Are you on track to retire comfortably?

Status
Not open for further replies.
If you take SS at 62 as opposed to 66, the break even point is at age 82. Likewise, if you take SS at 66 as opposed to 70, the break even point is also 82. In both cases, 82 years old is the average life expectancy.

If you don't need the SS to live on and will invest it at a good rate of return, the break even age moves later, but this is not the case for most people.

If you are healthy, i.e. weight, blood pressure, and cholesterol under control with no diabetes and decent family genes, you will likely be among the 50% that live past your average life expectancy and would be better off taking your SS later. If not, grab it at 62 or 66. Like life insurance it's a gamble and you are betting you will live longer than average.
 
For probably about 90% of the people, the standard advice is to take it later rather than sooner. For those born after 1960, you only get 70% of your benefit if you take it at 62, you get 124% of your benefit if you're at 70. So if your normal benefit is $2000 at full retirement, taking 30% off yields you $1400. Waiting til 70 means you get $2480. If you're older than that, here's a chart that breaks it down:

https://www.ssa.gov/oact/progdata/ar_drc.html
 
Originally Posted By: Tom NJ
If you take SS at 62 as opposed to 66, the break even point is at age 82. Likewise, if you take SS at 66 as opposed to 70, the break even point is also 82. In both cases, 82 years old is the average life expectancy.

If you don't need the SS to live on and will invest it at a good rate of return, the break even age moves later, but this is not the case for most people.

If you are healthy, i.e. weight, blood pressure, and cholesterol under control with no diabetes and decent family genes, you will likely be among the 50% that live past your average life expectancy and would be better off taking your SS later. If not, grab it at 62 or 66. Like life insurance it's a gamble and you are betting you will live longer than average.


Looks like your math is a bit off, way off to be exact. If I take my SS at age 62 I would get $1200 a month. If I wait until I reach full benefit age (66 years 8 months), my monthly benefit would be $2000 a month. Collecting $1200 a month from age 62 until age 66 and 8 months I would collect $67200 over that period. Waiting until 66 and 8 mo to get the additional $800 per month, it would take 7 years to break even, which would be age 73 and 8 months...I don't know where you came up with a break even age of 82...
 
Originally Posted By: grampi
Originally Posted By: Tom NJ
If you take SS at 62 as opposed to 66, the break even point is at age 82. Likewise, if you take SS at 66 as opposed to 70, the break even point is also 82. In both cases, 82 years old is the average life expectancy.

If you don't need the SS to live on and will invest it at a good rate of return, the break even age moves later, but this is not the case for most people.

If you are healthy, i.e. weight, blood pressure, and cholesterol under control with no diabetes and decent family genes, you will likely be among the 50% that live past your average life expectancy and would be better off taking your SS later. If not, grab it at 62 or 66. Like life insurance it's a gamble and you are betting you will live longer than average.


Looks like your math is a bit off, way off to be exact. If I take my SS at age 62 I would get $1200 a month. If I wait until I reach full benefit age (66 years 8 months), my monthly benefit would be $2000 a month. Collecting $1200 a month from age 62 until age 66 and 8 months I would collect $67200 over that period. Waiting until 66 and 8 mo to get the additional $800 per month, it would take 7 years to break even, which would be age 73 and 8 months...I don't know where you came up with a break even age of 82...


If you read the article I mentioned earlier, it assumes that you invested that money and got a 6% return on it. That's somewhat realistic as the S&P 500 has averaged around 7% but it's been much higher the last few years if you don't include 2008 when it tanked by about 38%. But that 6% doesn't include taxes so it's a good estimate. Then your break even goes to about 83 years old. Don't forget the 2% annual cost of living adjustment when calculating those extra years worth of payments. Also I think the difference at 62 is 70.66% so you're really supposed to get $1413 a month instead of $1200. Now if you redo the numbers, that should come out closer to 82.

Also I'm not sure you appreciate what it means to break even. If you come up with 73, that means that if you die before 73, you come out ahead, if you die after 73, it's a losing situation according to your math. With your math, it would make even more sense to wait if you're expecting to hit the average life expectancy. It increases as you get older, but by 62, your average life expectancy is 84.
 
Originally Posted By: Indydriver
Originally Posted By: 02SE

So take the risk and start your own business and run it as you see fit. Just remember there's no guarantee of success, and you'll never work harder.

Good luck.


You are exactly right. This is the lesson to be learned from a lifetime of working for others and exactly how I’ve counseled my children: if you’re going to go into business, be sure it’s your name on the front door.


First of all I wasn't talking about me, I have done quite well for myself. I'm talking about the general populous and the majority of them aren't capable of starting their own business. Stop being narrow minded and assuming that it's "that easy"
 
Originally Posted By: StevieC
Originally Posted By: Indydriver
Originally Posted By: 02SE

So take the risk and start your own business and run it as you see fit. Just remember there's no guarantee of success, and you'll never work harder.

Good luck.


You are exactly right. This is the lesson to be learned from a lifetime of working for others and exactly how I’ve counseled my children: if you’re going to go into business, be sure it’s your name on the front door.


First of all I wasn't talking about me, I have done quite well for myself. I'm talking about the general populous and the majority of them aren't capable of starting their own business. Stop being narrow minded and assuming that it's "that easy"


If you're referring to me, I specifically said "Just remember there's no guarantee of success, and you'll never work harder."

As for the majority of people not being capable of starting their own business, that's either incredibly condescending, or defeatist.
 
Originally Posted By: Wolf359
Originally Posted By: CKN
Originally Posted By: BJD78
I am more leaning to taking it at 62 as well, a quick look at the family tree revealed that no males on either my mom or dad's side lived beyond 80 and the average age of death was around 74 to 78. My Dad took his at 70 and was gone at age 73 he probably drew 30 checks at best, my Mom decided to take her SS at age 62 and she managed to make it to age 81 before passing. She ended up in a nursing home at age 77 so the final 3 years of her SS went to pay for Nursing home care basically. I am more than likely just going to jump on that ship at age 62, the extra money at age 70 would be nice , but at age 70 what would I spend it on??



Exactly. Many can't/shouldn't travel at 70 either. Take it at 62 and use it for recreation or whatever else you need it for.


If you don't expect to live long, then taking it early makes sense. But if you're average, on average it's better to take it later than sooner. It's not really meant for traveling, it's basically a safety net for old age. Basically the benefit cuts and increases for taking it later are supposed to be neutral, but people are actually living longer than the tables they've been using so the standard advice is to take it later unless there's other circumstances where you need it earlier.

http://money.cnn.com/2016/05/11/retirement/when-to-take-social-security/index.html


I have done the math. It makes sense to take it early. Yes-there is the argument people are living longer-there is also a valid argument what the quality of YOUR LIFE will be as the years pile on. I don't know many 80 years old that are globetrotting. And yes-I will use it for traveling. There were many years I maxed out my contributions-so I have earned it.


If your suggesting by your post-unless I need it-I shouldn't take it, I'm not that charitable.
 
Last edited:
Originally Posted By: CKN
Originally Posted By: Wolf359
Originally Posted By: CKN
Originally Posted By: BJD78
I am more leaning to taking it at 62 as well, a quick look at the family tree revealed that no males on either my mom or dad's side lived beyond 80 and the average age of death was around 74 to 78. My Dad took his at 70 and was gone at age 73 he probably drew 30 checks at best, my Mom decided to take her SS at age 62 and she managed to make it to age 81 before passing. She ended up in a nursing home at age 77 so the final 3 years of her SS went to pay for Nursing home care basically. I am more than likely just going to jump on that ship at age 62, the extra money at age 70 would be nice , but at age 70 what would I spend it on??



Exactly. Many can't/shouldn't travel at 70 either. Take it at 62 and use it for recreation or whatever else you need it for.


If you don't expect to live long, then taking it early makes sense. But if you're average, on average it's better to take it later than sooner. It's not really meant for traveling, it's basically a safety net for old age. Basically the benefit cuts and increases for taking it later are supposed to be neutral, but people are actually living longer than the tables they've been using so the standard advice is to take it later unless there's other circumstances where you need it earlier.

http://money.cnn.com/2016/05/11/retirement/when-to-take-social-security/index.html


I have done the math. It makes sense to take it early. Yes-there is the argument people are living longer-there is also a valid argument what the quality of YOUR LIFE will be as the years pile on. And yes-I will use it for traveling. I don't know many 80 years old that are globetrotting. There were many years I maxed out my contributions-so I have earned it.


If your suggesting by your post-unless I need it-I shouldn't take it, I'm not that charitable.


It's actually the opposite. If you take it earlier, you'll get less. If you take it later, you get more. If you don't need the money, then you take it later. If you need it now for traveling, then you need the money. So take it if you need it. It was basically designed to be neutral, but people are living longer so for the majority, it's better to take it later. If you're feeling charitable, you take it early and get 25-30% less depending on your age. Take it later and get 24-32% more. About a 54-57% increase by waiting an extra 8 years or so.
 
You didn't address the issue of getting more dollars and being too frail to travel (or at least fully enjoy the experience) between the ages of 70 and 80. So you get this bigger check and can't go anywhere. I have been on PLENTY of cruise ships and have seen what life is like as one gets older. While I have compassion-I travel when I'm younger.

Yes-there are exceptions (health wise) to this-but they are few.


You can wait to collect when you will stay home and watch cable-I collect early while I have a good quality of life.

Sorry-you can't convince me to wait until I'm fail to collect.
 
Last edited:
Originally Posted By: CKN
You didn't address the issue of getting more dollars and being too frail to travel (or at least fully enjoy the experience) between the ages of 70 and 80. So you get this bigger check and can't go anywhere. I have been on PLENTY of cruise ships and have seen what life is like as one gets older. While I have compassion-I travel when I'm younger.

Yes-there are exceptions (health wise) to this-but they are few.


You can wait to collect when you will stay home and watch cable-I collect early while I have a good quality of life.

Sorry-you can't convince me to wait until I'm fail to collect.


I wasn't trying to. If you have enough assets so that you don't need it, you can travel with the money you already have. If you don't have enough to travel, then you need the money. There's nothing to address. It's just a smart financial move if you don't need it. If you do need it, then go ahead and collect early. I've just known some retirees who have enough monthly income where it well exceeds their SS check and they don't even really need it (bought real estate when they were young). So the rich can get richer...
 
Originally Posted By: Wolf359
Originally Posted By: grampi
Originally Posted By: Tom NJ
If you take SS at 62 as opposed to 66, the break even point is at age 82. Likewise, if you take SS at 66 as opposed to 70, the break even point is also 82. In both cases, 82 years old is the average life expectancy.

If you don't need the SS to live on and will invest it at a good rate of return, the break even age moves later, but this is not the case for most people.

If you are healthy, i.e. weight, blood pressure, and cholesterol under control with no diabetes and decent family genes, you will likely be among the 50% that live past your average life expectancy and would be better off taking your SS later. If not, grab it at 62 or 66. Like life insurance it's a gamble and you are betting you will live longer than average.


Looks like your math is a bit off, way off to be exact. If I take my SS at age 62 I would get $1200 a month. If I wait until I reach full benefit age (66 years 8 months), my monthly benefit would be $2000 a month. Collecting $1200 a month from age 62 until age 66 and 8 months I would collect $67200 over that period. Waiting until 66 and 8 mo to get the additional $800 per month, it would take 7 years to break even, which would be age 73 and 8 months...I don't know where you came up with a break even age of 82...


If you read the article I mentioned earlier, it assumes that you invested that money and got a 6% return on it. That's somewhat realistic as the S&P 500 has averaged around 7% but it's been much higher the last few years if you don't include 2008 when it tanked by about 38%. But that 6% doesn't include taxes so it's a good estimate. Then your break even goes to about 83 years old. Don't forget the 2% annual cost of living adjustment when calculating those extra years worth of payments. Also I think the difference at 62 is 70.66% so you're really supposed to get $1413 a month instead of $1200. Now if you redo the numbers, that should come out closer to 82.

Also I'm not sure you appreciate what it means to break even. If you come up with 73, that means that if you die before 73, you come out ahead, if you die after 73, it's a losing situation according to your math. With your math, it would make even more sense to wait if you're expecting to hit the average life expectancy. It increases as you get older, but by 62, your average life expectancy is 84.


Who invests their SS benefit? I don't know anyone who does anything with it besides spending it, and I certainly don't plan in investing it...
 
Last edited:
Originally Posted By: Wolf359
It's actually the opposite. If you take it earlier, you'll get less. If you take it later, you get more. If you don't need the money, then you take it later. If you need it now for traveling, then you need the money. So take it if you need it. It was basically designed to be neutral, but people are living longer so for the majority, it's better to take it later. If you're feeling charitable, you take it early and get 25-30% less depending on your age. Take it later and get 24-32% more. About a 54-57% increase by waiting an extra 8 years or so.


There's actually another benefit to waiting to take the benefit. For example, my SS benefit will be considerably higher than that of my wife, as I have paid more into the system, so the longer I wait to take my benefit, the more benefit my wife would get in the event that I pass before she does, as the remaining spouse would get the higher of the two benefits...
 
Most take SS early because they need the income. Many are tired and ready to retire or their bodies are wore out or health is bad.
 
Originally Posted By: grampi
Originally Posted By: Wolf359
Originally Posted By: grampi
Originally Posted By: Tom NJ
If you take SS at 62 as opposed to 66, the break even point is at age 82. Likewise, if you take SS at 66 as opposed to 70, the break even point is also 82. In both cases, 82 years old is the average life expectancy.

If you don't need the SS to live on and will invest it at a good rate of return, the break even age moves later, but this is not the case for most people.

If you are healthy, i.e. weight, blood pressure, and cholesterol under control with no diabetes and decent family genes, you will likely be among the 50% that live past your average life expectancy and would be better off taking your SS later. If not, grab it at 62 or 66. Like life insurance it's a gamble and you are betting you will live longer than average.


Looks like your math is a bit off, way off to be exact. If I take my SS at age 62 I would get $1200 a month. If I wait until I reach full benefit age (66 years 8 months), my monthly benefit would be $2000 a month. Collecting $1200 a month from age 62 until age 66 and 8 months I would collect $67200 over that period. Waiting until 66 and 8 mo to get the additional $800 per month, it would take 7 years to break even, which would be age 73 and 8 months...I don't know where you came up with a break even age of 82...


If you read the article I mentioned earlier, it assumes that you invested that money and got a 6% return on it. That's somewhat realistic as the S&P 500 has averaged around 7% but it's been much higher the last few years if you don't include 2008 when it tanked by about 38%. But that 6% doesn't include taxes so it's a good estimate. Then your break even goes to about 83 years old. Don't forget the 2% annual cost of living adjustment when calculating those extra years worth of payments. Also I think the difference at 62 is 70.66% so you're really supposed to get $1413 a month instead of $1200. Now if you redo the numbers, that should come out closer to 82.

Also I'm not sure you appreciate what it means to break even. If you come up with 73, that means that if you die before 73, you come out ahead, if you die after 73, it's a losing situation according to your math. With your math, it would make even more sense to wait if you're expecting to hit the average life expectancy. It increases as you get older, but by 62, your average life expectancy is 84.


Who invests their SS benefit? I don't know anyone who does anything with it besides spending it, and I certainly don't plan in investing it...


The whole point of investing it was a theoretical exercise to show that taking it later made more financial sense than taking it now. Most of the time it's the other way around like taking a lump sum on lottery winnings. The reason you take the lump sum on the lottery winnings is that you come out further ahead by investing it because of the long time period of a regular payout. The reason most people probably take it early is because they probably need the money and they're worried that they're not going to live as long on average. Sorta like how 80% of drivers think they're above average drivers.
 
Originally Posted By: ZZman
Most take SS early because they need the income. Many are tired and ready to retire or their bodies are wore out or health is bad.


When you decide to take your benefit, assuming you're in a well enough position financially to have a choice, is kind of like playing the money market. You're banking on how long you will live. The history of the men in my family (both sides) is that they don't tend to live very long. I will be in a good enough position to hold off taking mine until after I'm 62, but it may not be smart given my genetics...
 
Last edited:
Originally Posted By: Wolf359


The whole point of investing it was a theoretical exercise to show that taking it later made more financial sense than taking it now. Most of the time it's the other way around like taking a lump sum on lottery winnings. The reason you take the lump sum on the lottery winnings is that you come out further ahead by investing it because of the long time period of a regular payout. The reason most people probably take it early is because they probably need the money and they're worried that they're not going to live as long on average. Sorta like how 80% of drivers think they're above average drivers.


The problem with theoretic scenarios is they aren't always practical. Most people don't invest their SS benefit, they spend it. Therefore, my timeline for breaking even is more accurate...
 
Grampi, there is still a time value of money factor. Money right now is worth more than the same amount later. Doesn't matter if you spend it or invest it, it's still worth more.

On the other hand, nobody has addressed how being married can change claiming strategies. For instance, my wife is 6 years younger than me with eligibility of just under 1/2 my SS benefit. An online calculator told me the best strategy for us is for her to start collecting when she reaches 62 at her reduced rate, and me to collect a restricted application based upon her income at the same time (67 and 10 months for me). When I hit 70, start collecting my full SS + the extra 32% for the deferral, and she start collecting based upon half of mine with a reduction for taking it early. If I kick the bucket before her, she gets an increased monthly benefit because of my deferral.

Now, that's the ideal strategy. Not going to happen, as she doesn't want to take hers early. I will probably start mine at 67 for the full amount +8% for the one year deferral, and she will start hers 5 or so years later when she reaches full SS eligibility.

I am deferring this year to minimize my income while I rollover as much of my IRA to Roth IRA as practical. I will take it next year because of the uncertainty that SS will be paid in full without a reduction because of funding in my lifetime, or because it becomes means tested, both of which are unlikely, but possible.
 
Originally Posted By: grampi
Originally Posted By: Wolf359


The whole point of investing it was a theoretical exercise to show that taking it later made more financial sense than taking it now. Most of the time it's the other way around like taking a lump sum on lottery winnings. The reason you take the lump sum on the lottery winnings is that you come out further ahead by investing it because of the long time period of a regular payout. The reason most people probably take it early is because they probably need the money and they're worried that they're not going to live as long on average. Sorta like how 80% of drivers think they're above average drivers.


The problem with theoretic scenarios is they aren't always practical. Most people don't invest their SS benefit, they spend it. Therefore, my timeline for breaking even is more accurate...


The point of the theoretical scenario is to show that you make more money by deferring it instead of taking it now. If you're taking it now and spending all the money, that means you don't have other assets to use instead. You wouldn't actually save the money because if you understood the scenario, it means you're better off deferring and not taking it.

And in terms of time value of money, that is the whole point of investing it. A dollar that you have now will be worth more than a dollar you get in the future. How much more depends on the interest rate. So in the future if that dollar is going to be worth 1.4 dollars and you'll get 1.5 dollars by waiting, you're better off waiting.
 
Wolf,

People understand they will get more if the wait a few more years.....
but they want to enjoy their SS while they are still active and in good health.

An extra few hundred dollars a month won't matter if they need a medical walker / stroller with wheels.
 
Status
Not open for further replies.

Similar threads

sloinker
Federal tax filing advice.
Replies
15
Views
690
ecotourist
vavavroom
Abe has to go
Replies
1
Views
551
fantastic
UncleDave
Hackers got Us or UPS, it's cost us 150K so far....
Replies
5
Views
439
atikovi
Z
  • Locked
Can I live on a 10 million retirement?
6 7 8
Replies
141
Views
6K
Astro14
GON
Treasury or annuity for retirement monies not needed?
2 3
Replies
45
Views
2K
zzyzzx
Back
Top