retiring

[RickB]

Yes, BUT: My mother was a postal carrier. My father a custodian for a university system. He was 11 yrs older than my mother. Not exactly sure how their retirement accounts were handled. Mom's was definitely civil service. Dad's, maybe similar??? My older brother helped my mother (executor) with the estate paperwork. When my father died, Mom started collecting his SS benefits. My father had opted (with his plan at the time) to take a lesser SS benefit so that mother was able to take his at the time of his death. Which she did. For about 2 years after his death. Then she got a letter from the SS admin saying that she owed them all those SS payments back as it was illegal for her to collect his. Even though at the time Dad had opted for the lesser amount so that she could. It didn't matter. they told her that the rules were the rules and that even if Dad had been instructed to take a lesser amount back then (probably 15 years worth) it was most likely not proper to have offered that to him at that time. My parents even had that paperwork saved which showed his decision. Didn't matter. She was given a couple of months to pay the funds back (close to $40K) or start paying penalties. They would also not reimburse anything for the so called improper lesser payments that dad had been receiving all those years. Pretty heartbreaking for an elderly widow!! So things can change, and usually not for the better!!
Regards,
david

As a civil service employee your Mom was ineligible for SSI.

 

[Chris616]

My earlier post regarding SS withdrawals at age 62 vs. full retirement age wasn't an easy one to grasp. Let's try again with some actual #s. I'lll even slant the #s to give advantage to waiting to age 66 vs. starting at age 62 and see where it leads with a simpler illustration using my situation, but rounding to nice simple #s for ease of understanding. Also, since its usually mentioned that its better to wait til full retirement age to start SS, that implies you don't need the money prior to age 66. That is my situation as I try to have a ready reserve fund that will last me quite a while in a down market. But I still took it at age 62. Why? This:
Full retirement age: 66 (actually 66.5) but giving it the advantage of being earlier. SS benefit: $2500 mo.
Age 62: Reduced SS benefit is $2000 month (Easy figures to use but again slanted a little bit to give advantage to the age 66 benefits. The difference between the two payments is $500 per month.

<snip>

Here are a couple of things to consider, David.

I'll say again that I don't know anything about SS, but the bit of reading that I've done says that you can expect a 30% decrease in the payment when taking at age 62 vs full retirement age. I notice that in your calculation that it only gets knocked down by 20%.

Of course, everyone's health prospects are different, but if we're just working with average lifespans (and it doesn't make a great deal of difference), but just to be correct 78 isn't the number to use. The OECD says that the life expectancy at birth for someone in the US is 78.6 years, but the life expectancy for a male who has already made it to 65 years old is 83.1.
Health status - Life expectancy at birth - OECD Data
Health status - Life expectancy at 65 - OECD Data

Chris

 

[dmccarty]

...

I doubt Congress would ever actually cut benefits for those already entitled as it is electoral suicide. Remember too that members of congress have older relatives who are the most potent lobbyists of all. My observation after watching this closely for a few decades (my old job) is they usually fool around with cutting future benefits for people not too close to retirement as it's safer. The COLA allowances might get throttled back for beneficiaries as there is a school of thought that they may be too generous. Likely to raise payroll taxes (F.I.C.A.) Lastly for those few of you who still have defined benefit pensions through your employer or labor union : Don't automatically take the survivor option. You say "What, I love my wife." Sometimes the more cost effective plan is to take self only with no survivor benefit. Use the extra money to fund additional life insurance to protect your loved one. That will take one heck of a spreadsheet to compute.

I think what you said has the highest probability of happening. However, why is there always however, :laughing: with the increasing Federal debt there is going to be a time when the whole financial house of cards comes tumbling down. Then things get interesting. There are numerous cities that have already gotten into trouble because of their debt load, often made far worse by pensions, where benefits have been cut.

For sure, the younger generation is going to get a cut in SS benefits and an increase in taxes. Already happened to me and it will happen to them. The question is how much, when and how often.

Your comment about life insurance vs PRSO, pension coverage for a spouse, is correct. The life insurance policy might be the better option. However, did I comment about however , I have a family member whose husband did not take the spouse option and took out life insurance as a replacement. Then he let the policy lapse. And then he died...

One of our retirement plans is to sell everything, buy a boat and go see the world. Health insurance is far cheaper overseas than in the US and one can get quality health care in some places that one would not expect. However, there is that word again :laughing:, one of our issues is what to do if I die and wife is left alone with the boat. I don't mean left alone at sea, though that is a probability though low one, I mean I die in some country on the other side of the world and she is left with the boat. I doubt she will continue sailing but she might. A 77 year old woman just completed a solo sail around the world. Anyway, we will have to keep up a life insurance policy so that if I die, the wife can hire a delivery captain to get the boat to a port where it can be sold, if the wife does not wish to sail the boat herself or keep the boat.

Don't know if the boat plan will happen but we are actively working toward the goal. But life happens.

Later,
Dan

 

[goeduck]

Your Social Security benefits are based on your 35 highest-paid years on the job. But if you don't put in 35 years in the workforce, you'll have a $0 factored into your benefits equation for each year you go without an income. I have 35 years in but part of my intent is to work a little longer to get the early lower income years off of that calculation. Every little bit helps.

 

[goeduck]

Here is another explanation of drawing SS early that I came across. I had not understood the second point before:

If you claim Social Security early, your benefit will be reduced at the rate of 6 2/3% per year (about 0.56% per month), for as long as 36 months before your full retirement age.

Beyond 36 months early, your benefit will be further reduced at the rate of 5% per year (about 0.42% per month), until as early as age 62.

If you claim Social Security late, your benefit will be increased at a rate of 8% per year (about 0.67% per month), until as late as age 70.

 

[RickB]

Your Social Security benefits are based on your 35 highest-paid years on the job. But if you don't put in 35 years in the workforce, you'll have a $0 factored into your benefits equation for each year you go without an income. I have 35 years in but part of my intent is to work a little longer to get the early lower income years off of that calculation. Every little bit helps.

All true.

 

[dnw64]

No one answer will work for everyone regarding SS.

Kinda like R1s vs R4s...

 

[dnw64]

The biggest factor that influenced me was that using the age of 90 as a death date far exceeds the average age of a male today.

But, do you feel average, kid? Do ya?

My goal is to have enough at retirement that I will not be able to (without doing something stupid, like buying 5 "second" homes or a yacht or three) outspend my income from investments. But it's amazing how quickly a very small change in the "numbers" can make it go one way or the other.

 

[bird dogger]

As a civil service employee your Mom was ineligible for SSI.

Rick, that's true. I might have misspoke on some of the details. As I said, I wasn't involved much as my parents lived 2 states away from me at the time and my older brother lived near them. My parents were sticklers for keeping paperwork and had all the details and original forms they had filled out. They were ok'd by there employment superiors at the time and approved by the benefit providers. That's been over 30 years ago now and it's probably been 10 years since my mother died. The point I was making though was that even though both had made choices that they thought were best for them, and at the time was considered fair, square, and perfectly legal, signed and submitted by their employment superiors, only to find out 30 years later that something had changed. And not for mother's benefit even though she had all the original paperwork. She talked to an attorney and he advised her that she might have a chance to prevail but the time, cost, and aggravation would be no where near financially beneficial for her. All the while accruing penalties. She ended up having to pay back those benefits (what ever they were from my father's plan). A short time later she was diagnosed with cancer and passed away hardly a year later. Just pointing out that nothing is absolutely guaranteed.

 

[kenmac]

I think what you said has the highest probability of happening. However, why is there always however, :laughing: with the increasing Federal debt there is going to be a time when the whole financial house of cards comes tumbling down. Then things get interesting. There are numerous cities that have already gotten into trouble because of their debt load, often made far worse by pensions, where benefits have been cut.

For sure, the younger generation is going to get a cut in SS benefits and an increase in taxes. Already happened to me and it will happen to them. The question is how much, when and how often.

Your comment about life insurance vs PRSO, pension coverage for a spouse, is correct. The life insurance policy might be the better option. However, did I comment about however , I have a family member whose husband did not take the spouse option and took out life insurance as a replacement. Then he let the policy lapse. And then he died...

One of our retirement plans is to sell everything, buy a boat and go see the world. Health insurance is far cheaper overseas than in the US and one can get quality health care in some places that one would not expect. However, there is that word again :laughing:, one of our issues is what to do if I die and wife is left alone with the boat. I don't mean left alone at sea, though that is a probability though low one, I mean I die in some country on the other side of the world and she is left with the boat. I doubt she will continue sailing but she might. A 77 year old woman just completed a solo sail around the world. Anyway, we will have to keep up a life insurance policy so that if I die, the wife can hire a delivery captain to get the boat to a port where it can be sold, if the wife does not wish to sail the boat herself or keep the boat.

Don't know if the boat plan will happen but we are actively working toward the goal. But life happens.

Later,
Dan

If /when you die. Like everyone else. Jody will be there to take up any slack. I have no doubt Jody is there waiting for me to kick the bucket where he can step in and take over.
Jody can do it all, From piloting the boat, to running the farm !:laughing:

 

[RickB]

Rick, that's true. I might have misspoke on some of the details. As I said, I wasn't involved much as my parents lived 2 states away from me at the time and my older brother lived near them. My parents were sticklers for keeping paperwork and had all the details and original forms they had filled out. They were ok'd by there employment superiors at the time and approved by the benefit providers. That's been over 30 years ago now and it's probably been 10 years since my mother died. The point I was making though was that even though both had made choices that they thought were best for them, and at the time was considered fair, square, and perfectly legal, signed and submitted by their employment superiors, only to find out 30 years later that something had changed. And not for mother's benefit even though she had all the original paperwork. She talked to an attorney and he advised her that she might have a chance to prevail but the time, cost, and aggravation would be no where near financially beneficial for her. All the while accruing penalties. She ended up having to pay back those benefits (what ever they were from my father's plan). A short time later she was diagnosed with cancer and passed away hardly a year later. Just pointing out that nothing is absolutely guaranteed.

Certainly an unfortunate, costly and upsetting situation. Probably caused by a lack of attention to detail by the folks that handled your Dads SSI account on the Fed side.

 

[kenmac]

Taking SS money early is a gamble. Will the Government win, or will you win ?
I will get enough at 62 that I'm just not going to worry about it.
Running the numbers, I will out live my IRA distributions anyway

 

[bird dogger]

Here are a couple of things to consider, David.

I'll say again that I don't know anything about SS, but the bit of reading that I've done says that you can expect a 30% decrease in the payment when taking at age 62 vs full retirement age. I notice that in your calculation that it only gets knocked down by 20%.

Of course, everyone's health prospects are different, but if we're just working with average lifespans (and it doesn't make a great deal of difference), but just to be correct 78 isn't the number to use. The OECD says that the life expectancy at birth for someone in the US is 78.6 years, but the life expectancy for a male who has already made it to 65 years old is 83.1.
Health status - Life expectancy at birth - OECD Data
Health status - Life expectancy at 65 - OECD Data

Chris

Hi Chris, You are correct but you miss my point in that illustration. I noted that I used numbers that had been rounded off, picked #s that were close to reality for my situation. But still easy enough that one could follow along and most likely do the math in their head as they were reading. That was the point. To make it easier to understand that one should really crunch their own numbers while considering their own spot in life. Many people, agencies, polls, etc., say to just wait as long as you can to draw ss payments. I don't believe that's true, along with many others. Notice I also said I'll use 66 in the illustration vs. my FRA of 66.5 That was for easy figuring also. But if I had used 66.5, that would've given me another 6 months ($12K more in my up front payouts...$2000 x 6 months). Another $12K invested over the years would even drive my point home more in my illustration. It would've lengthened my 0% tin can illustration. But multiplying uneven large numbers by fractional years makes it harder to follow along in a quick read.

I'm proof positive that it doesn't take a financial guru to do well in the market. I have a 2yr technical degree in the electrical field from 40+ yrs ago. I can't cite all the fancy financial algorithms or do calculus or that quantitative financial figuring. Although I did see the movie "A Beautiful Mind". :laughing: However, with a little reading, some simple night classes, etc., I can understand most terms once their explained, as could anyone else. Investing with sound practices without panicking, learning about index funds, ETFs, and mutual funds, (low expense ratios) will be enough to put anyone leaps and bounds ahead of passbook savings over time. That's me as a prime example. I've never had a paid financial advisor that benefited me. Rather, they benefited from me when I was young. It was a good lesson for me. Looking at my 2 Schwab accounts (personal and pension rollover) the combined lifetime average return is just over 13%. Not too bad for a trade school average joe. If I would've used my real figures in my illustration the percentage of my return over the last 4 years would've provoked laughs and all kinds of remarks. the last few years have been wildly great for my returns, some of which was recovery from a previous down trend. So I think my use of numbers and time was pretty fair and reflected that at a bare minumim (0% to 2.5%) return on money that's in your hand from early ss benefits can even out or surpass the benefits of waiting til a later date to retire. Again, depending on your needs, health insurance, rainy day funds, investment strategy, etc.

You brought up the life expectancy as determined by the OECD that is 83.1 years for a male who is already 65 yrs old. That is according to OECD. Their are all kinds of data collection and others that say the life expectancy is much less, a little less, the same, and even longer. Who does one believe the most. I think we are not too far apart. I used the example of 78 - 80 yrs as a sort of average of quite a few different sources that I had looked at. Plus, now they're saying the life expectancy of a male (in the US) has been declining in each of the last 3 years. Believable? who knows. But for the illustration to get people to start thinking.....your figure or mine....are acceptable. Even yours is closer to mine than age 90 (again, which I used to put more leverage on waiting to take ss payments rather than at age 62. The obits seem show more people passing before age 83 than after. If one lives to age 90 they get a pretty big write up. If they live to be 100 they usually make the national news!
Cheers!
David

 

[RickB]

As I neared 62 I struggled with the SSI question. I finally determined the tax and penalty consequences of collecting at 62 tipped the scales in favor of not collecting. That taxable income portion of SS benefits have consequences on things like the 0% threshold for capital gains income and other items. The choice is a gamble, as suggested. When I get closer to 63 I will revisit the decision.

 

[4570Man]

I’d sign up for SS the day I was old enough. Every day you wait risk it not being there anymore or tightened requirements. Then there’s the obvious risk of dying before you collect on it.

 

[bird dogger]

Certainly an unfortunate, costly and upsetting situation. Probably caused by a lack of attention to detail by the folks that handled your Dads SSI account on the Fed side.

Agreed. We came to that conclusion too, Rick. Unfortunately it was far too late to do either of my parents any good. Pretty sad!

As I neared 62 I struggled with the SSI question. I finally determined the tax and penalty consequences of collecting at 62 tipped the scales in favor of not collecting. That taxable income portion of SS benefits have consequences on things like the 0% threshold for capital gains income and other items. The choice is a gamble, as suggested. When I get closer to 63 I will revisit the decision.

Agreed again! I looked at that too. It didn't affect my holdings that I have that much at the time. And each month I waited to draw SS stacked the deck more in the favor of losing than gaining in my circumstances. I was a little mad at myself as I missed the earliest filing date and wound up missing the first chance to draw. Darn!!

 

[bird dogger]

I壇 sign up for SS the day I was old enough. Every day you wait risk it not being there anymore or tightened requirements. Then there痴 the obvious risk of dying before you collect on it.

:thumbsup::thumbsup::thumbsup::thumbsup::thumbsup: I'm elated someone thinks like I do.

4570Man, you'll do well!! Especially if you use it to invest wisely or it allows you to keep that same sum of your personal funds invested wisely.

Best regards,
David

 

[kenmac]

I’d sign up for SS the day I was old enough. Every day you wait risk it not being there anymore or tightened requirements. Then there’s the obvious risk of dying before you collect on it.

That's my thinking as well. A little more than four more months for me.
With the stroke of the pen, these idiots can make it go from 66.5 to 77.5 for full benefits.

 

[MossRoad]

I’d sign up for SS the day I was old enough. Every day you wait risk it not being there anymore or tightened requirements. Then there’s the obvious risk of dying before you collect on it.

Read this article...
The Best Age to File for Social Security - Social Security Intelligence


Many people make these poor choices in their filing decisions because of something called hyperbolic discounting.

Hyperbolic discounting is a cognitive bias which leads individuals to accept a smaller reward today instead of waiting for a known larger reward later. This bias becomes stronger when the reward is closer to us (as opposed to farther into the future).

 

[kenmac]

''Imagine you heard about an income-producing investment backed by the US government. They羆*e willing to pay you today, but they have a special deal for you to consider.''

This is the funny part I read in the article. Nothing is guaranteed by the us government. Any thing they say today can be cancelled with the stroke of the pen tomorrow. And, we wouldn't even know it until it was all over.

We all know that the Government would never go back on it's word ! :laughing:

''if you started collecting benefit at an earlier date, and die before reaching the breakeven age, you come out ahead. If you live beyond your breakeven age, you would have been better off to have filed later''

This is another thing. You aren't guaranteed tomorrow. much less 8 more years down the road.
We are at the age where anything can hit at any time.

My mom went at 70. My father went at 75
So, I may as well take mine early and hope for the best.
I could live just fine with out it, just drawing off my IRA.
But, as I have stated, It's a gamble at best as to how long you will live.

Will I live to 100, or more ? no one Knows. The odds are, I won't make past seventy ???