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

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1 hour 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. 

Not sure where you got your numbers but the max benefits I saw for 2019 (I used 2020) were $2209 for 62 and $3770 for 70. Your spread makes the comparison even closer.

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1 hour 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.

All this math is great for those without spouses.  The two player game is much more complicated.  I've had a good bit larger income history than my wife and plan to take at 70.  The longer I wait the better off she will be when I croak first.  Me taking at 70 allows for the greatest longevity insurance I can get her.

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1 hour ago, gianmarco said:

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.). 

Honestly, I think taxes would be more in favor of 62 as well although due to retirement i wouldn’t think taxes would make much difference either way as they should be on the lower scale. That said for 62, the calculations should include far more capital gains taxes versus income tax.

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11 minutes ago, Sand said:

All this math is great for those without spouses.  The two player game is much more complicated.  I've had a good bit larger income history than my wife and plan to take at 70.  The longer I wait the better off she will be when I croak first.  Me taking at 70 allows for the greatest longevity insurance I can get her.

Actually, my math is for two, just a working 2 version. I do agree that when you are talking about one spouse whose SS future could be based on spousal benefits there’s a different calc. Not saying it will change but obviously everything I’ve posted is for 1 or 2, but both getting their benefits.

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11 minutes ago, Sand said:

All this math is great for those without spouses.  The two player game is much more complicated.  I've had a good bit larger income history than my wife and plan to take at 70.  The longer I wait the better off she will be when I croak first.  Me taking at 70 allows for the greatest longevity insurance I can get her.

My wife's benefits are almost identical to mine. She's a year and a half older. Our kids will be over 18 by the time we hit these ages so they wouldn't get benefits either. 

I don't know if there's a good reason for us to wait for full benefits unless one of us lives beyond age 85. Perhaps it makes sense for one of us to take it early and the other to wait?  In either case, the survivor would benefit from the other passing earlier?

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Thinking I'm going to split 401k and Roth 401k 50\50 going forward.  I messed with backdoor Roth and I'm more and more convinced that will eventually be penalized.   (Conspiracy theory no real insight)

 

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I had an interesting discussion about SS the other day that I haven’t had a chance to run numbers on. The SS surplus is expected to be depleted by 2034 at which point benefits could be cut by 20% unless a fix is implemented on the  revenue side. If that happens it may be more beneficial to collect early to maximize the number of years you collect before the reduction in benefits. 
 

Not totally sure how I feel about it and obviously no one knows what will happen to the system in the next 15 years, but it’s probably something to keep in mind. 

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2 hours ago, Sand said:

All this math is great for those without spouses.  The two player game is much more complicated.  I've had a good bit larger income history than my wife and plan to take at 70.  The longer I wait the better off she will be when I croak first.  Me taking at 70 allows for the greatest longevity insurance I can get her.

So if we make substantially more than our wife, is it almost always better to wait as long as possible?

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1 hour ago, Tom Hagen said:

I had an interesting discussion about SS the other day that I haven’t had a chance to run numbers on. The SS surplus is expected to be depleted by 2034 at which point benefits could be cut by 20% unless a fix is implemented on the  revenue side. If that happens it may be more beneficial to collect early to maximize the number of years you collect before the reduction in benefits. 
 

Not totally sure how I feel about it and obviously no one knows what will happen to the system in the next 15 years, but it’s probably something to keep in mind. 

Boomers are dying younger now because they are so ####### fat and hooked on pain pills.  I think we will be fine.   

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3 hours ago, Sand said:

All this math is great for those without spouses.  The two player game is much more complicated.  I've had a good bit larger income history than my wife and plan to take at 70.  The longer I wait the better off she will be when I croak first.  Me taking at 70 allows for the greatest longevity insurance I can get her.

This has been my recently formulated plan, take hers at 62 and mine at 70 - but I was rethinking it after reading this thread. I think I'll stick with the 62/70 so her total revenue loss is reduced.

But, I also learned about transitioning money to a Roth (thanks whoever posted that link). I'm shooting for retirement at 60, so I'll have 10 years to try to shift as much as possible (tax effectively) before RMDs kick in.

 

Edited by Dragons

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2 hours ago, stbugs said:

Honestly, I think taxes would be more in favor of 62 as well although due to retirement i wouldn’t think taxes would make much difference either way as they should be on the lower scale. That said for 62, the calculations should include far more capital gains taxes versus income tax.

Doesn't all 401k/IRA distributions count as income?

Edited by Dragons

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2 hours ago, gianmarco said:

My wife's benefits are almost identical to mine. She's a year and a half older. Our kids will be over 18 by the time we hit these ages so they wouldn't get benefits either. 

I don't know if there's a good reason for us to wait for full benefits unless one of us lives beyond age 85. Perhaps it makes sense for one of us to take it early and the other to wait?  In either case, the survivor would benefit from the other passing earlier?

I believe the survivor will only get the higher payment. If you're pretty much even, I would think 62/70 would work in your benefit as well. Get some early income right away and a higher residual payment for the survivor.

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4 hours ago, Capella said:

Spot on 

Where are you getting the 8% returns?  

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55 minutes ago, Dragons said:

Doesn't all 401k/IRA distributions count as income?

We were talking about SS and taking the lower benefits at 62 versus bigger benefits 8 years later. Any investment with that money is after tax/capital gains.

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17 minutes ago, Tiger Fan said:

Where are you getting the 8% returns?  

I think that was his guess at a historical return. I used 5% as a lower bar. 8% and taking the SS early is way, way better and in my scenario taking it at 70 would never ever catch up.

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My $.0002...I think we are more likely to see the retirement age continue to rise over tax or entitlement change.  Not nearly as political and I think we can all agree that the current political climate is septic.

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5 hours ago, James Daulton said:

So if we make substantially more than our wife, is it almost always better to wait as long as possible?

Not necessarily always better as SS is designed to be actuarially neutral on claim date.  But a woman's chance to live past 90 is way, way higher than a man.  I'm not looking so much at return potential as longevity insurance - she'll get a higher SS payment if I wait and I'm willing to forego a hypothetical higher total return (dependent on an unknown market) to give her a guaranteed higher payment late in life.

Edited by Sand

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2 hours ago, DocHolliday said:

Why not 65 or 66 instead of choosing 62 vs 70?  Is middle ground the safe play?  

Most of the math, particularly if incomes are very different, favor the barbell approach.  

Honestly this is one area that I think a professional analysis is well worth it.  The math on the two player game here isn't super straightforward and seeing the options can make the difference of thousands of dollars.

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1 hour ago, Sand said:

Not necessarily always better as SS is designed to be actuarially neutral on claim date.  But a woman's chance to live past 90 is way, way higher than a man.  I'm not looking so much at return potential as longevity insurance - she'll get a higher SS payment if I wait and I'm willing to forego a hypothetical higher total return (dependent on an unknown market) to give her a guaranteed higher payment late in life.

my simple payback is just under 82 yrs of age if I take it at 62 vs 66 and 7 months.  I have the 70 calc somewhere but don't feel like looking for the file.

Edited by Binky The Doormat

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18 hours ago, Sand said:

All this math is great for those without spouses.  The two player game is much more complicated.  I've had a good bit larger income history than my wife and plan to take at 70.  The longer I wait the better off she will be when I croak first.  Me taking at 70 allows for the greatest longevity insurance I can get her.

Yep. That's my plan.

18 hours ago, stbugs said:

Actually, my math is for two, just a working 2 version. I do agree that when you are talking about one spouse whose SS future could be based on spousal benefits there’s a different calc. Not saying it will change but obviously everything I’ve posted is for 1 or 2, but both getting their benefits.

Biggest difference is the likelihood of one of the couple living past 90 is pretty high. On average. 

15 hours ago, Dragons said:

Doesn't all 401k/IRA distributions count as income?

Not Roth.  But if you mean traditional, yes. 

We're waiting until 70. Partly because my life insurance goes until 70, and my pension goes with me. So if I die before 70, she'll get the LI, our accounts, and if she decides to take SS at that point, cool. If I die right after turning 70, she won't get LI, but gets the accounts and higher SS than if we had claimed before. I'm not sure if it's the optimal decision math wise, but it is for security and ensuring she keeps a good quality of life. 

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22 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.

Be better with your money.  Retire 10 years sooner than you expect.

No 100 grand weddings

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19 hours ago, culdeus said:

Thinking I'm going to split 401k and Roth 401k 50\50 going forward.  I messed with backdoor Roth and I'm more and more convinced that will eventually be penalized.   (Conspiracy theory no real insight)

 

Completely agree. Easiest political solution to complaints about rich getting tax breaks, IMO 

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I could be wrong, but to me it seems like taking 401k/403b distributions at 59 1/2 and waiting on SS might be the way to go.  At those ages the guarantee return of waiting on the SS just might be worth it.  

Once you guys actually retire, how do you plan to start collecting money from your various sources?

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23 minutes ago, ghostguy123 said:

I could be wrong, but to me it seems like taking 401k/403b distributions at 59 1/2 and waiting on SS might be the way to go.  At those ages the guarantee return of waiting on the SS just might be worth it.  

Once you guys actually retire, how do you plan to start collecting money from your various sources?

Rolls of wheatpennies. 

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39 minutes ago, ghostguy123 said:

I could be wrong, but to me it seems like taking 401k/403b distributions at 59 1/2 and waiting on SS might be the way to go.  At those ages the guarantee return of waiting on the SS just might be worth it.  

Once you guys actually retire, how do you plan to start collecting money from your various sources?

Unmarked bills and quarters for trips to Aldi's

I don't think there's a definitive answer for everyone regarding the right time to take SS, withdrawals, etc. I do fully intend to keep my Roth IRAs as our last accounts to tap. At 59.5, I'll start taking from the TSP (really don't know which one I'd tap first, the military one should be larger than civilian if the market returns ~7% over the next 17 years but not by a huge amount). Between the pensions the TSPs, we'll be good for a long time. 

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2 hours ago, -OZ- said:

Biggest difference is the likelihood of one of the couple living past 90 is pretty high. On average. 

Yep, my calcs were based on my case or no-spouse. I haven’t done any calcs with spousal benefits because my wife and I have both worked more than enough so we could both start at 62 with the full amount. Maybe someone can take a whack at it.

I think people just see the income difference and immediately think waiting makes sense. It’s only around 6 or 7% where the age 62 nut is already big enough that it generates the income difference but you also have that 500-600k nest egg.

For my wife and I, the SS statements have us around $5k a month. That’s just about $500k. That’s a large amount to risk not getting. What if benefits go down or they stop letting people retire early? What if they add income or wealth tests, i.e., got $1M in 401ks? Now your SS is reduced to age 62 levels. There’s so many scenarios to worry about.

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52 minutes ago, ghostguy123 said:

I could be wrong, but to me it seems like taking 401k/403b distributions at 59 1/2 and waiting on SS might be the way to go.  At those ages the guarantee return of waiting on the SS just might be worth it.  

Once you guys actually retire, how do you plan to start collecting money from your various sources?

Don’t base it on using up your 401k first. Base it on actual numbers. I honestly don’t know what money I’d use first just because I still have kids in college and I don’t know how long my wife and I will work. She gets generous bonuses with stock grants involved so I’m legitimately not sure how much our taxable accounts will have. That’s obviously the first choice and as @Sand mentioned above the backdoor Roth will be in use once I get to retired or maybe only one of us working (who knows if Trump’s plan is in place).

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1 hour ago, stbugs said:

Don’t base it on using up your 401k first. Base it on actual numbers. I honestly don’t know what money I’d use first just because I still have kids in college and I don’t know how long my wife and I will work. She gets generous bonuses with stock grants involved so I’m legitimately not sure how much our taxable accounts will have. That’s obviously the first choice and as @Sand mentioned above the backdoor Roth will be in use once I get to retired or maybe only one of us working (who knows if Trump’s plan is in place).

Right.  Just thinking about which way will be the best way to pay less taxes and maximize actual money.

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On 12/15/2019 at 8:27 AM, ghostguy123 said:

I could be wrong, but to me it seems like taking 401k/403b distributions at 59 1/2 and waiting on SS might be the way to go.  At those ages the guarantee return of waiting on the SS just might be worth it.  

Once you guys actually retire, how do you plan to start collecting money from your various sources?

The blueprint for me is in Figure 1 here.  Take out enough to minimize tax hits while simultaneously converting what is possible to a Roth.  That graph doesn't include ACA issues, but that would have to be taken into account, as well.

Edited by Sand
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On 10/29/2019 at 10:43 AM, The_Man said:

Crossed the $500k mark for the first time yesterday (by 300 bucks). I'm a half-millionaire!

I'm sure I'll have plenty more occasions to celebrate this milestone as the markets goes down and up. But it's still pretty cool to see that 5 at the start of my balance for the first time ever. 

Balance is up about 5% (not counting contributions) in 7 weeks. Nice while it lasts

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15 minutes ago, The_Man said:

Balance is up about 5% (not counting contributions) in 7 weeks. Nice while it lasts

Yep

It's like playing an expensive game of chicken in the short term. In the long term I figure the chances of success are pretty high.

Looked at my long range projections yesterday (I set these every year in January). We're already past my end of 2021 target.  

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On ‎12‎/‎14‎/‎2019 at 2:08 PM, Tom Hagen said:

I had an interesting discussion about SS the other day that I haven’t had a chance to run numbers on. The SS surplus is expected to be depleted by 2034 at which point benefits could be cut by 20% unless a fix is implemented on the  revenue side. If that happens it may be more beneficial to collect early to maximize the number of years you collect before the reduction in benefits. 
 

Not totally sure how I feel about it and obviously no one knows what will happen to the system in the next 15 years, but it’s probably something to keep in mind. 

Economic disaster if that happens so don't worry about it. So many people rely on SS as their only income. Cut that by 20%. yeah, that wont end well for the economy.

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48 now and hope to retire at 55.  Might be reading it wrong, but I read that if you retire from the company your 401k is in you can withdrawal at 55...so at the moment that is the plan.  Would probably plan to take SS at 62.

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3 hours ago, yak651 said:

48 now and hope to retire at 55.  Might be reading it wrong, but I read that if you retire from the company your 401k is in you can withdrawal at 55...so at the moment that is the plan.  Would probably plan to take SS at 62.

Nice.  I’m 44 and at this rate will hopefully retire by 94.  Probably start taking SS right away.  

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5 hours ago, yak651 said:

48 now and hope to retire at 55.  Might be reading it wrong, but I read that if you retire from the company your 401k is in you can withdrawal at 55...so at the moment that is the plan.  Would probably plan to take SS at 62.

You are able to get penalty-free withdrawals from that plan specifically if you separate from the company in the year you turn 55. 

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35 minutes ago, Moe. said:

You are able to get penalty-free withdrawals from that plan specifically if you separate from the company in the year you turn 55. 

Is that even if you just simply quit? Does that apply for ANY reason you leave the company?

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38 minutes ago, Moe. said:

You are able to get penalty-free withdrawals from that plan specifically if you separate from the company in the year you turn 55. 

So crazy ...I'll be 62 early next year ...it doesn't seem possible.  Never thought I would see 40 as a young guy.  

Get the money now has been banged into my head, but I kind of like having part of what we have as some kind of annuity.  I have a pension that isn't bad, but it isn't interest adjusted.  My wife is 5 1/2 years younger and has a family that is too mean to die - so she'll likely live to 100 (both grandmas got close).  

Thinking I'm gonna wait.  

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Long time listener (reader), first time caller in this thread...

 

the SS delay calculations that use 8% or even 5% are confusing to me. If you’re at retirement age, wouldn’t you want to be conservative and not risk your capital, therefore investing in safer options with returns that are much lower than 5%? Sounds like spinner the roulette wheel a bit to me. 

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25 minutes ago, ghostguy123 said:

So what is Trumps impeachment going to do to my 401k?

Nothing. If there was a chance he could be removed by the Senate, then it would something to worry about.

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On 12/17/2019 at 8:50 PM, Binky The Doormat said:

So crazy ...I'll be 62 early next year ...it doesn't seem possible.  Never thought I would see 40 as a young guy.  

Get the money now has been banged into my head, but I kind of like having part of what we have as some kind of annuity.  I have a pension that isn't bad, but it isn't interest adjusted.  My wife is 5 1/2 years younger and has a family that is too mean to die - so she'll likely live to 100 (both grandmas got close).  

Thinking I'm gonna wait.  

Good to know @Binky The Doormat

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19 hours ago, joey said:

Long time listener (reader), first time caller in this thread...

 

the SS delay calculations that use 8% or even 5% are confusing to me. If you’re at retirement age, wouldn’t you want to be conservative and not risk your capital, therefore investing in safer options with returns that are much lower than 5%? Sounds like spinner the roulette wheel a bit to me. 

Not entirely. 

If you're 62, you should plan on living another 20-40 years. 

One technique is to have 3 years worth of planned withdrawals in bonds, and maybe 60% of the total in stocks. If the market drops just don't sell stocks that year. You want to protect the capital but also protect from inflation. 

A 60/40 split might not get 8%, but it should get 5, on average.

Edited by -OZ-
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9 hours ago, KCitons said:

Nothing. If there was a chance he could be removed by the Senate, then it would something to worry about.

Yep

Besides, do people really think Trump is the reason the market is doing so well?

Ok, many probably do. But they're wrong.

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1 hour ago, -OZ- said:

Not entirely. 

If you're 62, you should plan on living another 20-40 years. 

One technique is to have 3 years worth of planned withdrawals in bonds, and maybe 60% of the total in stocks. If the market drops just don't sell stocks that year. You want to protect the capital but also protect from inflation. 

A 60/40 split might not get 8%, but it should get 5, on average.

Morningstar has a good bucket portfolio where you basically keep 2 years in cash and then 3-5 in bonds. Then the rest in stocks. It helps with the risk of a decline since  you have at least 2 years where you really don't need any money in the market. 

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1 hour ago, -OZ- said:

Not entirely. 

If you're 62, you should plan on living another 20-40 years. 

One technique is to have 3 years worth of planned withdrawals in bonds, and maybe 60% of the total in stocks. If the market drops just don't sell stocks that year. You want to protect the capital but also protect from inflation. 

A 60/40 split might not get 8%, but it should get 5, on average.

102 sounds pretty awful tbh.   

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6 minutes ago, culdeus said:

102 sounds pretty awful tbh.   

Well, that's the year you die.  Good luck!

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1 hour ago, -OZ- said:

Yep

Besides, do people really think Trump is the reason the market is doing so well?

Ok, many probably do. But they're wrong.

No, but a president being impeached and possibly removed from office could cause a downswing, regardless of what impact that president has had on the economy

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