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or what if i die , the most common way of deciding
I'm going to quote one of the MathJack Precepts:
"The question that requires consideration is not just 'what if I die?', but 'what if I LIVE?'"
IMHO, family history and/or stark survival are compelling reasons to take it early.
As an older divorced woman, my inclination is to hang in there. If/when I need extensive medical support (e.g., assisted living) - it's likely that extra money per month will come in handy.
My personal quandary is weighing the costs of continuing to tote that barge in view of the bandwidth consumed by the continuously changing family dramas. Thankfully they're not in my backyard. But I could make a difference. But I would probably be paid with resentment.
or what if i die , the most common way of deciding
That is one of the poor reasons, along with “I’d rather have the money to spend while I’m young rather than at 70 when it does me no good”, if those are the main or only one. If you absolutely know you will be dead by 75, then 62 is the smartest choice by far. Unfortunately there are some in that predicament.
But usually it is never one reason. As mentioned ad nauseum here, for many, there is simply no choice. They can not work past 62, and this is their only choice. Fine. But people that choose to not work at 62 BECAUSE they can file for SS and think that’s enough are probably setting themselves up for failure, should they live a long life. I think that anyone that makes that decision, with SS the major source of income, probably is not too financially savvy to begin with.
Once you can truly afford to take SS whenever you want, then there is really no bad choice, as the actual monetary difference is not going to make or break your retirement. Will an extra $100k cumulative (or less) at age 90 really make a difference? The much higher secure income might. No one can predict that car in advance. If you delay even qualifying for the max SS for 8 years, the most that annuity costs you is around $300k. To many people, that difference in their portfolio is monstrous, regardless if the amount they end up collecting at age 70 is enough to easily live on, which is like making about $48k in a regular job.
But if you have say, $2 million in todays dollars or more saved, is there a real difference to how you live or what you leave behind if it is $300k less for a few years? In short order, once you start collecting that large SS check, and reduce withdrawals from investments the same amount, that portfolio will recover and likely then some. IF you live long enough, IE age 82-3.
Despite both my parents passing at 69 & 81, I plan to delay as long as it appears to make sense. They both died of what I feel were preventable causes. DM was lifelong chain smoker and DF was always overweight, and never in any kind of shape (except round) once he hit his 40’s and worked hard labor much of his life, none of which is relevant to me. But at 62 now, if I get a bad diagnosis at 65, I’ll file in a heartbeat.
Last edited by Perryinva; 01-01-2020 at 07:37 AM..
But if you have say, $2 million in todays dollars or more saved, is there a real difference to how you live or what you leave behind if it is $300k less for a few years? In short order, once you start collecting that large SS check, and reduce withdrawals from investments the same amount, that portfolio will recover and likely then some. IF you live long enough, IE age 82-3.
yes , not having 40k a year less in ss plus colas , even with a few million would matter . just because like i said our lifestyle budget includes that 40k a year ss whether we delayed or not ... that money is planned around . and that 40k ss buys quite a bit of lifestyle for us which we count on . especially when you figure that income takes 1 million to generate without the ss
But you don’t actually have $40k less a year plus COLAs. You have the difference between the smaller collected amount at 62 and the earnings that were not withdrawn continue to make, which is just as COLA increased by virtue of being invested.
The difference in PRACTICAL income between collecting a smaller amount at 62 and having a larger portfolio to draw a SWR from VS spending down your portfolio so your SWR amount is smaller, but drawing more as if you had the larger age 70 SS, and then maintaining that income when collecting is a scant $2-3k a year in favor of delaying. That is hardly buying “quite a bit of lifestyle” now, is it? You have posted the same real ROI plots for years showing the same thing. None of this is new to you. It is a longevity hedge, nothing more, nothing less, and while at a truly great cost for the income, its not a giant hedge amount at that, EXCEPT for a spouse that may be the last one standing. The maximum that annuity is worth is about $22k/yr, tax preferred, COLA & spouse inheritable, at a cost of about $250k. By anyones standards, while a nice annuity, to anyone that has a few million NW, that is not going to make or break your retirement.
But you don’t actually have $40k less a year plus COLAs. You have the difference between the smaller collected amount at 62 and the earnings that were not withdrawn continue to make, which is just as COLA increased by virtue of being invested.
The difference in PRACTICAL income between collecting a smaller amount at 62 and having a larger portfolio to draw a SWR from VS spending down your portfolio so your SWR amount is smaller, but drawing more as if you had the larger age 70 SS, and then maintaining that income when collecting is a scant $2-3k a year in favor of delaying. That is hardly buying “quite a bit of lifestyle” now, is it? You have posted the same real ROI plots for years showing the same thing. None of this is new to you. It is a longevity hedge, nothing more, nothing less, and while at a truly great cost for the income, its not a giant hedge amount at that, EXCEPT for a spouse that may be the last one standing. The maximum that annuity is worth is about $22k/yr, tax preferred, COLA & spouse inheritable, at a cost of about $250k. By anyones standards, while a nice annuity, to anyone that has a few million NW, that is not going to make or break your retirement.
Appreciate your thinking, but please consider a point of fact:
For some, the 62/70 difference is significantly more than a scant $2-3K per year.
Even a difference of $2.5K/yr (for example) is significant: that boils down to $50/wk, COLA-adjusted.
If pushed, I could buy a week's worth of groceries for $50. Chicken, rice, beans, eggs, vegetables, milk and the proverbial apple a day. Of course, I am only cooking for one - YMMV.
But you don’t actually have $40k less a year plus COLAs. You have the difference between the smaller collected amount at 62 and the earnings that were not withdrawn continue to make, which is just as COLA increased by virtue of being invested.
The difference in PRACTICAL income between collecting a smaller amount at 62 and having a larger portfolio to draw a SWR from VS spending down your portfolio so your SWR amount is smaller, but drawing more as if you had the larger age 70 SS, and then maintaining that income when collecting is a scant $2-3k a year in favor of delaying. That is hardly buying “quite a bit of lifestyle” now, is it? You have posted the same real ROI plots for years showing the same thing. None of this is new to you. It is a longevity hedge, nothing more, nothing less, and while at a truly great cost for the income, its not a giant hedge amount at that, EXCEPT for a spouse that may be the last one standing. The maximum that annuity is worth is about $22k/yr, tax preferred, COLA & spouse inheritable, at a cost of about $250k. By anyones standards, while a nice annuity, to anyone that has a few million NW, that is not going to make or break your retirement.
no , while i was delaying to age 65 we had to take out from our portfolio not only our normal draw that our portfolio would provide throughout retirement but another 40k a year to make up for the portion of our budget ss was going to cover that we were not getting .
if our yearly budget was 150k as an example i needed all 150k from our money .... if i took ss we would need only 110k from our portfolio plus the 40k in ss we get
so yeah it certainly does cost us 40k more a year .....in my opinion it is a poor idea to first wait untill ss kicks in to spend more ... rather the budget should stay the same , inflation adjusted all the way through ..only the mix of your money vs ss money should shift depending on when you file and ss money starts to replace some of yours .
Last edited by mathjak107; 01-01-2020 at 10:12 AM..
I think there is too much fearmongering about running out of money in retirement. We're told we need 80% of current income to retire comfortably and as a skeptic I ran our numbers and it's more like 35%. Our key is no debt.
Government statistics show that spending in retirement voluntarily slows (and continues to decline) at age 75. Most people will need less money in retirement than they are told.
the problem was identified early on .. the thread questions why she did not know something that is pretty much common knowledge with most seniors was the root of th discussion if you read the threads
the real question is why do people spend more time researching and learning about a refrigerator or car or even restaurants , then they do some of the most important decisions in their lives like ss and basic retirement planning . that is the question and it is not just about the op .
the basic understanding of these things , can take all of 5 minutes of reading to learn , yet so many still won't bother to do an ounce of homework . then everyone else is to blame when they don't know something that is basic ..
social security can be very complex , we all get that ... but there are things that are just pretty much so basic that anyone ss age should know or have known , some of these things on their own . there are many things in retirement that are so important that there will be a price to pay for taking no interest and this is an example of what can happen when you expect others to do 100% of the learning for you
If you had filed immediately instead of delaying and drawing the extra $40k you would have only been drawing.....$20k. And from a larger pot. Since you filed at 65, that’s hardly delaying. 3 years? Cost you $120k extra from your savings to wait. If you get an extra 20k a year, in 6 years you are ahead. In your case since your wife collects spousal, filing when You did made perfect sense.
@jane_sm1th73, I believe you misunderstood the math. Of course delaying from 62 to 70 is more than $3k/yr. That is not what I wrote. In my case delaying is almost $20k more a year. What I wrote was that the PRACTICAL income difference is much smaller. Using the 4% ruoe as a typical “what if”, if Inhave a a million saved and collect SS at 62 of $27000/yr, then I have a practical income of 4% of a mil plus my SS or $67k. If I delay until age 70, my SS (all in todays dollars so inflation is factored out) will be $46k. And it will have cost me about $300k to do that, so my million is now $700k. So my income is now 4% of $720k, or $28k plus my $46k SS or $74k. Ok so the difference is more like $7k/yr, but that is only for a max earner for 35+ years. Cut those numbers roughly in half for an average earner, and you see my point.
- identified what Cindi's real issue was. ( that when she attained FRA she should have switched to her husbands benefit) Some of you were kind and helpful but some of you (MIKE) act like you have it all figured out when in fact NONE of you did.
Thanks for the shout out
But, I did give her the correct answer, GET HELP from someone who knows what he/she is doing.
OP obviously needs help understanding the Social Security laws.
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