This scenario only focuses on the dollars gained to the retirement plan from social security. But if you delay SS you have to make up that difference from your retirement savings. Depending on your savings and retirement spend strategy that could push the break even point back, possibly even into you late 80s. Would love to see a video that tracks the retirement savings impacts of delaying social security.
And to make it even more complex, this is only 1/2 of the picture. What happens if one of them dies fairly early? Now the expenses definitely will not be cut by half but social security amount is cut in half, and since no longer "married filing jointly" the surviving spouse may face higher tax bills. It would be good to run at least two more scenarios: one dies early (say age 68) and if that isn't enough, then another where one dies in their early 80s. The surviving spouse may have 20 to 30 years "single" with similar expenses to the couple, but half the social security income and potentially higher taxes especially in the RMD years.
Patrick when you run these Monte Carlo scenarios are you able to put different numbers into the software for different ages? It would seem that someone retiring at 62 has 3 years of different medical premiums than at 65 when Medicare kicks in. I ask because the free software I use only has a withdrawal amount. Based on what input I put in for withdrawal they always show me 95+% success rate out 40 years ... makes me wonder how accurate they are! But after saying that I can say for us once SS kicks in along with my smallish pension our withdrawal is very low. I do try to stress test our plan with using more money than needed and various sequencing of bad years in the beginning and that's when success rate drops down to around 85%. I've learned a lot from you - thanks!
Patrick, I don't fully understand/believe that their financial situation is better if they wait for larger checks. I get that waiting gives you larger checks and therefore, in the long run, you receive more dollars from the SSA with the crossover point occurring at around age 78. HOWEVER, consider the fact that receiving $20k/yr in SS funds at age 62 takes the burden off your portfolio allowing $20k/yr of your portfolio to grow exponentially over the 5 year period: you collect $100k plus the growth. Running the numbers, I find that taking smaller checks early, I would make far more wealth through compound growth than waiting to age 67 and larger checks. Because of compound growth, the larger checks would only catch up and outpace the smaller checks after age 90 (doesn't seem worthwhile). Further, if I wait for age 67 and the larger checks, I would burn more IRA cash in the process. Even further, taking SS early reduces my tax burden as SS dollars are tax advantaged over IRA distributions. It seems that one would build more wealth with smaller early SS checks thanks to compound growth. Thoughts?
the biggest problem with using monte carlo is that it relies on your input of life not the probability of life expectancy. I'd love to assume I'd live into my 90s, but that's not the reality. in 2022, 37.7million 70yo+ drew social security, but only 5.289million were 85yo+, and around 2million were 90yo+ 1:4 male to female. breakeven between 62 and FRA 67 is 10.5years according to ssa, so you are basically waiting on an eventuality of higher lifetime payments that has the increased probability of never materializing, especially for males. Even if you make break even, you are talking maybe 1-5 years beyond break even. It's ridiculous to use a scenario assuming over 90years old, when the reality doesn't match it. Even though I think it's even dubious to use the ssa life table of 82yo male and 85yo female, that's a better assumption than over 90yo. So, if you have the smiling graph that means that you would be spending soc sec in your prime retirement years with decreasing expenses to the break even point. I just doesn't see the convincing argument for waiting to FRA or 70 anymore. I suppose if your grandparents, parents, their siblings, etc, have lived into their 90s there is a higher probability that you have a likely foundation of doing so, too.
The decision really depends not only lifespan but also your retirement income strategy. If you delay taking Social Security until 70, you can utilize the lower income bracket to do other things such as ROTH IRA conversions. Best thing to do is to consult with a fee for service financial advisor.
I began accumulating wealth when I started following up my investment properly, The value of expert mentorship cannot be overstated. Without proper mentoring, people tend to make mistakes and loose money. This is why I prefer to invest with Juliann Hart because her methods are unique and extremely profitable-
Overtime I have come across people earning consistent returns with the assistance of a professional manager but how do I find one? This is something that piques my interest-
I invest with Juliann Hart. She's the best when it comes to making gains in the financial market she's well accredited and proficient to help beginners through managing your investments-
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This scenario only focuses on the dollars gained to the retirement plan from social security. But if you delay SS you have to make up that difference from your retirement savings. Depending on your savings and retirement spend strategy that could push the break even point back, possibly even into you late 80s. Would love to see a video that tracks the retirement savings impacts of delaying social security.
And to make it even more complex, this is only 1/2 of the picture. What happens if one of them dies fairly early? Now the expenses definitely will not be cut by half but social security amount is cut in half, and since no longer "married filing jointly" the surviving spouse may face higher tax bills. It would be good to run at least two more scenarios: one dies early (say age 68) and if that isn't enough, then another where one dies in their early 80s. The surviving spouse may have 20 to 30 years "single" with similar expenses to the couple, but half the social security income and potentially higher taxes especially in the RMD years.
Patrick when you run these Monte Carlo scenarios are you able to put different numbers into the software for different ages? It would seem that someone retiring at 62 has 3 years of different medical premiums than at 65 when Medicare kicks in. I ask because the free software I use only has a withdrawal amount. Based on what input I put in for withdrawal they always show me 95+% success rate out 40 years ... makes me wonder how accurate they are!
But after saying that I can say for us once SS kicks in along with my smallish pension our withdrawal is very low. I do try to stress test our plan with using more money than needed and various sequencing of bad years in the beginning and that's when success rate drops down to around 85%.
I've learned a lot from you - thanks!
Patrick, I don't fully understand/believe that their financial situation is better if they wait for larger checks. I get that waiting gives you larger checks and therefore, in the long run, you receive more dollars from the SSA with the crossover point occurring at around age 78. HOWEVER, consider the fact that receiving $20k/yr in SS funds at age 62 takes the burden off your portfolio allowing $20k/yr of your portfolio to grow exponentially over the 5 year period: you collect $100k plus the growth. Running the numbers, I find that taking smaller checks early, I would make far more wealth through compound growth than waiting to age 67 and larger checks. Because of compound growth, the larger checks would only catch up and outpace the smaller checks after age 90 (doesn't seem worthwhile). Further, if I wait for age 67 and the larger checks, I would burn more IRA cash in the process. Even further, taking SS early reduces my tax burden as SS dollars are tax advantaged over IRA distributions. It seems that one would build more wealth with smaller early SS checks thanks to compound growth. Thoughts?
Been enjoying your videos great information.
How would you plan for someone who qualify for social security from both USA and the uk
Great job
Delaying Social Security is definitely my plan unless something happens to change that
I'll never make it to 90.....
the biggest problem with using monte carlo is that it relies on your input of life not the probability of life expectancy. I'd love to assume I'd live into my 90s, but that's not the reality. in 2022, 37.7million 70yo+ drew social security, but only 5.289million were 85yo+, and around 2million were 90yo+ 1:4 male to female. breakeven between 62 and FRA 67 is 10.5years according to ssa, so you are basically waiting on an eventuality of higher lifetime payments that has the increased probability of never materializing, especially for males. Even if you make break even, you are talking maybe 1-5 years beyond break even. It's ridiculous to use a scenario assuming over 90years old, when the reality doesn't match it. Even though I think it's even dubious to use the ssa life table of 82yo male and 85yo female, that's a better assumption than over 90yo. So, if you have the smiling graph that means that you would be spending soc sec in your prime retirement years with decreasing expenses to the break even point. I just doesn't see the convincing argument for waiting to FRA or 70 anymore. I suppose if your grandparents, parents, their siblings, etc, have lived into their 90s there is a higher probability that you have a likely foundation of doing so, too.
The decision really depends not only lifespan but also your retirement income strategy. If you delay taking Social Security until 70, you can utilize the lower income bracket to do other things such as ROTH IRA conversions. Best thing to do is to consult with a fee for service financial advisor.
I began accumulating wealth when I started following up my investment properly, The value of expert mentorship cannot be overstated. Without proper mentoring, people tend to make mistakes and loose money. This is why I prefer to invest with Juliann Hart because her methods are unique and extremely profitable-
Overtime I have come across people earning consistent returns with the assistance of a professional manager but how do I find one? This is something that piques my interest-
I invest with Juliann Hart. She's the best when it comes to making gains in the financial market she's well accredited and proficient to help beginners through managing your investments-
She offers the best services and continuous wins in the markets-
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