is, if you don’t have enough saved, you can deplete your savings dangerously low
Last edited by mathjak107; 12-14-2023 at 03:07 PM..
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,707 posts, read 58,042,598 times
Reputation: 46177
Quote:
Originally Posted by Wile E. Coyote
The winning formula is to max out everything . ...
That 'depends'
(And very obvious when you are doing volunteer help with seniors and financial management.
Painful case studies on maxing out the wrong thing. (thinking it was a good idea at the time)
Painful for some (many) who pull SS out on day one and were already maxed out on spending, then they just went ahead and SPENT 100% of their new windfall. No investing / planning for the LT future.
Now 80+ yrs old and saying... "If only I would have thought this through"
(And very obvious when you are doing volunteer help with seniors and financial management.
Painful case studies on maxing out the wrong thing. (thinking it was a good idea at the time)
Painful for some (many) who pull SS out on day one and were already maxed out on spending, then they just went ahead and SPENT 100% of their new windfall. No investing / planning for the LT future.
Now 80+ yrs old and saying... "If only I would have thought this through"
(As OP is doing )
I never said max out spending. My idea for OP is to become a saver now during his last 6 years of work and work on the budget. Practice the retirement budget while you are still working.
There is an interesting article linked below where someone asked the question if they can retire at 62 and they have $500,000 in a Roth IRA and $2,000 a month between pension and SS. They say the $500,000 could throw off $20,000 a year. But, they think if invested 60/40 could be worth almost $1 million by the time she is 70 (and recommend she works to 70 to get her retirement way up from $4,000 a month). They think she has too much of a chance of running out of money if she retires at 62 with these numbers.
There's a lot of arguments against this advice in the comments section too.
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
34,707 posts, read 58,042,598 times
Reputation: 46177
Quote:
Originally Posted by Wile E. Coyote
There is an interesting article linked below where someone asked the question if they can retire at 62 ....
There's a lot of arguments against this advice in the comments section too.
"Sounds like the Smart Asset advisor is a fool to me. Why stop at 70 when you can work until you die on the job?"
and
My wife also took SS at 62 and we enjoyed retirement for 15 yrs. Delaying retirement or SS would not have worked as she passed in 2018 from ALS. Life really can be too short.
Having watched a few people die at work, and many others die early in retirement.
Make your choices with full disclosure. (and deep consideration).
You should have plenty of visibility of both sides, within your group of friends and family.
Just yesterday I was chatting with friends who took SS too early, and another who will not live long enough to to be eligible to take SS.
"Sounds like the Smart Asset advisor is a fool to me. Why stop at 70 when you can work until you die on the job?"
and
My wife also took SS at 62 and we enjoyed retirement for 15 yrs. Delaying retirement or SS would not have worked as she passed in 2018 from ALS. Life really can be too short.
Having watched a few people die at work, and many others die early in retirement.
Make your choices with full disclosure. (and deep consideration).
You should have plenty of visibility of both sides, within your group of friends and family.
Just yesterday I was chatting with friends who took SS too early, and another who will not live long enough to to be eligible to take SS.
When I talk about delaying SS I do not mean that I am still working. I just mean I am delaying taking it. My plan is 5 more years and retiring around 66 (mostly because I need to buy shxt like a roof, a new or newish car, another round of a/c, furnace, etc.).
There is an interesting article linked below where someone asked the question if they can retire at 62 and they have $500,000 in a Roth IRA and $2,000 a month between pension and SS. They say the $500,000 could throw off $20,000 a year. But, they think if invested 60/40 could be worth almost $1 million by the time she is 70 (and recommend she works to 70 to get her retirement way up from $4,000 a month). They think she has too much of a chance of running out of money if she retires at 62 with these numbers.
There's a lot of arguments against this advice in the comments section too.
one is that you are locked in to 20k a year inflation adjusted income starting with 500k and a 60/40..that is wrong , that is based on worst case outcomes .
anything better in sequences and returns then worst case needs raises taken or to much money is left unspent .
so if that 500k was able to grow enough to be 1 million over 8 years then income would be growing if they retired at 62 .
the other wrong assumption is that everyone uses the constant dollar method of withdrawal which is what that 4% of the initial balance is .
there are other methods like what we use which is called bob clyatts 95/5 .
our draw each year is based on actual balance but to avoid steep cuts in a down market , one takes the higher of 4% of the actual balance or 5% less then the previous year .
there are no other adjustments needed . raises and inflation adjusting are built in .it is a very popular draw method for those who know about it and it even has its own tab in firecalc
for a choice as a draw method .
so as your portfolio value grows in up years your draw is larger and larger .
there is also no guarantee you will grow 500k to a million in 8 years . we had the lost decade for stocks in our lifetime already
so that article as usual is nothing more then useless click bait.
as far as how much of a raise they can take if they retire at 62 ?
that needs to be seen in real time as their balance can be all over the map.
and remember , 60/40 can also mean one of those leveraged models i spoke about really driving income up if it’s successful.
Last edited by mathjak107; 12-15-2023 at 02:25 AM..
here is the range of a conventional 60/40 , with 500k
more the portfolio value at 30 years if raises are not taken except inflation adjusting, can range from minus 136,237 under worst case outcomes to 2,282,000 with the best outcomes , with an average of 718k left .
so without a system for taking raises along the way they can die with more unspent then they started with
FIRECalc Results
Your spending in every year after the first year will be adjusted for inflation, so the spending power is preserved.
FIRECalc looked at the 123 possible 30 year periods in the available data, starting with a portfolio of $500,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 123 cycles. The lowest and highest portfolio balance at the end of your retirement was $-136,237 to $2,282,449, with an average at the end of $717,926. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 5 cycles failed, for a success rate of 95.9%.
Last edited by mathjak107; 12-15-2023 at 02:27 AM..
how should raises be taken if using the conventional constant dollar method , which is the 4% rule , which really ain’t a rule
one suggestion from kitces is if your balances is 50% higher then you started with , take a 10% increase ON TOP OF THE NORMAL INFLATION ADJUSTMENT.
look again in 3 years and repeat if still 50% above .
so you can see over time with good or average markets one’s income can increase a lot.
it can be as much as 30% higher plus decades of inflation adjusting to that higher income
oh did the article fail to realize that ?
Last edited by mathjak107; 12-15-2023 at 02:28 AM..
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