Fantasy Football - Footballguys Forums
dorno

What's your age and the value of your 401k?

Recommended Posts

How many people actually meet "best case scenario" every year?  Too many changes for anyone to remain in front of the curve. 

The poor analogy I would use is to compare retirement investments to a baseball team. The goal is to win by having the most runs at the end of 9 innings, or in the case of retirement, having X dollars by the end of 50 years of working. If you field a bunch of players that do nothing but swing away, looking for a home run, they are going to strike out more often than not. And they may not offer much on defense. A retirement portfolio is made up of a mix of players that can achieve the end goal. Sometimes that's a boring single to left field. At this point, I'm willing to take a pitch to noggin to advance a runner. 

Share this post


Link to post
Share on other sites

Sooo.....the company I am working for is starting a 401K for the first time in their history. I have been here 3 years.  I have a Roth already from previous companies I have worked for. 

I am 50 years old. My plan is to work 10 more years full-time and then semi-retire. Wife is 39 and has a great 401K with her company, which she has been contributing to since she was 22. We put 20% of her salary in that plan.  She will work until 60 and then hopefully fully retire.  Hers is a traditional pre-tax 401K.

So I basically have 10 years on this particular plan. They will match 100% of the first 1% and then 50% of the next 5%.

What's my best play? Traditional 401K or Roth? I'm thinking Roth at this point.  

 

Edited by ChiefD

Share this post


Link to post
Share on other sites
24 minutes ago, ChiefD said:

Sooo.....the company I am working for is starting a 401K for the first time in their history. I have been here 3 years.  I have a Roth already from previous companies I have worked for. 

I am 50 years old. My plan is to work 10 more years full-time and then semi-retire. Wife is 39 and has a great 401K with her company, which she has been contributing to since she was 22. We put 20% of her salary in that plan.  She will work until 60 and then hopefully fully retire.  Hers is a traditional pre-tax 401K.

So I basically have 10 years on this particular plan. They will match 100% of the first 1% and then 50% of the next 5%.

What's my best play? Traditional 401K or Roth? I'm thinking Roth at this point.  

 

Personally, I like the idea of having both traditional and Roth "pots" to pull from later on.  It gives you flexibility and none of us can say in certain what the tax rates will look like in 15 years.  I vote for Traditional because you have the Roth already.

Also, make sure you put in at least the 6% to get the full match.

  • Like 2
  • Thanks 1

Share this post


Link to post
Share on other sites
5 minutes ago, eoMMan said:

Personally, I like the idea of having both traditional and Roth "pots" to pull from later on.  It gives you flexibility and none of us can say in certain what the tax rates will look like in 15 years.  I vote for Traditional because you have the Roth already.

Also, make sure you put in at least the 6% to get the full match.

Yeah, I'll be putting in at least the 6%. Thanks.

Share this post


Link to post
Share on other sites
43 minutes ago, ChiefD said:

Sooo.....the company I am working for is starting a 401K for the first time in their history. I have been here 3 years.  I have a Roth already from previous companies I have worked for. 

I am 50 years old. My plan is to work 10 more years full-time and then semi-retire. Wife is 39 and has a great 401K with her company, which she has been contributing to since she was 22. We put 20% of her salary in that plan.  She will work until 60 and then hopefully fully retire.  Hers is a traditional pre-tax 401K.

So I basically have 10 years on this particular plan. They will match 100% of the first 1% and then 50% of the next 5%.

What's my best play? Traditional 401K or Roth? I'm thinking Roth at this point.  

 

The math gets complicated.  There is a good chance you'll be in your highest tax bracket now with the two incomes and your taxable earnings will be less when you start taking out the money.  So you may save more now than you'd pay later.  Of course, we don't know what tax rules will be like in 10 to 20 years.  The math is also going to depend on how you have it invested (thus your expected return) as well as when you think you'll need the money.

(How's that for a non-answer?)

Edited by Juxtatarot
  • Thanks 1

Share this post


Link to post
Share on other sites
On 11/29/2019 at 12:47 PM, KCitons said:

How many people actually meet "best case scenario" every year?  Too many changes for anyone to remain in front of the curve. 

The poor analogy I would use is to compare retirement investments to a baseball team. The goal is to win by having the most runs at the end of 9 innings, or in the case of retirement, having X dollars by the end of 50 years of working. If you field a bunch of players that do nothing but swing away, looking for a home run, they are going to strike out more often than not. And they may not offer much on defense. A retirement portfolio is made up of a mix of players that can achieve the end goal. Sometimes that's a boring single to left field. At this point, I'm willing to take a pitch to noggin to advance a runner. 

Yep.

I'll take a team of Wade Boggs, Paul molitors, Ichiro, etc. Maybe the occasional Rob deer. 

Yeah, I'm old.

It's a little hard to find motivation on an annual basis now, when maxing the Roth IRAs adds like 4-5% to our retirement accounts. And really doesn't make a difference in our long term Outlook. 

Nice problem to have I guess. 

Share this post


Link to post
Share on other sites
2 minutes ago, Juxtatarot said:

The math gets complicated.  There is a good chance you'll be in your highest tax bracket now with the two incomes and your taxable earnings will be less when you start taking out the money.  So you may save more now than you'd pay later.  Of course, we don't know what tax rules will be like in 10 to 20 years.  The math is also going to depend on how you have it invested (thus your expected return) as well as when you think you'll need the money.

(How's that for a non-answer?)

Very good point. Thank you. 

Share this post


Link to post
Share on other sites
1 hour ago, ChiefD said:

Sooo.....the company I am working for is starting a 401K for the first time in their history. I have been here 3 years.  I have a Roth already from previous companies I have worked for. 

I am 50 years old. My plan is to work 10 more years full-time and then semi-retire. Wife is 39 and has a great 401K with her company, which she has been contributing to since she was 22. We put 20% of her salary in that plan.  She will work until 60 and then hopefully fully retire.  Hers is a traditional pre-tax 401K.

So I basically have 10 years on this particular plan. They will match 100% of the first 1% and then 50% of the next 5%.

What's my best play? Traditional 401K or Roth? I'm thinking Roth at this point.  

What tax rate are you at now?  (this is the FFA, so 99% sure the answer is 37% :P)  Does your current employer offer both the Roth 401 and traditional?

IMO, unless you're in a pretty low bracket I'd shield the income now and pile into the traditional.  Between 60-70 rollover the 401k to an IRA and start slowly converting the IRA into a Roth at low tax rates (hopefully 12% or lower). Will you rely on ACA between 60-65 or will you have company coverage?

Edited by Sand

Share this post


Link to post
Share on other sites
30 minutes ago, Sand said:

What tax rate are you at now?  (this is the FFA, so 99% sure the answer is 37% :P)  Does your current employer offer both the Roth 401 and traditional?

IMO, unless you're in a pretty low bracket I'd shield the income now and pile into the traditional.  Between 60-70 rollover the 401k to an IRA and start slowly converting the IRA into a Roth at low tax rates (hopefully 12% or lower). Will you rely on ACA between 60-65 or will you have company coverage?

25%. (we are the paupers of the group)

Yes, they offer both.

I will have insurance through my wife's company until I'm 71 if she retires at 60. Not sure if I would still be insurable through them because of my age. Have no ideas on the rules of this. 

Edited by ChiefD
  • Thinking 1

Share this post


Link to post
Share on other sites
1 hour ago, eoMMan said:

Personally, I like the idea of having both traditional and Roth "pots" to pull from later on.  It gives you flexibility and none of us can say in certain what the tax rates will look like in 15 years.  I vote for Traditional because you have the Roth already.

Also, make sure you put in at least the 6% to get the full match.

I second all of this. Get all the free money you can, then have money in both types so you can decide later what works better for you then.

  • Like 3

Share this post


Link to post
Share on other sites
14 minutes ago, ChiefD said:

25%.

Yes, they offer both.

I will have insurance through my wife's company until I'm 71 if she retires at 60. Not sure if I would still be insurable through them because of my age. Have no ideas on the rules of this. 

I ask because the ACA subsidy cliff is a real thing and would restrain roth conversions if you went that way.  With HC covered (wife and then Medicare) it becomes a less complicated problem.  You can estimate, roughly, what your semi-retirement salary will be, what capital gains you may have from taxable, if any, etc.  From there you can see what your headroom will be to the top of, say, the 12% tax bracket.  That will give you a rough idea how much you can move into a Roth at 12% (instead of 25% as you'd pay now) each year for a while (either until you increase your income with SS or you have to start RMDs).

Sheltering income from the tax man and allowing it to grow tax free for a while pays off bigly and it sounds like you'll have a number of years to take advantage of this if you go that way.

I've posted this before, but this is a good article to read on these account types.

Edited by Sand

Share this post


Link to post
Share on other sites
1 minute ago, Sand said:

I ask because the ACA subsidy cliff is a real thing and would restrain roth conversions if you went that way.  With HC covered (wife and then Medicare) it becomes a less complicated problem.  You can estimate, roughly, what your semi-retirement salary will be, what capital gains you may have from taxable, if any, etc.  From there you can see what your headroom will be to the top of, say, the 12% tax bracket.  That will give you a rough idea how much you can move into a Roth at 12% (instead of 25% as you'd pay now) each year for a while (either until you increase your income with SS or you have to start RMDs).

Sheltering income from the tax man pays off bigly and it sounds like you'll have a number of years to take advantage of this if you go that way.

I've posted this before, but this is a good article to read on these account types.

OK. Thanks. :thumbup:

Share this post


Link to post
Share on other sites
2 hours ago, ChiefD said:

Sooo.....the company I am working for is starting a 401K for the first time in their history. I have been here 3 years.  I have a Roth already from previous companies I have worked for. 

I am 50 years old. My plan is to work 10 more years full-time and then semi-retire. Wife is 39 and has a great 401K with her company, which she has been contributing to since she was 22. We put 20% of her salary in that plan.  She will work until 60 and then hopefully fully retire.  Hers is a traditional pre-tax 401K.

So I basically have 10 years on this particular plan. They will match 100% of the first 1% and then 50% of the next 5%.

What's my best play? Traditional 401K or Roth? I'm thinking Roth at this point.  

:tebow:

  • Like 3
  • Laughing 1

Share this post


Link to post
Share on other sites
3 minutes ago, humpback said:

:tebow:

Best part about it is the 11 years he'll be home alone while the wife schleps off to work.

  • Like 4
  • Love 1

Share this post


Link to post
Share on other sites
1 minute ago, Nigel said:

Best part about it is the 11 years he'll be home alone while the wife schleps off to work.

Amen brother. :banned:

Share this post


Link to post
Share on other sites
2 hours ago, ChiefD said:

Sooo.....the company I am working for is starting a 401K for the first time in their history. I have been here 3 years.  I have a Roth already from previous companies I have worked for. 

I am 50 years old. My plan is to work 10 more years full-time and then semi-retire. Wife is 39 and has a great 401K with her company, which she has been contributing to since she was 22. We put 20% of her salary in that plan.  She will work until 60 and then hopefully fully retire.  Hers is a traditional pre-tax 401K.

So I basically have 10 years on this particular plan. They will match 100% of the first 1% and then 50% of the next 5%.

What's my best play? Traditional 401K or Roth? I'm thinking Roth at this point.  

Seriously though, don't sweat it too much as there is no right or wrong answer (unless you have a crystal ball). Which one turns out to be the "best" choice all depends on a bunch of unknowable things in the future. I'm a proponent of trying to end up with a roughly equal mix of both if it's feasible (it usually is not), only because it gives you a lot of flexibility in the future.

If your wife has been socking away 20% of her salary in her company's great 401k plan for that long, I'm guessing that balance is at least close if not greater than what you have in a Roth right now? Something else to consider is that any company match to a Roth 401k gets put into a traditional account that will be taxable later (many people think it would all go into a Roth).

  • Like 1

Share this post


Link to post
Share on other sites
23 minutes ago, humpback said:

Seriously though, don't sweat it too much as there is no right or wrong answer (unless you have a crystal ball). Which one turns out to be the "best" choice all depends on a bunch of unknowable things in the future. I'm a proponent of trying to end up with a roughly equal mix of both if it's feasible (it usually is not), only because it gives you a lot of flexibility in the future.

If your wife has been socking away 20% of her salary in her company's great 401k plan for that long, I'm guessing that balance is at least close if not greater than what you have in a Roth right now? Something else to consider is that any company match to a Roth 401k gets put into a traditional account that will be taxable later (many people think it would all go into a Roth).

Thanks. 

As for my wife, we have just started putting 20% in hers a couple of years ago. She started small and has ramped it up over the years as finances have allowed. I met her when she was 22 and I was 33, so she's been consistent with at least some contributions over that time. Me, not so much. I have worked in the blue collar industry since I was about 30, so it's been hit or miss on whether the companies I've worked for have ever offered anything at all.

So we've concentrated on putting as much into hers as possible because of her age. But now I can catch up for the next ten years, now that all of our cc debt has been paid off. So we are in a pretty good spot. 

Share this post


Link to post
Share on other sites
2 hours ago, ChiefD said:

25%. (we are the paupers of the group)

 

😡 🤑 

There is no 25% tax bracket.  Do you mean 24% or your real tax is 25%?

Edited by -OZ-

Share this post


Link to post
Share on other sites
20 minutes ago, -OZ- said:

😡 🤑 

There is no 25% tax bracket.  Do you mean 24% or your real tax is 25%?

24%. 

  • Like 1

Share this post


Link to post
Share on other sites
On 12/5/2019 at 11:34 AM, ChiefD said:

Sooo.....the company I am working for is starting a 401K for the first time in their history. I have been here 3 years.  I have a Roth already from previous companies I have worked for. 

I am 50 years old. My plan is to work 10 more years full-time and then semi-retire. Wife is 39 and has a great 401K with her company, which she has been contributing to since she was 22. We put 20% of her salary in that plan.  She will work until 60 and then hopefully fully retire.  Hers is a traditional pre-tax 401K.

So I basically have 10 years on this particular plan. They will match 100% of the first 1% and then 50% of the next 5%.

What's my best play? Traditional 401K or Roth? I'm thinking Roth at this point.  

 

Your best play was marrying a woman who contributed to her 401k at 22 years old. 

Edited by ConstruxBoy
.
  • Like 4
  • Thanks 1

Share this post


Link to post
Share on other sites

401(k) guys - question.  You might know my screen name as an insurance guy, which I am, but I don't do any investment type stuff.  Do get calls into the office asking about them, and just had one earlier....

50 year old wife lost her husband who had a large 401k.  When he initially set it up, he listed his mother as the beneficiary, never changed it when he got married....and then passed.  Mother doesn't want/need it - wants for it to go to widow.  Is that possible without a large taxable event to the mother?  No will, either. 

Share this post


Link to post
Share on other sites
53 minutes ago, matttyl said:

401(k) guys - question.  You might know my screen name as an insurance guy, which I am, but I don't do any investment type stuff.  Do get calls into the office asking about them, and just had one earlier....

50 year old wife lost her husband who had a large 401k.  When he initially set it up, he listed his mother as the beneficiary, never changed it when he got married....and then passed.  Mother doesn't want/need it - wants for it to go to widow.  Is that possible without a large taxable event to the mother?  No will, either. 

It’s my understanding that the wife has to waive the right to be a beneficiary.  This should have been dealt with when he got married.  Maybe she should complain about it? Maybe she becomes the beneficiary without a waiver signed.

I can’t find a great link on this but here’s a start:

Quote

401(k) Plans

A special rule applies to 401(k) plans and other “qualified plans” governed by federal law: Your spouse is entitled to inherit all the money in the account unless he or she signs a written waiver, consenting to your choice of another beneficiary. It’s not enough just to name someone else on the beneficiary form that your employer gives you.

If your spouse agrees to sign the waiver, which should be provided by the firm that administers the 401(k) plan, a plan representative or a notary public must act as a witness. A prenuptial agreement can’t take the place of a waiver; the law says the spouse (not soon-to-be-spouse) must sign. A spouse who does sign a waiver can withdraw that consent if the other spouse later names a different beneficiary, unless the signing spouse expressly gave up that right. (IRC § 417(a)(2).)

https://www.nolo.com/legal-encyclopedia/if-you-don-t-want-leave-retirement-accounts-your-spouse.html

  • Like 1

Share this post


Link to post
Share on other sites
5 minutes ago, Juxtatarot said:

It’s my understanding that the wife has to waive the right to be a beneficiary.  This should have been dealt with when he got married.  Maybe she should complain about it? Maybe she becomes the beneficiary without a waiver signed.

I can’t find a great link on this but here’s a start:

https://www.nolo.com/legal-encyclopedia/if-you-don-t-want-leave-retirement-accounts-your-spouse.html

We just had our 401k meeting yesterday, and this is basically it. They covered this very topic.

The wife is automatically the beneficiary. Without a will it has to go through probate from what I understand, but she inherits the 401k no matter what. Unless she signed a waiver of course. 

  • Like 1

Share this post


Link to post
Share on other sites
1 hour ago, matttyl said:

401(k) guys - question.  You might know my screen name as an insurance guy, which I am, but I don't do any investment type stuff.  Do get calls into the office asking about them, and just had one earlier....

50 year old wife lost her husband who had a large 401k.  When he initially set it up, he listed his mother as the beneficiary, never changed it when he got married....and then passed.  Mother doesn't want/need it - wants for it to go to widow.  Is that possible without a large taxable event to the mother?  No will, either. 

Adding also:

Even if her mother in law is the beneficiary on the paperwork, the wife still gets the money by law. Unless of course she signed some kind of waiver.

The spouse overrides any other beneficiary he would have put on there.

Edited by ChiefD

Share this post


Link to post
Share on other sites

Not my client or anything, and she just called in so I don't know the details.  But was able to find his obit, as well as find out when they were married (amazing what you can find out from just a name online these days).  He just passed last month, they were just married in 2017.  (at least second marriage for her, unsure on him).  If in the last two years they never had a waiver for her to sign, and mom was beneficiary listed.....then what?

Share this post


Link to post
Share on other sites
1 minute ago, matttyl said:

Not my client or anything, and she just called in so I don't know the details.  But was able to find his obit, as well as find out when they were married (amazing what you can find out from just a name online these days).  He just passed last month, they were just married in 2017.  (at least second marriage for her, unsure on him).  If in the last two years they never had a waiver for her to sign, and mom was beneficiary listed.....then what?

The wife still gets the money.

Share this post


Link to post
Share on other sites
1 minute ago, ChiefD said:

The wife still gets the money.

An an inherited IRA I would assume. 

  • Like 1

Share this post


Link to post
Share on other sites

"Well, Mrs. Havercamp, I checked with my best resources, and it sure seems to me like you should inherit the 401k."

  • Like 1
  • Love 1
  • Laughing 2

Share this post


Link to post
Share on other sites
50 minutes ago, matttyl said:

An an inherited IRA I would assume. 

Well, if she became beneficiary it would be eligible to be rolled over into an IRA.  If it has to go through probate, as mentioned above, I don’t know.

Share this post


Link to post
Share on other sites
2 hours ago, matttyl said:

401(k) guys - question.  You might know my screen name as an insurance guy, which I am, but I don't do any investment type stuff.  Do get calls into the office asking about them, and just had one earlier....

50 year old wife lost her husband who had a large 401k.  When he initially set it up, he listed his mother as the beneficiary, never changed it when he got married....and then passed.  Mother doesn't want/need it - wants for it to go to widow.  Is that possible without a large taxable event to the mother?  No will, either. 

The Mom can disclaim the 401k so it goes to the wife.  Sounds like she wants it to go to the wife so no problem.

  • Like 1

Share this post


Link to post
Share on other sites

Something to consider....it's to your benefit to delay taking SS payments as long as possible.  70 is the latest age to begin....obvioulsy take your family history/health into account; but try to set up your retirement to get you to 70 to take full advantage of what you put in over time.

Share this post


Link to post
Share on other sites
29 minutes ago, Tiger Fan said:

Something to consider....it's to your benefit to delay taking SS payments as long as possible.  70 is the latest age to begin....obvioulsy take your family history/health into account; but try to set up your retirement to get you to 70 to take full advantage of what you put in over time.

If you can get or beat 8% it makes sense to take it early. That’s what I plan to do. 

Share this post


Link to post
Share on other sites
8 minutes ago, Capella said:

If you can get or beat 8% it makes sense to take it early. That’s what I plan to do. 

8% of what?

Edited by Tiger Fan

Share this post


Link to post
Share on other sites

Had one of those weeks at work where I thought to myself "I'm not sure I want to do this much longer."   But I still have 20 years or so of working life left, and a lot of paying off and retirement saving to do in that span....

Oh well.

Share this post


Link to post
Share on other sites

 

6 minutes ago, Otis said:

Had one of those weeks at work where I thought to myself "I'm not sure I want to do this much longer."   But I still have 20 years or so of working life left, and a lot of paying off and retirement saving to do in that span....

Oh well.

I had a similar bad week and I am really aiming to get out of my job at 55. I forgo some added benefits by doing so but going until I get my law firms pension (64) doesn’t seem worth it as I want to get the benefits of my work.  I am really sure I will be able to make it early as I am saving a ton and finally getting up into a level at my firm where I am doing very well. Law firm partner is not an easy gig (or an old man’s job unless a huge rainmaker). 

Share this post


Link to post
Share on other sites
On 12/5/2019 at 12:54 PM, Sand said:

What tax rate are you at now?  (this is the FFA, so 99% sure the answer is 37% :P)  Does your current employer offer both the Roth 401 and traditional?

IMO, unless you're in a pretty low bracket I'd shield the income now and pile into the traditional.  Between 60-70 rollover the 401k to an IRA and start slowly converting the IRA into a Roth at low tax rates (hopefully 12% or lower). Will you rely on ACA between 60-65 or will you have company coverage?

This is my plan. Unless one of my wife and I stop working earlier, we are high in the tax rates combined now so all 401k contributions would be taxed at that rate. It’s not an average, we tax taxable income off the top. Once one or both of us retire I do plan to use that rollover.

Share this post


Link to post
Share on other sites
1 hour ago, Otis said:

Had one of those weeks at work where I thought to myself "I'm not sure I want to do this much longer."   But I still have 20 years or so of working life left, and a lot of paying off and retirement saving to do in that span....

Oh well.

Sat next to a guy on a plane to Portland. He was killing himself with Big Law and told me the whole story of you have X years to make partner or they get rid of you. Have to clear a path for younger candidates. He was so burned out. Was taking 3 days in Portland with no laptop. Was going to a top craft pizza and beer place to learn what they do. Wants out 

  • Like 2

Share this post


Link to post
Share on other sites

After events this week I care a whole lot less about this. I’ve been driving to a number and being done by a certain age and I almost didn’t even make it to T -4 of that age.  I can survive if I stooped now. Could just take the portfolio, sell the house and be fine. May not leave a ton for my kids after all us said and done but so be it. I’ve already given them a great head start in life. 

  • Like 6
  • Love 2

Share this post


Link to post
Share on other sites
2 minutes ago, Judge Smails said:

After events this week I care a whole lot less about this. I’ve been driving to a number and being done by a certain age and I almost didn’t even make it to T -4 of that age.  I can survive if I stooped now. Could just take the portfolio, sell the house and be fine. May not leave a ton for my kids after all us said and done but so be it. I’ve already given them a great head start in life. 

You could also go part time or get some kind of part time gig to supplement your income for a few years.

I'm 51 and want to be able to retire at 55 if I want but I'd like to work until 60.  Switching jobs has really revitalized me, maybe it would you too?  Even if it's less take-home.

Share this post


Link to post
Share on other sites
1 hour ago, Tiger Fan said:

8% of what?

I agree with @Capella. He’s saying that if you do the math, the extra SS you get from 62-70 can grow to an amount where the extra amount you get waiting until 70 will never catch up. For instance, my wife and I have the max credits so we’d get $4530 for 8 years. That’s almost $440k with no investment. It’s $536k with a 5% return.

We’d get around an extra $3k a month if we waited until 72. Even at 5% return, I’d only gain back $9k a year. That’s 50+ years or at age 120 when it catches up. 8% and the spread is crazy big.

Unless you know you’re lasting until 100, it’s an easy decision IF you have enough saved that you would in fact invest the money. If you don’t then you should work as long as you can and take the larger payment.

  • Thanks 1

Share this post


Link to post
Share on other sites
2 hours ago, Tiger Fan said:

8% of what?

Think he’s talking Venezuelan bonds. Yields are near all time highs right now. Lebanese bonds looking good too 

Share this post


Link to post
Share on other sites
2 hours ago, Otis said:

Had one of those weeks at work where I thought to myself "I'm not sure I want to do this much longer."   But I still have 20 years or so of working life left, and a lot of paying off and retirement saving to do in that span....

Oh well.

Go row, you’ll feel better. 

Share this post


Link to post
Share on other sites
15 minutes ago, stbugs said:

I agree with @Capella. He’s saying that if you do the math, the extra SS you get from 62-70 can grow to an amount where the extra amount you get waiting until 70 will never catch up. For instance, my wife and I have the max credits so we’d get $4530 for 8 years. That’s almost $440k with no investment. It’s $536k with a 5% return.

We’d get around an extra $3k a month if we waited until 72. Even at 5% return, I’d only gain back $9k a year. That’s 50+ years or at age 120 when it catches up. 8% and the spread is crazy big.

Unless you know you’re lasting until 100, it’s an easy decision IF you have enough saved that you would in fact invest the money. If you don’t then you should work as long as you can and take the larger payment.

I just ran these calculations using this calculator here.  Yeah, I think it's a no brainer to take at age 62 after looking at the numbers.

I looked at my benefits and I'm at:

1)  $2083/month if taken at age 62

2)  $3150/month if taken at age 67

3)  $3907/month if taken at age 70.

If I took that amount and invested it monthly at 5% return, here's what it looks like.

 

At age 80:

1)  $719,170

2)  $684,759

3)  $603,096

 

At Age 85:

1)  $1,059,119

2)  $1,087,559

3)  $1,034,669

 

Based on that, taking it early definitely makes the most sense unless you are living past age 85.  And even then, it's such a small percentage difference and really wouldn't be significant until close to age 90.  Given life expectancy, give me the money early to be able to either use and/or invest. 

  • Thanks 1

Share this post


Link to post
Share on other sites
2 minutes ago, gianmarco said:

I just ran these calculations using this calculator here.  Yeah, I think it's a no brainer to take at age 62 after looking at the numbers.

I looked at my benefits and I'm at:

1)  $2083/month if taken at age 62

2)  $3150/month if taken at age 67

3)  $3907/month if taken at age 70.

If I took that amount and invested it monthly at 5% return, here's what it looks like.

 

At age 80:

1)  $719,170

2)  $684,759

3)  $603,096

 

At Age 85:

1)  $1,059,119

2)  $1,087,559

3)  $1,034,669

 

Based on that, taking it early definitely makes the most sense unless you are living past age 85.  And even then, it's such a small percentage difference and really wouldn't be significant until close to age 90.  Given life expectancy, give me the money early to be able to either use and/or invest. 

You pay any taxes on those numbers before you reinvested? 

Share this post


Link to post
Share on other sites
3 minutes ago, gianmarco said:

I just ran these calculations using this calculator here.  Yeah, I think it's a no brainer to take at age 62 after looking at the numbers.

I looked at my benefits and I'm at:

1)  $2083/month if taken at age 62

2)  $3150/month if taken at age 67

3)  $3907/month if taken at age 70.

If I took that amount and invested it monthly at 5% return, here's what it looks like.

 

At age 80:

1)  $719,170

2)  $684,759

3)  $603,096

 

At Age 85:

1)  $1,059,119

2)  $1,087,559

3)  $1,034,669

 

Based on that, taking it early definitely makes the most sense unless you are living past age 85.  And even then, it's such a small percentage difference and really wouldn't be significant until close to age 90.  Given life expectancy, give me the money early to be able to either use and/or invest. 

So you're just taking the SS payouts at the various ages and investing them to arrive at those #'s at 80 and 85?   Curious, did you adjust the SS payout for inflation? A 2% increase (i think its less than this but I'm just ballparking) is gonna be more of an increase for the 70 payout then the 62 payout.

Share this post


Link to post
Share on other sites
6 minutes ago, wilked said:

You pay any taxes on those numbers before you reinvested? 

Didn't realize social security benefits were taxed.  I just looked it up and realize it's based on income.  I plan on being retired at that point anyway and not sure what my income will be.  Not sure what it does to the numbers as that's a lot of variables to consider (how much is taxed, at what rate, etc.). 

Share this post


Link to post
Share on other sites
41 minutes ago, stbugs said:

I agree with @Capella. He’s saying that if you do the math, the extra SS you get from 62-70 can grow to an amount where the extra amount you get waiting until 70 will never catch up. For instance, my wife and I have the max credits so we’d get $4530 for 8 years. That’s almost $440k with no investment. It’s $536k with a 5% return.

We’d get around an extra $3k a month if we waited until 72. Even at 5% return, I’d only gain back $9k a year. That’s 50+ years or at age 120 when it catches up. 8% and the spread is crazy big.

Unless you know you’re lasting until 100, it’s an easy decision IF you have enough saved that you would in fact invest the money. If you don’t then you should work as long as you can and take the larger payment.

Spot on 

Share this post


Link to post
Share on other sites

Keep in mind that there's a dramatic difference between life expectancy between income quintiles.    If you're in the top quintile you're most likely gonna be making it to your mid-80's.   There's always the chance you can drop dead at 60, but that's the exception not the rule and I try to plan for the rule.     Of course if you don't take care of yourself or have family history, that changes things.  

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Restore formatting

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Recently Browsing   0 members

    No registered users viewing this page.