How Much Do You think You Need to Retire? What Age Will You/Spouse Retire? General Retirement Issues (Part 2)

Parent Cafe
2531

I am feeling a lot more sluggish at 65 than I expected. Trying to modify eating and exercising more. Trying. Baby steps.

Working on various goals and activities. We are in no rush on a lot of things so I have time to sort things out. I was on a freshly started daily exercise program until a 5 day road trip - and haven’t gotten restarted yet. In the past I have been able to stay on a exercise plan so will get it set up again. Travel with Thanksgiving so I need to concentrate on other goals and tasks. DH has his activities and schedule going pretty well since he has been retired for a year now.

We are still waiting on DH’s Medicare B card and payment invoice from the government. Supposed to be dated September (application in July for September). SSA has the documentation and hopefully it will come soon. They put in a note Oct 18 after we received another Medicare A card October 15 (we were worried they ‘closed out’ the application) but it is in their words ‘pending’. We called again and were told it is still pending, and in their system putting in another note might very likely delay the processing! Supposedly to be handled within 30 - 60 days. We started paying for supplement Oct 1 and drug plan, but until Medicare B is securely in place…ugh! We have all our medical appointments scheduled in January and have had all things taken care of on DH in Sept under my employer health plan coverage. SSA erroneously was going to start DH’s SS so we had to put in a form to stop that action. His SSA/MC computer file has been in disarray – that is why they shifted it to the payment center.

DH has a lot of longevity on both his parents’ lineage. Steering clear of prostate cancer is key on his dad’s side - so that is regularly checked and monitored. In January we will have a cardiac work up on DH and see where he stands on that - his mom and her 7 sisters all had cardiac issues; one had a massive heart attack and died at age 79, another had a series of heart attacks - kept on top of things and died at 89; the rest all lived to 92 - 96 (mother and one sister at 92, two sisters at 93, one sister at 94, and one sister at 96). Congestive Heart Failure, Hypertensive Heart Failure. Other co-morbidities. The 96 YO sister had totally recovered from a stroke but would not be able to tolerate more aggressive treatment for Congestive Heart Failure.

I don’t have family longevity per se, but some specks of hope there. I joke about outliving DH but it is not in our hands.

2532

Planning would be so much easier if we had a crystal ball. My mom’s parents both lived into their 90s. My mom passed at 78. My dad’s parents both died very, very young. He lived into his early 80s. His grandparents (my greats) lived into their late 90s and he even had aunts who were over 100 in a time where that just didn’t happen.

H has the same inconsistencies on his side of the family. 1/2 the family died relatively young, the other 1/2 well into their 90s. Who knows which side of the genetic lottery we will get.

I think we all make the best decisions with the information we have available, and with our own personal risk biases.

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2533

It’s an extremely rare FA that will suggest waiting to 70 is the best wealth strategy for you. And that is bcos of the discount rate that they use. “Historical 8% return” beats waiting for SS nearly every time – no analysis required. However, that discount rate is incorrect for most. (Any parents of Finance types could ask their kid about choosing appropriate discount rates.)

btw: Not suggesting that is an incorrect analysis for you, shaw, as I have no way of knowing your personal sitch, but just pointing out that most FA’s get paid by assets under management; they are conflicted. If you spend assets down to live while waiting for SS at age 70, they have less of your money to manage/invest.

2534

@bluebayou, good points. I’m a finance type. Worked on Wall Street, a family office, quant hedge funds after teaching at a business school with a PhD in an applied math field. I did a quick search and the return was not the driver. Instead, it had to do with SS’s treatment of ShawWife, whose income as a fine artist has not been high. What he described was that her benefit maxes out at 50% of my FRA at age 66 and 4 months. And then, the choice depended upon our expected lifespans.

"The analysis showed that until age 74, you would be better both claiming now. From age 74 to 94, you would be best off using the approach that you claim when ShawWife reaches full retirement age (April of 2023). If you both live beyond age 94, you would be very marginally better off delaying to 70 and then ShawWife begins when you begin.

However, if you factor in an investment return of 5% on the SS benefit, which really is just assuming that other funds in your account can grow because they are not needed for income as the SS benefit is supplying support, the decision to take at ShawWife’s FRA (66 and 4 months) becomes the best option. The breakeven between the taking now and at ShawWife’s FRA is moved back from 74 to 82 because of the investment return. In summary, if you both expect to live beyond 82, the numbers say to take the Social Security benefit in April of 2023."

The FA in question gets paid a fixed annual fee. And, since I’m still working, my assets are growing. The SS will in effect, just cover the mortgage payments on the house. I think we are talking less than two year’s of SS payments, which wouldn’t move the meter on even a FA who charged 1% of assets (my other FA charges less and I don’t use him for advice because of the conflict of interest). If I’m not mistaken, this would increase such an FA’s fees by $600 a year for two years. Not sure in the grand scheme of things that even with the conflict of interest this would be particularly motivating as they would know that I would ask questions to understand the analysis.

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2535

I do not have longevity on my side, based on how long my parents & grandparents lived. However, I am trying to live longer than they did … so my financial calculations are based on living until 95. I could die at 75, like my mom. But if I live well into my 90’s, I’m going to need to be able to afford to do so. I’d rather be safe than sorry. I know others feel differently, and we all have to do what we feel is best for us.

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2536

To me this sums up why I think it’s better to take SS earlier. I’d rather use that money and preserve/invest my own instead of using my money while waiting to collect at 70. As @Hoggirl mentioned you can’t leave SS payments to your kids.

I’m also curious how much money is really left on the table if you begin collecting at 62 or 64 vs. 70 and you live to 82.

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2537

Yes, definitely health care costs can ramp up in 80s/90s. But travel, car purchases etc will likely taper off.

Various scenarios possible. Some folks do have Long Term Care insurance and/or separate buckets in anticipation of medical needs. Also some will eventually be more willing to eat into their principal, risk going on government assistance if it runs out.

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2538

This website was linked earlier by @my3girls Open Social Security calculator It will answer the question of how much money is left on the table if you begin collecting at different ages. Your individual scenario will greatly affect the answer.

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2539

Ok thanks!

2540

“To me this sums up why I think it’s better to take SS earlier. I’d rather use that money and preserve/invest my own instead of using my money while waiting to collect at 70. As @Hoggirl mentioned you can’t leave SS payments to your kids.”

I get the emotional appeal, but again, that’s not Finance 101. It’s all about your - and your spouse’s, if appropriate – mortality. If Hoggirl lives past ~80, she will have less money to leave to her kids if she claims earlier rather than later. It’s just a NPV math problem using mortality-adjusted cash flows and a discount rate.

I’m a huge fan of Mike Piper’s Open Social Security, and by using the Additional Input tab, you can maximize the NPV of the cash flows. Alternatively, you change the parameters to see what the analysis shows for claiming at an earlier date, i.e., ‘money left on the table’. For some, it might only be a few thousand dollar difference, and over 30+ years, not all that material.

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2541

I always find these discussions interesting and confusing. Every time. I hadn’t thought of the idea that you can’t leave SS to your kids. Now, I’m wondering whether to start drawing earlier.

My plan was at 59.5 to start taking out from my 401k for our property taxes, which are super-high in Texas. The FA said we will do just fine and not need to touch my 401k, but I thought taking out our yearly taxes would be a great way to take out a set amount each year and then forget it. Maybe I should pay my taxes by taking my SS a little early … As Pooh would say, “Think. Think, think think.”

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2542

@vpa2019 it depends what your birth year is to determine what your full SS age would be. For example DH and I were both born in 1956 and full SS is 66 and 4 months.

If you have received a Social Security Statement, it gives estimated benefits and your earnings record. A 4 page report. You can set up a SSA.gov log in to keep up to date with your earnings and estimated benefits. You will need this later when you apply for Medicare. Then on the Medicare.gov site once you are 65 or approaching, you also set up a log in.

If you apply for Medicare online you have to do it on the SSA web site. IDK why they do what they do. Some forms you get on Medicare web site.

The government is full of ‘confusion’.

I set up an appointment with SSA for starting my Social Security payments – that way I could ‘communicate’ with the agent and know what their numbers would be. IDK if after the year they receive my 2021 earnings they include for a recalculation of my benefits - or if it is frozen once I start drawing SS payments.

So early SS is from age 62 to full retirement age. Every month early is 5/9 of 1% off of the full SS. So for example, I am starting to draw my SS at age 65. I had stopped out of any paid employment for 18 years, but worked enough the last 4 1/2 years to receive more for SS by drawing out of my own SS account. My payments would be about $200 more a month if I waited to 66 and 4 months; however that is w/o considering my 2021 earnings. They take the Medicare B out of the SS check (for me that is $148.50). In August the gal told me my check would be $1388/mo starting 2nd Wed of Nov (payment for Oct). Checking the SSA.gov site it does show that is the amount to go into our checking account.

If I had started SS at age 64, my benefit would have been $1471/month, but once I was 65 the $148.50 would be taken out.

SS only pays in whole dollar amounts, and rounds down.

If I waited to age 70, my payments would be about $2307/month less the cost of Medicare B.

If you are younger than 62 when you pull up your estimated benefits, it probably will tell you what your payment would be - for age at 62 or if you are over 62 - giving that amount, for age 70, and for full retirement (and they type out what age/year and month that is).

I just looked at DH’s - at age 65 his benefit would be about $3,000/year less than at age 66 and 4 months (his full SS). $892/mo difference if he waited until age 70 ($10,700/year more from 66 and 4 months). I hate the penalty before full SS, and we will see if we do wait much longer - he is now getting close to being 65 1/2.

Not taking into account whatever the increase is stated to be with SS payments with inflation - IDK if that starts Jan 2022.

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2543

As was discussed upthread a while ago, you need to factor in health insurance costs. By not taking SS income and living off savings for a few years, you may qualify for significantly lower health insurance premiums during those years. This plays into any decision where you are at an age where you are eligible for SS but not yet for Medicaire (both you and spouse if that applies).

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2544

And if your spouse is subject to the offset and windfall provisions of SS, you can’t leave SS payments to your spouse either.

I’m one who is part of that offset and windfall provision group. I strongly feel that DH should take his SS now at 68…and just bank it if he wants to. I feel he is throwing $60,000 away by delaying until age 70. Our FP is terrific and feels we need to see how our cash flow actually is because DH can turn on SS at any time. But I still think it’s like throwing $30,000 a year away. It will take many years to make up that lost money once he starts to collect SS.

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2545

That is true if you retire before you become 65 and you have to pay for health insurance – some have a company plan they can still pay, or had a government job. Some states offer plans on their open market that do have sliding scale for income level. So you may pay a lower rate for health insurance by not drawing your SS until after you get Medicare.

Once one gets on Social Security, if you are deemed ‘low income’ - there is help available too - a way to qualify for help. “Supplemental Social Security”. Each State has a level for seeing what your monthly income is with SS and what SSI payment (Supplemental Security Income) level would be. I got a letter stating my monthly income (SS payment) is too high for any SSI payments in my State.

2546

I, too, am always confused by the social security talk. Sorta seems like an optimization problem that can’t really be solved since we have no crystal balls.

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2547

@thumper1 I would print out your DH’s SS statement about every 6 months and show him what it says his payment would be now, and what the delay payment would be. Also write out what the yearly amount is. Maybe once he sees it that way he will change his mind.

2548

Seems to with respect to social security and the age to start collecting (like many issues in life) you make the best choice you have with info you have at the time and move forward without looking back on it.

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2549

I tried…like I said…this really won’t affect him…but I get nothing for his SS benefits when he dies. Feel like we should save it now.

We are both mostly retired but do per diem work. We have no issues with cash flow at all now.

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2550

I’m taking my SS at age 62. With my actuarials, it makes sense. It’ll be going straight into savings. Will be taking it based on my record until H retires, which he says will not be before he hits FRA at 67, and then about six months after that to maximize vacation payout and sick leave credits to his pension. I’ve put a bug in his ear about waiting to take SS til 70, but I think I’ll have to run some Wharton-level spreadheets to show him the pros and cons. I suspect he’ll work til 70, as he is still having fun. He will be lost without a job to keep his mind busy.

We’ve moved almost all of H’s 401k to age-targeted options in the TSP, but have laddered them in five-year increments so the money we won’t touch til 2040 is in more growth funds.

We got offers from USAA to convert our term policies to universal, but the premiums are nuts at our current coverage level.

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