Variable 3: Portfolio Return & Roth IRA. Without a Roth IRA, I'd delay drawing on social security (from 67 to 70). With a sizeable IRA, I'd be drawing on social security early (age 62). My avoided federal/state, IRMAA & NIIT avoided tax & medicare premiums, on Roth withdrawals, is 42.3%. Thus, this tips the scale to drawing social security early, as my optimal choice. My portfolio is 100% stock & I have a sizeable Roth IRA. I turn 62 next month.
Best explanation I have heard is to look at SS as a 'Life' asset and portfolio as a 'Legacy' asset. So, if you will live long ... file SS later, if you will not, file SS sooner ... as you say. In this manner, you both maximize usage of the 'Life' asset and maximize potential for the 'Legacy' asset (upon death).
@@commonsenseisntcommon1776 obviously, the concept is if you have family history of younger deaths versus family history of people living 90+ that’s what I meant :)
I have never regretted delaying SSA. Once I saw how much cash would have been left on the table, I buckled down. Coupled with the RMD being delayed after every Senate bill passed, I think I finally know what that IRS RMD will be, barring legislation.
You need to also include quality of life. Retirement isn't all about math... will you be healthier and have more energy at 62 vs 85? What use is a bigger SS payment when you are beddriden in a diaper?
@@captsorghum This specific video is related to filing for SS. While I agree that someone could retire before filling for SS... my comment is applicable to this video, and retirement in general.
Eric, as you were going over the spend your bond allocation first as you delay social security I could not help but to call this a bucket strategy. And then when you introduced the 40/60 allocation that progress to a 75/25 portfolio I could not help but to call this a Mike Kitces type "Rising Equity Glide Path" . These two strategy's are both great to make sure you don't run out of money before you run out of life. Thank you there is some great content in this video.
@@SafeguardWealthManagement I'll chime in on Sergio's insights to admire your technique for ensuring a genuine apples-to-apples comparison between personal investment portfolio returns and SSA payout streams, SWM. Your proper financial analysis construes SSA payments as a lifetime, risk-free, inflation-adjusted gov't "bond" within your overall investment portfolio. Respect!
Could you also show an analysis of the tax benefit of Social Security income vs investment income since only a maximum of 85% Social Security income is taxed?
Unless you have at least double the money you want at the point of retirement, counting on an 8-10% return is nuts in a distribution phase. You just can’t count on that return. The way that the numbers are usually presented requires a ridiculously low withdrawal rate over 30 years to protect from the 10-20% failure rate. Totally agree on the insurance and longevity protection for persons with modest portfolios that Social Security can provide. I know this because I watched our parents take early, run out of money and live close to the poverty line. If they had delayed even just 2-3 years they would have been way better off.
I'd argue that an 8-10% return is NOT nuts, when combined with a dynamic spending strategy (reduce spending during stock crashes). Of course, having a sizeable savings balance to begin with, makes a dynamic spending strategy much more doable. I ran the numbers for 20 year time periods, and it showed there's a 75% chance of beating an 8% return, based on 1909 to current. Of course, prior results don't guarantee future results. I'm sorry to hear your parents ran out of money. I'd guess that 80% of my relatives (prior and current) will probably run out of money, as well. In the end, it all comes down to simple math. A lot of people have insufficient savings balances, and spend too much in retirement. Of course, longevity is impossible to predict.
@@larryjones9773 Larry everything you said is correct. But, by advocating for a dynamic spending strategy as a backup you are making my point that you can’t count on an 8% return. I didn’t say it wasn’t possible. My point is that retirement plans that have failure rates of even 5-10% are not adequate. Once you allow a truly dynamic spending plan, risk goes to near zero. We just finished shutting down the whole world over an illness that was at most killing less than 1%. How would that have gone if 1 in 10 died? Those persons with smaller portfolios need to focus on adequate base income, it is much more predictable and less risky.
@@randolphh8005 Actually, there are plenty of previous 20 year time periods with at least an 8% return, that included a stock crash. For example, 2003 to 2022 had a CAGR of 10%, but 2008 had a negative 37% return. I agree, those with smaller portfolios should really try to wait until age 70, to draw social security. I still see a lot of friends, who are recent retirees, with way too conservative portfolios. I think most should have 90% stock (Warren Buffett agrees with me). My plan for stock crashes, is to do a cashout refinance. Thus, I won't have to sell stock during crash years.
I think you might want to clarify as it’s a bit confusing in the beginning. I had to get a couple min minutes into this to realize what you’re talking about is taking Social Security early and reinvesting it. Then it makes sense but prior to that I honestly couldn’t figure out where you were going with us.
This may be good advice for those close to retirement but what about those who are retiring in 20 years and expect SS to either provide much less at best and nothing at worst? I’m seriously thinking of taking it at 62 because I’m not sure there’ll be anything left by the time I’m 70.
This idea of "running out of money" seems to assume a few things: 1) people will robotically just withdraw a set amount of predetermined money for 25 to 30 years. 2) people are not smart enough to adjust their withdraw rate during a 25-to-30-year retirement 3) that during "no-go years" people need just as much inflation adjusted income as in other years. 4 thru ?) throw in a few of your thoughts ... I will say it is very nice to have a plan, the proper plan for your planned needs, just don't get so locked into that initial plan that you are unwilling to adjust as the "real world" throws punches at you.
Delay if the rate of return of your portfolio doesn't beat the rate of return for social security AND you expect to live longer than the break even age. This is outside of other reasons to delay, like having more time to do tax conversions, working longer, etc.
In my opinion the best way to be certain that you will not run out of money in retirement is to have plenty of money going into retirement! Indeed, sometimes you just need more money. About Social Security, everybody has an opinion on when to start. Do your own analysis, and then do what you think is right. It is an actuarial computation so it is difficult to make too big of a mistake. You are not going to be healthy forever and will not live forever. Don't sweat all these little details.
Should inflation also factor into this? Even if you are lucky enough to get 8-9% return on investments, that's only 6% after taxes and with inflation at 6% you are just breaking even.
We are working on a few different options here! Potential options rolling out in the next couple months and we will make an announcement (Ex. Minimum flat fee rather than asset minimum)
Hate to burst your bubble but the whole program will need a 25% cut in 2033 per the trustee statement. Social Security's "trust" fund was eliminated by both parties in the 1970's. It's been a pay as you go system for years but demographics win take it off the cliff. Get educated and have a back up plan. Biden's trillions in free $$$ is making it harder for the feds to pay back all the social security funds they borrowed!!!!
Republicans are unlikely to succeed in making a material change to Social Security, but there is a high probability that they will also prevent any effort to increase funding and avoid the automatic 20-25% cut that happens when the Trust Fund is depleted (currently estimated to happen in 2034). All they need to do is keep saying “no” and find a way to place the blame elsewhere.
The vast majority of republicans don’t support cutting social security. There are a few nut jobs in both political parties that have crazy ideas. It will take both parties approval to make changes to social security. Fixing social security so it’s whole for the next 75-100 years is easy by increasing FICA by 1.5% for the employee and the same amount for the employer. The longer term fix requires a higher growing population in the country. We need more workers per retiree to sustain social security organically.
![YoungBoy Never Broke Again - Sneaking [Official Video]](http://i.ytimg.com/vi/1ILUps2zDFU/mqdefault.jpg)
Variable 3: Portfolio Return & Roth IRA.
Without a Roth IRA, I'd delay drawing on social security (from 67 to 70).
With a sizeable IRA, I'd be drawing on social security early (age 62).
My avoided federal/state, IRMAA & NIIT avoided tax & medicare premiums, on Roth withdrawals, is 42.3%. Thus, this tips the scale to drawing social security early, as my optimal choice. My portfolio is 100% stock & I have a sizeable Roth IRA. I turn 62 next month.
Best explanation I have heard is to look at SS as a 'Life' asset and portfolio as a 'Legacy' asset. So, if you will live long ... file SS later, if you will not, file SS sooner ... as you say. In this manner, you both maximize usage of the 'Life' asset and maximize potential for the 'Legacy' asset (upon death).
Oh so you know how long you will live? Are you psychic?
@@commonsenseisntcommon1776 obviously, the concept is if you have family history of younger deaths versus family history of people living 90+ that’s what I meant :)
It seemed to me retiring at 55 that drawing down my 401k and building up my SS to take at 70 had many safety and tax advantages.
I have never regretted delaying SSA. Once I saw how much cash would have been left on the table, I buckled down. Coupled with the RMD being delayed after every Senate bill passed, I think I finally know what that IRS RMD will be, barring legislation.
You need to also include quality of life. Retirement isn't all about math... will you be healthier and have more energy at 62 vs 85? What use is a bigger SS payment when you are beddriden in a diaper?
But retiring and filing for SS are two different things...
@@captsorghum This specific video is related to filing for SS. While I agree that someone could retire before filling for SS... my comment is applicable to this video, and retirement in general.
The difference between a smaller or bigger SS payment is the diaper being changed once per day or as needed.
@@KevinInPhoenix At that point, dementia has set in and it really doesn't matter. The quality of life for a typical 85yo+ isn't very good.
Thanks Eric--I always appreciate your data-driven analysis approach. 🙌🏻🙌🏻🙌🏻
Eric, as you were going over the spend your bond allocation first as you delay social security I could not help but to call this a bucket strategy.
And then when you introduced the 40/60 allocation that progress to a 75/25 portfolio I could not help but to call this a Mike Kitces type "Rising Equity Glide Path" .
These two strategy's are both great to make sure you don't run out of money before you run out of life.
Thank you there is some great content in this video.
Thank you! Astute observations!
@@SafeguardWealthManagement I'll chime in on Sergio's insights to admire your technique for ensuring a genuine apples-to-apples comparison between personal investment portfolio returns and SSA payout streams, SWM. Your proper financial analysis construes SSA payments as a lifetime, risk-free, inflation-adjusted gov't "bond" within your overall investment portfolio. Respect!
Could you also show an analysis of the tax benefit of Social Security income vs investment income since only a maximum of 85% Social Security income is taxed?
This is great info, worth watching more than once.
Unless you have at least double the money you want at the point of retirement, counting on an 8-10% return is nuts in a distribution phase. You just can’t count on that return. The way that the numbers are usually presented requires a ridiculously low withdrawal rate over 30 years to protect from the 10-20% failure rate.
Totally agree on the insurance and longevity protection for persons with modest portfolios that Social Security can provide.
I know this because I watched our parents take early, run out of money and live close to the poverty line. If they had delayed even just 2-3 years they would have been way better off.
I'd argue that an 8-10% return is NOT nuts, when combined with a dynamic spending strategy (reduce spending during stock crashes). Of course, having a sizeable savings balance to begin with, makes a dynamic spending strategy much more doable.
I ran the numbers for 20 year time periods, and it showed there's a 75% chance of beating an 8% return, based on 1909 to current. Of course, prior results don't guarantee future results.
I'm sorry to hear your parents ran out of money. I'd guess that 80% of my relatives (prior and current) will probably run out of money, as well. In the end, it all comes down to simple math. A lot of people have insufficient savings balances, and spend too much in retirement. Of course, longevity is impossible to predict.
@@larryjones9773 Larry everything you said is correct. But, by advocating for a dynamic spending strategy as a backup you are making my point that you can’t count on an 8% return. I didn’t say it wasn’t possible. My point is that retirement plans that have failure rates of even 5-10% are not adequate. Once you allow a truly dynamic spending plan, risk goes to near zero.
We just finished shutting down the whole world over an illness that was at most killing less than 1%. How would that have gone if 1 in 10 died?
Those persons with smaller portfolios need to focus on adequate base income, it is much more predictable and less risky.
@@randolphh8005 Actually, there are plenty of previous 20 year time periods with at least an 8% return, that included a stock crash. For example, 2003 to 2022 had a CAGR of 10%, but 2008 had a negative 37% return.
I agree, those with smaller portfolios should really try to wait until age 70, to draw social security.
I still see a lot of friends, who are recent retirees, with way too conservative portfolios. I think most should have 90% stock (Warren Buffett agrees with me).
My plan for stock crashes, is to do a cashout refinance. Thus, I won't have to sell stock during crash years.
I think you might want to clarify as it’s a bit confusing in the beginning. I had to get a couple min minutes into this to realize what you’re talking about is taking Social Security early and reinvesting it. Then it makes sense but prior to that I honestly couldn’t figure out where you were going with us.
This may be good advice for those close to retirement but what about those who are retiring in 20 years and expect SS to either provide much less at best and nothing at worst? I’m seriously thinking of taking it at 62 because I’m not sure there’ll be anything left by the time I’m 70.
This idea of "running out of money" seems to assume a few things:
1) people will robotically just withdraw a set amount of predetermined money for 25 to 30 years.
2) people are not smart enough to adjust their withdraw rate during a 25-to-30-year retirement
3) that during "no-go years" people need just as much inflation adjusted income as in other years.
4 thru ?) throw in a few of your thoughts ...
I will say it is very nice to have a plan, the proper plan for your planned needs, just don't get so locked into that initial plan that you are unwilling to adjust as the "real world" throws punches at you.
Even if I waited and had a big SS benefit I don't think I could handle the volatility of a 75/25 portfolio.
But thanks Eric for all the videos that you do
Delay if the rate of return of your portfolio doesn't beat the rate of return for social security AND you expect to live longer than the break even age.
This is outside of other reasons to delay, like having more time to do tax conversions, working longer, etc.
This was great. Well done.
In my opinion the best way to be certain that you will not run out of money in retirement is to have plenty of money going into retirement! Indeed, sometimes you just need more money.
About Social Security, everybody has an opinion on when to start. Do your own analysis, and then do what you think is right. It is an actuarial computation so it is difficult to make too big of a mistake.
You are not going to be healthy forever and will not live forever. Don't sweat all these little details.
Should inflation also factor into this? Even if you are lucky enough to get 8-9% return on investments, that's only 6% after taxes and with inflation at 6% you are just breaking even.
Anyone know if it's smart to overpay taxes when withdrawing from 401K?
What a bummer that I have to have a minimum of $2million in my retirement accounts for Safeguard Wealth Management
To even consider managing my money
We are working on a few different options here! Potential options rolling out in the next couple months and we will make an announcement (Ex. Minimum flat fee rather than asset minimum)
And neither can be accurately predicted.
how can i hire this gent?
Call the phone number on the slide. I did and am very happy working with them
@@steveguillory7568 wherethey based outof
Wisconsin
@@davidjensen8090 thnx
Not quite sure when the couple stopped working
Except SS is going bankrupt!
Note if seniors on SS who will make up 50%?? of the population do not get paid, the US will end in a civil war so factor that in.
Another variable is if Republicans are able to cut social security in the future as some of them have suggested.
Hate to burst your bubble but the whole program will need a 25% cut in 2033 per the trustee statement. Social Security's "trust" fund was eliminated by both parties in the 1970's. It's been a pay as you go system for years but demographics win take it off the cliff. Get educated and have a back up plan. Biden's trillions in free $$$ is making it harder for the feds to pay back all the social security funds they borrowed!!!!
Republicans are unlikely to succeed in making a material change to Social Security, but there is a high probability that they will also prevent any effort to increase funding and avoid the automatic 20-25% cut that happens when the Trust Fund is depleted (currently estimated to happen in 2034). All they need to do is keep saying “no” and find a way to place the blame elsewhere.
The vast majority of republicans don’t support cutting social security. There are a few nut jobs in both political parties that have crazy ideas. It will take both parties approval to make changes to social security. Fixing social security so it’s whole for the next 75-100 years is easy by increasing FICA by 1.5% for the employee and the same amount for the employer. The longer term fix requires a higher growing population in the country. We need more workers per retiree to sustain social security organically.
Dont believe Demorats BS!
Biden himself was for cutting!!