These seem to be the two most pertinent counterpoints to me:
Assume you have $25,000. You can go and buy an inflation protected annuity with survivor benefits that pays you 4% ($1,000) per year for the rest of your life. Same thing with a presumed Safe Withdrawal Rate of 4%.
Now, assume also you can draw a SS payment of $25,000. Here's the choice: Should you invest your $25,000 and draw Social Security? Or, should you defer SS for a year and use your $25,000 for living expenses?
The answer is, your $25,000 of deferred SS benefits pays you 8% ($2,000) for the rest of your life. There is no better deal on the planet!
Increased life expectancy and a presumption about future interest rates have converged to make deferring SS the best choice for virtually everyone that has any savings, in my opinion.
Whatyear? wrote:When I think whether to start SS benefits at 62 v. 67 v. 70, it's more from a "bird in the hand" perspective. In other words, wouldn't it be better/safer to start drawing sooner in case the program "goes away", or gets reduced for people with a certain level of alternative support, etc.? Does anyone else look at it that way? Barring that, I would delay to age 70 without a second thought, since I know I can support myself and my family from age 62 - 70 without it.
If I at all trusted politicians and wasn't afraid that SS will be greatly reduced by the time of or during our retirement, I do think we'd wait til age 70. But if the benefits we expect to gain by waiting longer are reduced or eliminated between our age 62 and 70, then we could lose a lot. Kind of an emotional gambling sense vs. the raw numbers dilemma.
Any advice specific to our situation?
I have an appointment next week with a financial planner. But in the meantime, aside from the crystal-balling exercise I mentioned above regarding the SSA's future, is there any financial reason for us not to wait til age 70 for SS?
AGES:I am currently age 50 and wife is 49. We plan to retire at age 55 and 54.
SALARIES: Her salary is about 80% of mine.
PENSIONS: We both have them, assuming they aren't raided. Mine at age 55, hers was supposed to be 52, now 59, but union is in court with state over pension reform. Hers would've been 65%, currently 40%, but I suspect after law suits to end up somewhere in between - so hopefully about 50% of salary if we're lucky. Mine will be around 60%. She'll receive 60% of mine if I die; I'd get 50% of hers.
At full retirement age (67): $2,540 a month
At age 70: $3,188 a month
At early retirement age (62): $1,738 a month
At full retirement age (67): $2,208 a month
At age 70: $2,786 a month
At early retirement age (62): $1,470 a month
401k/403b: $608k, 80% stock, 20% bond mutual funds. Only saving 10% each but I also get 6% employer match. Strongly considering maximizing catchup contributions once daughter graduates college this summer. That would increase annual savings (including employer match) to around 36k for next 5 years.
HEALTH COVERAGE: Access to my employer plan from retirement til Medicaid, which will cost less than $3,000/yr for the two of us. Similarly-attractive supplemental plan available for Medicaid.
DEBT: None currently. Mortgage paid, one kid almost through college with no loans, another just started (no loans). Cars are approaching 5 and 7 yrs old and we intend to drive them another 5+ yrs.
EMERGENCY FUND: Yes.
Thank you in advance.