Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

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Rick Ferri
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Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by Rick Ferri » Wed Mar 06, 2019 5:57 pm

.
Mike Piper, a.k.a. ObliviousInvestor.com was my guest this month on the "Bogleheads on Investing" podcast. We discussed all things Social Security including his book, Social Security Made Simple, and his FREE opensource Social Security calculator at OpenSocialSecurity.com

Enjoy!

Bogleheads on Investing with Mike Piper, host Rick Ferri
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by akblizzard » Wed Mar 06, 2019 6:07 pm

Really enjoying the podcasts!

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by Dottie57 » Wed Mar 06, 2019 7:05 pm

Great podcast - really enjoyed it.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by Taylor Larimore » Wed Mar 06, 2019 7:13 pm

Bogleheads:

Rick and Mike are "regulars" on our Panel of Experts during Boglehead Conferences. Rick's podcast show why.

Thank you and best wishes.
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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by columbia » Thu Mar 07, 2019 5:15 am

The idea of delaying social security, withdrawing the money you are foregoing each month and then adding on a 4% rule was certainly interesting.

I didn’t catch the exact details of the referenced paper, from Stanford, but that would be of interest to many here.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by Rick Ferri » Thu Mar 07, 2019 7:07 am

All of Wade D. Pfau's articles on Social Security can be found on his website at RetirementReseacher.com.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by ObliviousInvestor » Thu Mar 07, 2019 8:47 am

columbia wrote:
Thu Mar 07, 2019 5:15 am
The idea of delaying social security, withdrawing the money you are foregoing each month and then adding on a 4% rule was certainly interesting.

I didn’t catch the exact details of the referenced paper, from Stanford, but that would be of interest to many here.
Here's the full paper:
http://longevity.stanford.edu/wp-conten ... ersion.pdf

Here's a briefer write-up that Steve Vernon did:
http://longevity.stanford.edu/wp-conten ... -final.pdf

Here's my (briefer still) attempt to summarize:
https://obliviousinvestor.com/an-ideal- ... -strategy/

When we talk about spending down a portfolio to delay Social Security, we're usually talking about, to the extent possible/practical, spending down one's bonds to delay Social Security. This is one reason why most analyses use a discount rate comparable to TIPS yields. Here's one article I wrote about that topic:
https://obliviousinvestor.com/claiming- ... we-assume/

Here's another relevant paper on that topic, from David Blanchett and Michael Finke:
https://www.onefpa.org/journal/Pages/NO ... ation.aspx

Relatedly, when trying to figure out how much you can spend per year, I think it's often helpful to mentally separate the portfolio into two components: one that funds the additional spending-from-portfolio that's necessary while delaying Social Security, and one that funds spending indefinitely (for which we can apply a spending rule of our choosing -- RMD-based spending, 4% of portfolio, traditional 4% rule, etc.).
Mike Piper, author/blogger

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by Skiandswim » Thu Mar 07, 2019 2:27 pm

Wonderful podcast! Thank you for investing the time and energy to do this for all of us.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by azanon » Thu Mar 07, 2019 3:58 pm

I look forward to listening to the podcast as soon as I can, but I will say this as my personal opinion, or concern rather. The closer and closer we get to 2034 where there'll be a 25% or so cut to SS payments, the more I'll be confused by professional recommendations to delay SS until 70 under any circumstances. Surely, the chance that issue will be address and completely resolved is not a full 100%. So how much does the "~ 6.4% "risk free" return" (I know it's not a 6.4% return, but just go with it) one hopes to get by delaying SS have to be tempered by the risk that one won't get anywhere near that, because SS might never be fixed?

I'm just glad I'm 47, because when I'm 62, I'll know whether or not they fixed it (cause that will be 2034). And if all they do is pass something that kicks the can down the road a bit, then I'll pass on that. I'm more of a "bird-in-the-hand" kind of guy, but if one prefers 2 in the bush, have at it.

To borrow/modify a sentiment I heard Zvi Bodie once say, I REALLY hate losing (being duped), and much more so than I like the chance of possibly making off like a bandit. Specifically, if I deferred for 8 years, only to have the payment cut by 25% a few years later due to underfunding, I'll have a hard time forgiving myself because I knew better.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by ObliviousInvestor » Thu Mar 07, 2019 4:31 pm

azanon wrote:
Thu Mar 07, 2019 3:58 pm
The closer and closer we get to 2034 where there'll be a 25% or so cut to SS payments, the more I'll be confused by professional recommendations to delay SS until 70 under any circumstances. Surely, the chance that issue will be address and completely resolved is not a full 100%. So how much does the "~ 6.4% "risk free" return" (I know it's not a 6.4% return, but just go with it) one hopes to get by delaying SS have to be tempered by the risk that one won't get anywhere near that, because SS might never be fixed?
I don't know of any serious analysis that calls it risk-free -- or that considers the expected return (even if there are no cuts) to be 6.4% for most people. For an average unmarried male, the expected return in such a scenario works out to about 1.8% above inflation. For an average unmarried female, it's about 3% above inflation.

Don't think there's really any way to delve into the likelihood and impact of various potential changes though, given forum rules.
Mike Piper, author/blogger

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by 3-20Characters » Thu Mar 07, 2019 4:36 pm

Listening now. Thanks Rick and Mike! A typo on the description page:

Oblivious Investsor blog

Oblivious Investor blog

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by Every things free » Thu Mar 07, 2019 5:14 pm

I am most grateful for having this knowledge available. It has helped me plan and implement the strategy best suited for me.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by azanon » Thu Mar 07, 2019 5:17 pm

ObliviousInvestor wrote:
Thu Mar 07, 2019 4:31 pm
azanon wrote:
Thu Mar 07, 2019 3:58 pm
The closer and closer we get to 2034 where there'll be a 25% or so cut to SS payments, the more I'll be confused by professional recommendations to delay SS until 70 under any circumstances. Surely, the chance that issue will be address and completely resolved is not a full 100%. So how much does the "~ 6.4% "risk free" return" (I know it's not a 6.4% return, but just go with it) one hopes to get by delaying SS have to be tempered by the risk that one won't get anywhere near that, because SS might never be fixed?
I don't know of any serious analysis that calls it risk-free -- or that considers the expected return (even if there are no cuts) to be 6.4% for most people. For an average unmarried male, the expected return in such a scenario works out to about 1.8% above inflation. For an average unmarried female, it's about 3% above inflation.

Don't think there's really any way to delve into the likelihood and impact of various potential changes though, given forum rules.
Thanks for the response, and yeah I definitely didn't intend to dive into a political discussion! I believe my SS estimate statement (or whatever its called) has that warning/disclaimer near the end of the brochure, and I then later verified it is a valid concern. So I see it as more of a matter-of-fact thing that can potentially reduce SS payments if not addressed, so only brought it up for the purpose of informing bogleheads. So I ultimately just want to make the best decision given what we know, regardless of whether or not I agree with how its being handled.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by Rick Ferri » Thu Mar 07, 2019 6:04 pm

3-20Characters wrote:
Thu Mar 07, 2019 4:36 pm
Listening now. Thanks Rick and Mike! A typo on the description page:

Oblivious Investsor blog

Oblivious Investor blog
Fixed. Thanks! :oops:
The Education of an Index Investor: born in darkness, finds indexing enlightenment, overcomplicates everything, embraces simplicity.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by CyclingDuo » Thu Mar 07, 2019 9:43 pm

Rick Ferri wrote:
Wed Mar 06, 2019 5:57 pm
.
Mike Piper, a.k.a. ObliviousInvestor.com was my guest this month on the "Bogleheads on Investing" podcast. We discussed all things Social Security including his book, Social Security Made Simple, and his FREE opensource Social Security calculator at OpenSocialSecurity.com

Enjoy!

Bogleheads on Investing with Mike Piper, host Rick Ferri
Great interview!!!! Thanks for doing the announcements here, asking for BH member questions, and then follow up links with the information.

Thanks Rick and Mike for this important discussion.
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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by Mel Lindauer » Fri Mar 08, 2019 12:51 am

Another outstanding podcast, Rick and Mike. Thanks to both of you.
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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by packer16 » Sat Mar 09, 2019 8:23 pm

I was reading BigERNs blog & it looks like he discounts SS based upon age. He stated that if you make it to 55 then most likely your benefits will not change but discounts benefits if you are younger. Has any one seen this in other places & what are your thought on this assumption. TIA.

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Re: Guest Mike Piper on "Bogleheads on Investing" podcast talking Social Security

Post by ObliviousInvestor » Sun Mar 10, 2019 9:05 am

packer16 wrote:
Sat Mar 09, 2019 8:23 pm
I was reading BigERNs blog & it looks like he discounts SS based upon age. He stated that if you make it to 55 then most likely your benefits will not change but discounts benefits if you are younger. Has any one seen this in other places & what are your thought on this assumption. TIA.
I'm not sure whether we're talking about a "when to claim benefits" analysis or a "do I have enough to retire" analysis. But in either case, my answer would be that I think it's important to test a range of assumptions with regard to whether (and when and to what extent) benefits will be cut due to inadequate funding.

Again, I'm reluctant to elaborate very much on this particular topic, given forum rules.
Mike Piper, author/blogger

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