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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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3 out of 4 retirees receiving reduced Social Security benefits



  • MJG
    edited May 2015
    Hi Guys,

    My general feeling is that as a group, we are overthinking and overreacting to the SS question.

    There are far too many uncertainties and personal preferences to reach any definitive resolution. It all depends because there are to many variables and far too many uncertainties.

    One of the major uncertainties are the ever changing laws, rules, and regulations. If they don't change today, they are sure to change in the future.

    When asked to count Federal and State laws, experts conclude that it is an impossible assignment. The estimated numbers are all over the map, and are likely in the multiple tens of thousands. Additionally, a hundred more are proposed each day. Lucky for us that only 10% of these become law.

    Good luck on forecasting which of these will be on the books a decade from now. Projecting any financial SS break-even point, given these uncertainties, is an impossible task.

    I suggest we just move-on.

    Best Wishes.
  • >>>I suggest we just move-on.<<<

    I thought Dex had a nice thread going here. I must have missed the memo where Professor Snowball had made you a moderator!
  • MJG said:

    My general feeling is that as a group, we are overthinking and overreacting to the SS question.

    You probably shouldn't think about it at all. They will probably will move the goal posts on you, means test or similar.

    But, I am getting close to it and it is there for me. So, thinking about it is a practical exercise.
  • Hi Junkster,

    Perhaps it’s been a tough day for you; perhaps you’ve sipped too much coffee?

    I’m flabbergasted by your sarcastic reaction to my rather innocuous suggestion. It is certainly not an order.

    No, I have not been appointed to moderator duties by Professor Snowball. In fact, if offered that dubious position, I would choose to decline it.

    I’m a strong advocate for freedom of complete and exhaustive discussions. But I don’t like just opinions that are not backstopped with applicable data and informed references.

    If you guys want to continue this discussion, that’s fine. If you guys want to close this exchange, that’s fine too. I think those options touch all bases. It “machts nichts” (doesn’t matter) to me.

    I too contributed to the basic discussion in its earlier life. It was worthwhile to do so. But these exchanges have a limited shelve life. I merely suggested that this thread had reached its shelve life expiration date. Everyone is free to disagree.

    But it is obvious that I’m not an anointed monitor. If I were a moderator, I surely would not have suggested a closure; I would have commanded it.

    My reply to you has taken a too serious turn. I’ll end with a little humor that just might lighten your day. Imagine driving your car down the highway. You might smile if a passing auto had this sign on its bumper: “Honk if you love Jesus; text if you’d like to meet him”. I hope you enjoyed it as much as I did.

    Best Wishes.
  • Dex
    edited May 2015
    MJG said:

    I too contributed to the basic discussion in its earlier life. It was worthwhile to do so. But these exchanges have a limited shelve life. I merely suggested that this thread had reached its shelve life expiration date. Everyone is free to disagree.

    Subjects are repetitively discussed on forums. It is the nature of forums and in many a driver of revenue.

    I frequent a mountain hiking site and there are always discussions about the best backpacks, boots, and all other equipment.

    If there were just one thread on each piece of equipment with the replies the forum would go out of business. So, it is the same here.

    Now threads get buried, people come and go and the same question gets asked.

    What is surprising is that you made the comments you did. Even if we ended this thread and the SS comments another one would be started and you would need to make your comments again. It is like you are trying to tell someone who does not have short term memory what they should do. Right after you say it, they forgot it.

  • "If you guys want to continue this discussion, that’s fine." "Everyone is free to disagree."

    Thanks so much for your permission and largesse, @MJG! We really appreciate your tolerance for our obviously substandard commentary.
  • edited May 2015
    You noted:
    "But I don’t like just opinions that are not backstopped with applicable data and informed references."

    You must have or have had some interesting discussions involving religious beliefs and other topics where opinion may not always have solid data and informed references .....

    Fact and Opinion descriptive

    Perhaps I will withdraw from opinion(s), before causing harm. You have caused me to rethink the way I think.

    Okay. Return to breathing latex paint fumes, for me.
  • Hi Catch22,

    I have few problems when discussing religion. I am a practicing Roman Catholic and am at peace with it.

    Investing is a horse of a different color. Perhaps I should have qualified my comment about supporting opinions with hard data. I was referring only to investment matters, decisions, and opinions in that instance.

    I have no quarrel with investing opinions. All investors ultimately form them and should act on them. That’s what makes a marketplace. As a general rule, I just don’t trust opinions that are offered without supporting documentation. I’m surprised that some MFOers take exception to something as basic as that rule.

    The marketplace is awash in a tsunami of statistical data. I expect that almost all investors use some portion of that data in making investment decisions. I do.

    I surely agree that investing is not all stats; it is part analytic and part gut feelings. Analyses can be overdone. Correlation is not necessarily causation. There are countless examples of chasing ghost patterns.

    Remember in the 1990s Harry Dent projected a Dow 41,000 because of a faulty population aging/spending argument. It was a badly flawed model.

    With the abundance of market data, reasonably high correlations can always be “discovered” to project future market prices.

    Remember David Leinweber’s discovery that the butter production in Bangladesh could predict 75% of the equity market’s returns. Add the Sheep population in that Country to the correlation parameters, and the correlation coefficient advances to 99%. Of course, subsequent out of sample data convincingly disproved that nonsensical correlation.

    Enough. Please attend to your paint fumes while I do the same.

    Best Wishes.
  • I was told not to wait. Take SS at 62. That source told me that if you wait until 66, it will take 8 years to make up what you left on the table, as opposed to starting at 62. I've signed into the thing and saw my "account." At 62, I'd be due a bit over $1,000.00 per month, gross. But SS is taxed in MA. And I might just move far away where it's warm. Then there is the cost of medical insurance. This old dog does indeed consume multiple scripts. What is all this stuff about Medicare Part A, B, C, D, E, F, G, H, I, J.... ???

    ("M-I-C------ K-E-Y......... M-O-U-S-E.")
  • msf
    edited May 2015
    Are you sure Social Security is taxed in Mass? From
    21. Are Social Security benefits taxable in Massachusetts? Is the Medicare tax withheld from my Social Security benefits deductible on my return?

    Massachusetts does not tax benefits received from U.S. Social Security, Railroad Retirement (Tier I and II), Public Welfare assistance, Veterans' Administration payments or workers' compensation. Any portion of such income, which may be taxed under federal law, is not subject to Massachusetts's income tax.
    Regarding the parts of Medicare - A is hospitalization, 100% covered (once you begin SS benefits or apply if you don't claim SS benefits by age 65); B is doctor services, typically 80% covered, and you pay a premium (currently $104/mo). That premium is inflation adjusted and may be higher for high income retirees. The premium also goes up, permanently, if you don't start part B within roughly a year of eligibility (unless you're still working w/group coverage).

    D is for 'D'rugs. Since these are private insurance plans, their premiums vary, but are still subject to penalty and high income premiums like part B. And since these are nonstandardized, each insurer has a different formulary. Like employer plans, those are subject to change with little notice.

    C is Medicare Advantage. Like the group PPO/HMO plans you're familiar with, they (usually) cover everything (including drugs) but have their own networks of physicians and hospitals. So it replaces A/B/D if you use it.

    You always pay your Part B premium to Medicare (even if you take Medicare Advantage instead of vanilla Medicare parts A/B/D). Some Medicare Advantage plans charge extra (and provide extra benefits), some do not. The networks are the major drawback; IMHO the major plusses are a cap on out of pocket expenses and no additional part D (drug) premium. (Under "original" medicare, you'd need a Medicare Supplement - Medigap - plan for an out-of-pocket cap.)

    Medicare has standardized Medicare Supplemental Plans, so what one insurer offers must be the same as what another insurer offers for the same plan. These plans go by letters - too complicated to go into here. Since new Medigap plans (starting in 2020) cannot cover all your deductibles (new law), Medigap plans C and F will be changing, though no one knows exactly how yet. To that extent, MJG is correct, you cannot know the future exactly. But you can still have a pretty good idea of what's coming down the (Mass) Pike.

    Good luck.
  • edited May 2015
    As msf wrote; there are many choices. Time to get studying on all of this now. Not sure if you can have some of the supplemental coverage plans (i.e., Plan F) if you are "expat" status living in another country. And your stated $1,000 becomes $896 as a direct deposit, as Medicare part B (currently $104) will be pulled from your SS each month. Plan D, the meds/drug is another situation with many choices to help cover meds costs. Michigan has 36 vendor choices for this plan. msf also noted about delays of acceptance/choice by you of some of these plans. If you "opt out" and delay and then want Plan D in the future, you will incurr a permanent penalty which = higher rates.
    The internet is your best friend right now. All of this is available for research and study to determine what might suit your future needs.
    Not sure what your Mickey Mouse is about with this.................
  • It takes 12 years to break even if you don't take SS early, figure it out...I did....
    I have made very good use of my Gov. Checks for last 4 years 62 to 66yo, the money is well invested to make much more money (income) in the future, While late collectors 66/70 are still trying to get even.....go figure
  • Check the schwab lines and crossing points, halfway down this page:
    The amounts are so much higher when you wait, seems like a no-brainer if you can swing it from other resources and are unlikely to die soon.
  • Dex
    edited May 2015
    The amounts are so much higher when you wait, seems like a no-brainer if you can swing it from other resources and are unlikely to die soon.

    Check out Junkster's post above about his friend.

    Also, when computing when do take SS it isn't only what is mentioned in their article.

    When you delay taking SS; you have to take into consideration the opportunity cost of using your $ for expenses.

    So, using the schwab example, if a single person could get $2,000/mo or $24K/year from SS but use their money the interest or capital appreciation would have to be added to the years to break even.

    e.g. 10% interest = 2,400 x 5 year delay = 12,000

    Divide the 12,000 by the SS they would get per month at 67 for the number of months. Let's say 2,600. Then you have to add 4.6 months to the break even point.

    Other factors you have to take into account:
    -Opportunity cost above - compounding of int/cap gains, add more time for that? .

    -401K mandatory withdrawals, if you take SS later + you have 401K withdrawals you may pay more taxes than taking SS early + the 401K because your tax base would be lower- add more time for that?
    e.g. 600/month x 12 = 7,200 higher base x tax rate 20% =1,400/2600 = .5 month every year 15? = 7.5 months.

    4.6 opportunity cost
    .4 compounding interest
    7.5 extra taxes
    12.5 months.

    So deferring may not be financially advisable. In the Schwab example the break even is between 15-16 years - Between 77 and 78

    If you want to do the calculations I'd help in reviewing them for you.

  • Dex
    edited May 2015
    Double post
  • edited May 2015
    I like Tampa Bay's advice. The key thing is not to blow that early money. It needs to start working for you. Came in handy for us (at age 62) to pay taxes on a Roth conversion near market bottom in '09. I get killed by taxes both state and federal. So a Roth is golden. Also allowed us to defer taking any IRA distributions for many more years, pay off the balance on an auto loan, etc. etc.

    If you'd rather not have to put that $$ to good work for you ... than by all means hold off on taking it early. Deferring to the future is generally not a bad idea. And, those stats from Schwab are probably right - but they don't take into account what you might earn had you invested the early proceeds.
  • edited May 2015
    When considering the opportunity costs don't forget that 85% of SS benefits are taxed at very low income levels. Seems essential when considering investment possibilities at today's rates of return. That being said, Gary's cautionary tale re: not making it to the crossover point, or more extremely not making it to start receiving any benefits should also be a consideration
  • Hi Old Joe,

    To quote Ronald Reagan from the 1980 Presidential debates with Jimmy Carter: “There you go again”.

    What pleasure do you take in building a straw-man (that’s me), and then meaninglessly attacking that straw-man? That could be a dangerous practice for you. This straw-man chooses to fight over either flight or freezing. My posting record shows that over and over again.

    In this instance, you purposely misinterpret simple declarative statements that I wrote: "If you guys want to continue this discussion, that’s fine. Everyone is free to disagree." I meant nothing more than what I said. There is no deep hidden meaning that lurks below the surface.

    Somehow, with malicious intent, you distort and insinuate my real meaning to declare that I hold MFOers postings as “substandard commentary”. That’s a total fabrication that was invented in your own mind. That’s sad indeed.

    But I do appreciate this addition to your continuing and gratuitous tirade directed at me.

    It further documents your spiteful and nasty nature. Your written words say much more about your character than they identify my shortcomings. It permits seasoned MFOers to compare and judge the merits of your superfluous assertions against my posts. I’m sure they recognize and measure the quality to these exchanges.

    I note that in your comment, you use the plural “we” when recording “our” disapproval. Given your choice of pronouns, you presume to be speaking for the bulk of the MFO community.

    To satisfy my curiosity, I wonder how you assembled this imagined cohort. Did you conduct a comprehensive and independent survey? Did Professor Snowball provide you with some statistical documentation? Or are these the rants of a lone dissenter who has an old, rusted axe to grind? I suspect the latter.

    Why you persist in your ill-conceived vendetta totally escapes me. But I still hope for your rapid and complete recovery from this wasteful malady.

    Best Wishes (sort of since my patience is thinning but my resolve is not).
  • edited May 2015
    Hi @hank
    Not that you don't know this; but too many folks who may desire to not start SS early, must take the money early, as it is money they really need for living. The SS money is not for investing or otherwise; for these folks.
  • edited May 2015
    "Not that you don't know this; but too many folks who may desire to not start SS early, must take the money early, as it is money they really need for living. The SS money is not for investing or otherwise; for these folks. "

    This is why taking SS early is a personal decision and not black and white as we are led to believe.
  • edited May 2015
    "If you guys want to continue this discussion, that’s fine." "Everyone is free to disagree."

    "I note that in your comment, you use the plural “we” when recording “our” disapproval." "Given your choice of pronouns, you presume to be speaking for the bulk of the MFO community."

    @MJG- Well now, you gave "you guys" permission to continue the discussion, with an ever-so-slightly condescending "that's fine". And while I make no presumption about speaking for "the bulk of the MFO community", I thought that I was included in "you guys". Maybe not.

    Never did put much stock in your "Best Wishes", actually, especially when used to end one of your many polemics. Kinda sounds insincere, if you follow me. By the way, I've been noticing a bit of self-plagiarism in your recent replies to other MFO folks. And here I thought that you reserved all of that vituperation just for me. Yet another let-down.

    "Best Wishes"

  • My game plan!

    I don't care about taking SS at this time. My parents lived into their 90's and out lived their means of support, this is part of my fears. If you do this then other people make decisions for you. I'm 3 years from 70 and drawing a decent paycheck. Game plan is to work 3 years. Then draw SS and still make a decent paycheck if my health is good. Life is good and living the dream Just like Warren!

  • edited May 2015
    Good point Catch and JohnC. I may have misread the thread, but assumed it was about how to most productively utilize SS - assuming one had some choice. As you both say, that's a big assumption.

    I think it's deplorable that so many in our society have to subside on so little. That's a much different issue. (I'll shut-up now before Old Joe or someone else labels me a Communist.)

    Take care.
  • @hank, I think one big point of the thread was that we are inundated with reports that tell us to wait when in fact it makes sense for some to take SS at 62. Even here on MFO, we must get about one link a week on this subject. It is a very personal decision that should be done on a case by case basis.

  • edited May 2015
    @hank- You left wingnut commie nutcake !!

    Wait a minute... that's supposed to be ME!!
  • Man, so much violent agreement. Of course it depends on direness of individual situation. Who has said otherwise. If you must have it so as not to be on the street, well, duh.

    That does not apply to most of the frugal and smart types here, I bet.

    Dex, I cannot tell if you really read the piece since it does mention opp costs and more. I have made my decisions based on calcs and projections, sure. I may be wrong.

    Perhaps this will seem more savvy to you -- ? :
  • Excellent reading & comments worth the read. Another reason to convert IRA to a roth! Thanks for the link.

  • working till 70yo. and after..."Living the Dream"...Really?
    I must be in Heaven...
  • Starting SS at 70 does not mean working till 70 necessarily, that's the whole point! Try and use you own savings first, if you can.
  • edited May 2015
    ----- "Delaying Social Security As The Best Long-Term Return Money Can Buy" -----
    The above phrase which Michael Kitces highlights in bold-face near the end of his article would appear better suited for selling cars than providing serious financial advice. ... However, based on that proposition (and assuming I just fell off the turnip-truck), is there any way by which I might mail some additional money to the government for them to invest for me in this wonderful opportunity?

    Kitices writes: "... ultimately, delaying Social Security benefits provides superior risk-adjusted returns to equities and portfolio investing in the long run. ... Obviously, this is not true in the short run – as noted earlier, it takes more than 15 years to breakeven at all. Yet if the retiree’s time horizon was that short, the proper investment would not likely be equities anyway."

    1. I dispute the assertion that a retire with a 15-year time horizon would not want to own some equities. I don't think the smart folks at T. Rowe Price view it that way. Their Balanced Retirement Fund, designed for people already in retirement, carries about 40% equities. Even their conservative Spectrum Income Fund includes a 10-15% allocation to income-producing equities. If we include even a modest allocation to equities and corporate bonds in the investments of older people, I suspect many of his assumptions fail to hold water.

    2. Kitices' reference to "superior risk-adjusted returns" have not been documented. He has not analyzed for us the risks of owning different types of equities, or different types of bonds, or tried to quantify for us the risks of potential drastic changes in either tax policy or SS structure - any of which could upset his delicate apple cart.

    3. Kitices "proves" that deferring Social Security is a better investment than buying an annuity.
    OK - I'll give him that one. What investment isn't?

    4, It's somewhat incidental to the referenced article ... but part of the consideration is whom you would rather have in control of that sum of money, yourself or the government?

    I detest the pop-ups that have begun appearing asking me to send Mr. Kitices some $$ to subscribe to his newsletter.:)
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