Yup. That’s already part of the calculation I posted. Crystal clear result. Take at 62 and invest.
OT: Retiring early
- Thread starter JerseyNoles
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Breaking even in your early 80`s is not enough of an incentive in any case, and all the calculations with charts
doesn't figure investing the money between,62 and 70
+1
No reason to overthink this. Cash in hand rules the day with SS. If you need it, use it. If you don't, invest it.
No reason to not use your brain either. It’s not linear. Back test your numbers using actual results. It will work out great if you have great entry point and vice versa. Most investors don’t understand risk adjusted return. AAA rated investment that guarantees 8% return is hard to beat.
No, but leaving a boat load of money on the table if you live to 90+ is. All your investing assumptions only assumes positive returns. Market does lose money sometimes.
You are monthly DCA'ing over 8 years. It will be fine whatever is going on. Don't overthink this.
Post #219 does not account for taxes (SS is Federally taxed.) As I had indicated above, spousal survivor benefit should be considered. I like my wife and we are going to dinner and a show shortly. And Post #215 MTFU argument is so compelling for morons.
You will never catch-up to those 8 years of extra compounding, doesn't matter how long you live.
I started with mutual funds back in the late 70’s, and had to ride out a few pretty severe downturns over the years
You have to have a strong stomach, but in the long run you should do well
You have data points. Just back test it. DCA doesn’t help you because you are counting on compounding to keep you ahead.
To my point about timing the market. It’s unnecessary risk when there is a safer option that provides similar returns. Obviously, if you don’t think you or your spouse will make 90, it doesn’t make sense.
I actually think I will make it into my 90’s
and will not regret what I have done
Yes it does. That's the point of DCA'ing. LOL! By the way, we are all ignoring a massive risk with SS. That's the political risk of changes to the program. Just another reason to take the money ASAP, invest, and enjoy.
That extra 8 years of payments (only these benefits, nothing more past 70) will be worth $1.65M by the time you are 90.
Ain't no math going to make up for that. LOL!
Run it assuming you retire in the early 90s at 62 and see. Don’t be afraid of the math
i see both sides to this financial decision for waiting to get more money..., but for me the 2 variables are will you live that long and what will the amount be down the road...no actuaries that im aware can evaluate your life expectancy except using the average life .... .even if you don't use the money for expenses I would rather have the money in present day amount $$.. i
What investment grade or other AAA investment guarantees 8% over the long term? I’m just curious.
The other point regarding SS and income in general is that statistics show that the older you get, the less you spend (less travel, dining out, luxury spending, etc). Why not take the money while you’re young enough to enjoy it
You have given some outstanding advice in your posts, and thank you.
All of this too, is highly personalized based on a person's overall health in their 60's through their later years, which is very hard to predict.
Yeah this trumps all the which year questions. You'd be a fool to wait given the solvency risks and potential policy changes.
Strange comment. This assumes you have no other income or investments for retirement.
ETA it actually works the opposite. The longer you wait, the less likely you’ll outlive your money. You can spend you savings without the fear of not having enough to supplement your SS.
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I’m fortunate enough to not need the SS income but I’d still rather have it in my hands than the government’s. My daughter is in labor as I write this. Why not get my grandchild started financially? Lots of things to do with extra income.
Less than a $1mil. in investments at 62 you shouldn't be thinking of retiring early.
Of course. And by waiting to collect SS, you can spend your savings with less fear of running out because you will have a higher annuity for the rest of your life. If you have a lower annuity, you will have to compensate it with your savings. Congrats on being a grandfather
I did the math for you. If you employed your strategy, it would have worked between 1985 to 1991. It would not have worked if you retired between 1992 to 2000. Below are break even age during those years. Couldn’t run any numbers after that because there aren’t enough data for conclusion.
1992 93
1993. 87
1994. 85
1995. 83
1996 - 1998. 82
1999. 83
2000. 85
The earlier the break even the more money you leave on the table.
That’s the math.
LOL. Just checked on 1992 and 1993. The math worked perfectly and waiting to 70 never caught up. Sorry, feel free to try again. I assume you messed up on these other years as well.
S&P 500 returns
2000. -10.14%
2001 -13.04%
2002 -23.37%
If you retired at 62 years old in 1992 you get caught at 93. The math doesn’t lie. In that scenario, you would have a head start of 539k by age 69. After 2000 to 2002, that head start drops to 274k. In 2008, S&P drops by 38.49% and your head start drops to 164k. Try again.
You're not even calculating the right thing. LOL! Feel free to reread my original post.
I didn’t use imaginary numbers. Sorry. But if anyone wanted to see how it would’ve actually played out with actual historical data, you’re welcome.
Sorry, reread the original post and let me know when you actually do the right thing. Good luck!
Most of what I have read is break even for 62 vs 70 age to start collecting SS is 83 years old, you live longer you should have waited from a purely financial perspective. Studies also show most would be best financially waiting until 70. Those suggesting 62 is best financially are probably using higher returns then would normally be gotten with age appropriate investing, it might work but there is risk.
That said most including myself don't want to work until 70. I could retire at 62 and be good but I feel like I should work a little longer just in case I want more extravagances in retirement or my kids are struggling I may want to help. I am thinking 63 - 65 range although the studies said that was the worst time to take SS, lol. I have friends in the 63 to 65 range and none have retired and they are not even talking about it.
Whenever you retire have a social plan set up, you will be getting 40 - 50 hours per week that you haven't had for the past 40 years. A relative of mine worked until 73 and really didn't need the money. He retired and said he noticed cocktail hour kept getting earlier each day. As a big golfer he took a job at a golf course driving a cart and emptying garbage to keep himself busy. I am a little ways off but plan to have a weekly schedule and to my best to keep it, biking, excercise, swimming, golfing, hobbies, traveling to away RU games, whatever. Don't sit still.
That said most including myself don't want to work until 70. I could retire at 62 and be good but I feel like I should work a little longer just in case I want more extravagances in retirement or my kids are struggling I may want to help. I am thinking 63 - 65 range although the studies said that was the worst time to take SS, lol. I have friends in the 63 to 65 range and none have retired and they are not even talking about it.
Whenever you retire have a social plan set up, you will be getting 40 - 50 hours per week that you haven't had for the past 40 years. A relative of mine worked until 73 and really didn't need the money. He retired and said he noticed cocktail hour kept getting earlier each day. As a big golfer he took a job at a golf course driving a cart and emptying garbage to keep himself busy. I am a little ways off but plan to have a weekly schedule and to my best to keep it, biking, excercise, swimming, golfing, hobbies, traveling to away RU games, whatever. Don't sit still.
You're wasting your time. I appreciate the perspective you provided. I plan to keep my Lightning until I'm 90 years old in case anyone cares.
Just what Jersey roads need. A 90 year old driving a 2.5 ton vehicle that can go 0-60 in 4 secs.
Presumably, he is referring to the guaranteed increase of 8% per year of SS benefits for the years from 62 to 70. If you have other assets to fund your lifestyle, it isn't a bad return, especially cuz it is indexed for inflation.
Btw, while SS program may change, my guess is that there is more risk of a negative period in the US Total Stock Market (e. g. VTSAX) than any real reduction in benefits of retirees.
Thanks, I was thinking he was referring to an investment product. I wonder if SS would be rated AAA given the funding problem and possible cuts down the road.
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The US gov'ment isn't rated AAA anymore, so why would SS be? This has been a good discussion and the math is clear to take early and use if needed or invest if not needed.
Like ScarletNut mentioned before, are you using a bucket strategy for retirement?
The biggest risk is SS becoming means tested and cut for those that "don't need" it. SS is a much bigger risk than the market, especially with the state of DC and its partisan decline.