Thread Rating:

odiousgambit
odiousgambit 
  • Threads: 326
  • Posts: 9556
Joined: Nov 9, 2009
June 11th, 2017 at 5:20:57 AM permalink
I'm thinking that it is soon going to be common for two person *households* to have the equivalent of a million dollars in value with what their Social Security is worth, even though SS is not cashable.

What I'm doing is comparing the income generated by Social Security and comparing it to the income generated by the "rule of thumb" that says, for someone expecting to retire at the point where life expectancy is multi-decade, to figure being able to initially withdraw 4% of liquidatable assets and get an annual figure in income that should mean their money will not run out.

That 4% sounds like a low percentage is related to the provision that the amount to be withdrawn will be increased along with inflation while the principal has been decreasing - thus not much can be taken at first. But it strikes me that there is an element here similar to SS, which is also income that increases when there is inflation.

Now I do know that there are still plenty of differences between the two sources of income and that the rule of thumb is just that - there are no guarantees it will hold up [perhaps that also can be said of SS]. However, just keeping it simple here, it occurs to me that it's pretty easy to undervalue this SS income even for someone well off. Basically, $1,000,000 at 4% is $40,000 per year . I know there are some couples today taking that much in total from SS; are they usually too old to think 4% fits? Probably so, but probably quite a few can take in $20k each at age 62 now [not sure but can't be far off]. I'm thinking the 4% rule works pretty good for that age group. I don't get to look at what people draw in SS, but I'm ready to believe age 62 "SS millionaires" will be common soon.

There's nothing particularly profound about this, but I never see it discussed and I thought I'd bring it up. Or is there a flaw in my thinking?
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
Wizard
Administrator
Wizard 
  • Threads: 1491
  • Posts: 26435
Joined: Oct 14, 2009
June 11th, 2017 at 6:46:23 AM permalink
Just a quick answer here. The full retirement age is 66. You get less if you apply early and more if you wait, up until age 70. A 65 year old male today can expect to live 17 more years and a woman 20. Ignoring the time value of money, either would make out better with a 25-year annuity, which is how long the nest egg would last taking out 4% at a time. However, Social Security benefits rise with inflation, while annuity payments would not. Yes, the interest on the remaining annuity would earn interest but you would be drawing it down over time so you wouldn't be earning interest on the full amount the whole time.

Given the low rates of inflation lately, I think the 4% results in more average earnings. However, Social Security will pay no matter how long you live so for most people would be the better safety net.

That's just scratching the surface. One could write pages about it.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
Johnzimbo
Johnzimbo
  • Threads: 4
  • Posts: 1140
Joined: Sep 29, 2010
June 11th, 2017 at 7:29:41 AM permalink
I was born in 1960 and full retirement age for me is 67 :(
odiousgambit
odiousgambit 
  • Threads: 326
  • Posts: 9556
Joined: Nov 9, 2009
June 11th, 2017 at 7:57:55 AM permalink
Quote: Wizard

Just a quick answer here.



If I understand the 4% rule of thumb right, it adjusts for inflation by allowing increasing amounts of withdrawal, which is why initial withdrawal is 4% while a good investing strategy should still yield 4% 'plus' [assumes you can beat putting it in the bank]. If it was 4% withdrawal and you earned 4% of course you'd not touch the principal, but the r.o.t. assumes you get into the principal pretty heavily at some later point due to the increases.

I don't know much about annuities but wonder if it is a good comparison - I have gathered that typical annuities from insurance companies are rip-offs, I assume you mean something more fairly run than those.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
Wizard
Administrator
Wizard 
  • Threads: 1491
  • Posts: 26435
Joined: Oct 14, 2009
June 11th, 2017 at 11:21:32 AM permalink
Quote: Johnzimbo

I was born in 1960 and full retirement age for me is 67 :(



I was born in 1965 and it is 67 for me too. To be honest, I think they should raise it to 70 in an effort to save the program. Something drastic has to be done.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
Wizard
Administrator
Wizard 
  • Threads: 1491
  • Posts: 26435
Joined: Oct 14, 2009
June 11th, 2017 at 11:27:47 AM permalink
Quote: odiousgambit

If I understand the 4% rule of thumb right, it adjusts for inflation by allowing increasing amounts of withdrawal, which is why initial withdrawal is 4% while a good investing strategy should still yield 4% 'plus' [assumes you can beat putting it in the bank]. If it was 4% withdrawal and you earned 4% of course you'd not touch the principal, but the r.o.t. assumes you get into the principal pretty heavily at some later point due to the increases.

I don't know much about annuities but wonder if it is a good comparison - I have gathered that typical annuities from insurance companies are rip-offs, I assume you mean something more fairly run than those.



I probably shouldn't have used the word annuity, as those generally give a guaranteed revenue stream for x years. Sometimes they pay whatever is left to pay in a lump sum if the owner dies. I took a whole actuary exam about annuity math some 25 years ago.

Anyway, it sounds like you weren't talking about annuities, but putting the money in some kind of financial institution and taking out 4% of the initial amount per year.

Maybe it would help us talk about this if you told us why you were asking. Social Security is what it is. You can't just take out a lump sum and reinvest it.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
odiousgambit
odiousgambit 
  • Threads: 326
  • Posts: 9556
Joined: Nov 9, 2009
June 11th, 2017 at 11:58:33 AM permalink
Quote: Wizard

Quote: odiousgambit

it sounds like you weren't talking about annuities



I did ask if my thinking was screwy is all.

The thing is, I am of an age and place where when I was young, to be a "millionaire" was almost a thing of fantasy. You had to be born "with a silver spoon in your mouth" as they said or be a fantastic businessman to get there starting with little. Professional people in our neck of the woods rarely became millionaires in those days. Maybe a few really successful real estate developers and someone who owned a jewelry store that did well for decades, that sort of thing. This standard has finally changed and it seems clear that if you want to think of a millionaire as 'well off' that is fine but it is not uncommon now to have those kind of assets today. Such a household hardly has it made, and I really think a young couple should not even think of retiring at this previously fantastic level.

Multimillionaire? There is a certain point there that compares to yesteryear, not sure where it is.

So, surely for many my age it is 'kind of something' that we can expect soon.............. "millionaire" Social Security households being common according to this unusual way of looking at it. Or maybe it is all wrong to look at it that way which is why I have to ask.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
lilredrooster
lilredrooster 
  • Threads: 232
  • Posts: 6504
Joined: May 8, 2015
June 11th, 2017 at 4:18:13 PM permalink
Quote: odiousgambit

expecting to retire at the point where life expectancy is multi-decade, to figure being able to initially withdraw 4% of liquidatable assets and get an annual figure in income that should mean their money will not run out.


instead of withdrawing 4% a year a person could easily find a conservative bond fund that would average about 4% per year considering the yield and likely appreciation. it wouldn't be risk free but it would be low risk. if there is panic in the bond market which sometimes happens there could be a bad year or two. but there would be the tremendous advantage of always having your principal there if you choose to change strategies or if you wish to bequeath a greater amount to your heirs. imho this strategy is vastly superior to withdrawing 4% per year in estimation of your life expectancy. if you end up not needing the entire 4% the bond fund would generate in any year the excess could go back into the fund to earn even more.
Please don't feed the trolls
Ibeatyouraces
Ibeatyouraces
  • Threads: 68
  • Posts: 11933
Joined: Jan 12, 2010
June 11th, 2017 at 10:33:15 PM permalink
Quote: Wizard

Something drastic has to be done.


Abolish it and give everyone their money back! It's been a scam from the get go.
DUHHIIIIIIIII HEARD THAT!
onenickelmiracle
onenickelmiracle
  • Threads: 212
  • Posts: 8277
Joined: Jan 26, 2012
June 11th, 2017 at 11:58:46 PM permalink
Quote: Ibeatyouraces

Abolish it and give everyone their money back! It's been a scam from the get go.

Bernie Madoff would tell you, not so easy. It wasn't really a bad program, as much as all the money was used before it was needed and now it's a hostage to the dollar along with all the debt. Being based on worker to retiree ratios is more about the debt isn't it.
I am a robot.
odiousgambit
odiousgambit 
  • Threads: 326
  • Posts: 9556
Joined: Nov 9, 2009
June 12th, 2017 at 6:55:37 AM permalink
Quote: lilredrooster

instead of withdrawing 4% a year a person could easily find a conservative bond fund that would average about 4% per year ...



there are those who would argue, but in any case the more important point is that the 4% r.o.t. envisions increasing the percentage for inflation, so you begin at 4% withdrawal rate but you do not stay there .

P.S. just for the record I retired in 2013 and the 4% r.o.t. has worked pretty good. I have more in stocks than is recommended but stocks have done OK so that gamble has worked. I have 'tread water' as far as total liquidatable assets , which suggest they will go down later on. But the success of it has meant also I can hold off on SS till 70 in just about any likely scenario .
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
billryan
billryan
  • Threads: 240
  • Posts: 16282
Joined: Nov 2, 2009
June 12th, 2017 at 7:31:47 AM permalink
Quote: odiousgambit

there are those who would argue, but in any case the more important point is that the 4% r.o.t. envisions increasing the percentage for inflation, so you begin at 4% withdrawal rate but you do not stay there .

P.S. just for the record I retired in 2013 and the 4% r.o.t. has worked pretty good. I have more in stocks than is recommended but stocks have done OK so that gamble has worked. I have 'tread water' as far as total liquidatable assets , which suggest they will go down later on. But the success of it has meant also I can hold off on SS till 70 in just about any likely scenario .



How many years will it take getting SS at 70 to make up for what you would have had you started at 62 and invested the money?
The difference between fiction and reality is that fiction is supposed to make sense.
odiousgambit
odiousgambit 
  • Threads: 326
  • Posts: 9556
Joined: Nov 9, 2009
June 12th, 2017 at 8:03:46 AM permalink
Quote: billryan

How many years will it take getting SS at 70 to make up for what you would have had you started at 62 and invested the money?



A matter of huge debate, controversial enough that SS will not help you to decide.

You really need to know when you are going to die! If you are a gambler, not broke, and healthy, I think you have to wait until your regular retirement age at least as a bet on it! Past that is *really* debatable - I think a chart helps show that. Notice the conversion of lines.



chart from https://www.fool.com/retirement/2017/04/08/is-it-smarter-to-claim-social-security-at-62-or-70.aspx
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
TigerWu
TigerWu
  • Threads: 25
  • Posts: 5505
Joined: May 23, 2016
June 12th, 2017 at 8:30:10 AM permalink
Unless my investments have done insanely well and I have more money than I know what to do with, I will be taking SS ASAP at 62. It's all based off of average life expectancy, anyway. My life expectancy is 80 as of right now, so if I die at 80 I will have gotten pretty much the exact same amount of money no matter when I start taking payments. Might as well take them as early as possible, even if I don't really need the money, so I can either reinvest it or take some awesome vacations.
lilredrooster
lilredrooster 
  • Threads: 232
  • Posts: 6504
Joined: May 8, 2015
June 12th, 2017 at 9:22:05 AM permalink
i saw a guy post elsewhere a very good non mathematical reason for deferring s.s. to age 70. it works best for a guy who for whatever reason is not considering his spouse or his heirs. his reasoning was this: if he delays to age 70 and lives well beyond 70 then he has some extra money for those years which is great. but what if he decided to defer to 70 but he didn't live to age 70? is he pissed off because he didn't get anything? no, he's not pissed off about anything. because he's dead.
Please don't feed the trolls
odiousgambit
odiousgambit 
  • Threads: 326
  • Posts: 9556
Joined: Nov 9, 2009
June 12th, 2017 at 10:55:59 AM permalink
Quote: lilredrooster

i saw a guy post elsewhere a very good non mathematical reason for deferring s.s. to age 70. it works best for a guy who for whatever reason is not considering his spouse or his heirs. his reasoning was this: if he delays to age 70 and lives well beyond 70 then he has some extra money for those years which is great. but what if he decided to defer to 70 but he didn't live to age 70? is he pissed off because he didn't get anything? no, he's not pissed off about anything. because he's dead.



this is my thinking pretty much - spouses are taken care of anyway tho I couldn't cite exactly how that works at the moment. I *have* boned up on spousal benefits while both are still alive, something every couple should do.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
Skeptic
Skeptic
  • Threads: 5
  • Posts: 169
Joined: Dec 9, 2015
June 12th, 2017 at 11:07:42 AM permalink
In a perfect world SS will be means-tested within the next 15-20 years. This kind of waste is bankrupting the country.

Nothing depresses me more than going to a casino on a random weekday and seeing seniors feeding their SS checks into the machines. I won't even go into the Beau Rivage in Biloxi for that reason. There are probably hundreds of them there right now.
lilredrooster
lilredrooster 
  • Threads: 232
  • Posts: 6504
Joined: May 8, 2015
June 12th, 2017 at 11:47:37 AM permalink
Quote: Skeptic

Nothing depresses me more than going to a casino on a random weekday and seeing seniors feeding their SS checks into the machines. I won't even go into the Beau Rivage in Biloxi for that reason. There are probably hundreds of them there right now.


i've thought exactly the same thing. but then i thought, if they weren't there where would they be? a lot of them would be alone in their houses or apartments. for whatever reason i don't know many seniors don't become friends with other seniors. at least in the casino they are not alone and maybe don't feel lonely. maybe they feel good if they get something free on their comp card. its not a great way to fight loneliness. but its probably better than sitting all day alone in an apartment.
Please don't feed the trolls
ahiromu
ahiromu
  • Threads: 112
  • Posts: 2107
Joined: Jan 15, 2010
June 12th, 2017 at 11:49:36 AM permalink
Edit: Too aggressive before. Sorry

Also, social security is already means tested, re taxation thereof and on distribution. It's a full-fledged redistribution scheme, paying out low earners higher rates at the expense of higher earners. Completely removing the people that actually funded it (higher income types) would be unethical... more than the system already is. As far as I know, even Sanders (the most main stream far left politician) has only talked about raising the salary cap subject to SS.
Its - Possessive; It's - "It is" / "It has"; There - Location; Their - Possessive; They're - "They are"
odiousgambit
odiousgambit 
  • Threads: 326
  • Posts: 9556
Joined: Nov 9, 2009
June 12th, 2017 at 12:23:21 PM permalink
Quote: ahiromu

even Sanders (the most main stream far left politician) has only talked about raising the salary cap subject to SS.



I saw something once that said this, if it goes far enough, would do far more to solve the shortfall than any other step, more effective than raising the retirement age [which so far has been the only politically viable option]
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
TigerWu
TigerWu
  • Threads: 25
  • Posts: 5505
Joined: May 23, 2016
June 12th, 2017 at 12:47:08 PM permalink
Quote: Skeptic

In a perfect world SS will be means-tested within the next 15-20 years. This kind of waste is bankrupting the country.



Actually, in a perfect world, everyone has a job that provides a fair and livable wage, and everyone is given a comprehensive financial education during their school years so that everyone knows how to properly save and invest money and things like Social Security are not even needed.
lilredrooster
lilredrooster 
  • Threads: 232
  • Posts: 6504
Joined: May 8, 2015
June 12th, 2017 at 12:54:57 PM permalink
Quote: odiousgambit

the income generated by the "rule of thumb" that says, for someone expecting to retire at the point where life expectancy is multi-decade, to figure being able to initially withdraw 4% of liquidatable assets and get an annual figure in income that should mean their money will not run out.



there is yet another option. according to the linked annuity calculator you and your wife if you were both age 65 you could buy a single premium joint immediate lifetime annuity for $100K which would generate $5616 per year or $468 per month which is considerably more than 4%. One of the two of you would have to live about to age 83 in order to have been paid back the entire $100K. One of the two of you would need to live about to 92 to have generated $150K in annuity payments. the downside of course is that if you both leave early you will be able to bequeath less to your heirs. there is also an option to have the monthly payments increased each year according to an inflation calculation but that will of course lower your initial monthly payouts. i plan to do this for myself when the time comes. of course you are paying the house to assume the risk but i'm willing to trade that for the certainty. in this situation i'm not looking for an advantage play. just a fair deal.

https://www.immediateannuities.com/information/annuity-rates-step-1.html
Last edited by: lilredrooster on Jun 12, 2017
Please don't feed the trolls
Skeptic
Skeptic
  • Threads: 5
  • Posts: 169
Joined: Dec 9, 2015
June 12th, 2017 at 1:02:08 PM permalink
Quote: TigerWu

Actually, in a perfect world, everyone has a job that provides a fair and livable wage, and everyone is given a comprehensive financial education during their school years so that everyone knows how to properly save and invest money and things like Social Security are not even needed.



If someone doesn't have a job they aren't contributing to social security in the first place. I'm not buying the lack of financial education either. Someone old enough to be collecting social security has had decades to educate themselves about their own retirement. Sorry, but that isn't my responsibility. If they can figure out the pay tables on the crazy slot machine they're sitting at then by god they can figure out how to plan for retirement. I'm 43 and never married. I've paid more than my share of taxes and I doubt I'll ever see a meaningful dollar from social security. To think that as I type this a percentage of my withholding is being fed into a slot machine - right now - is infuriating.
lilredrooster
lilredrooster 
  • Threads: 232
  • Posts: 6504
Joined: May 8, 2015
June 12th, 2017 at 1:36:02 PM permalink
Quote: Skeptic

I I'm 43 and never married. I've paid more than my share of taxes and I doubt I'll ever see a meaningful dollar from social security.


i'm not sure exactly what you mean. but if you mean that you think s.s. will be bankrupt or drastically changed so that persons such as yourself will get almost nothing i think you are mistaken. i think you are underestimating the financial power of the u.s. yes, there are scare stories out there from economists but there always have been. they were saying that the national debt would bankrupt the u.s. in 5 years 40 years ago. think about it. if an economist or financial analyst doesn't predict disaster what use is he? no one is going to be interested in a book or column from an economist if everyone believes the economy is healthy.
Please don't feed the trolls
777
777
  • Threads: 31
  • Posts: 727
Joined: Oct 7, 2015
June 12th, 2017 at 1:41:51 PM permalink
Quote: lilredrooster

i saw a guy post elsewhere a very good non mathematical reason for deferring s.s. to age 70. it works best for a guy who for whatever reason is not considering his spouse or his heirs. his reasoning was this: if he delays to age 70 and lives well beyond 70 then he has some extra money for those years which is great. but what if he decided to defer to 70 but he didn't live to age 70? is he pissed off because he didn't get anything? no, he's not pissed off about anything. because he's dead.



What you stated is also my attitude about when to draw social security benefit and my decision when to draw social security benefit is dynamic & solely based on the standpoint of cost/risk v. benefit, and risk management.

If you don’t have sufficient net worth, asset, saving, or other source of supplemental income, then you have no choice but to draw social security benefit early. But if you are fortunate enough to have considerable asset, saving, or other source of income, then I think it would be wiser to delay drawing social security benefit as long as practical.
Skeptic
Skeptic
  • Threads: 5
  • Posts: 169
Joined: Dec 9, 2015
June 12th, 2017 at 1:44:32 PM permalink
I mean the dollar will be inflated away to nothing in 20 years and whatever I've contributed will be worthless by the time I'm able to draw.
TigerWu
TigerWu
  • Threads: 25
  • Posts: 5505
Joined: May 23, 2016
June 12th, 2017 at 2:09:51 PM permalink
Quote: Skeptic

If someone doesn't have a job they aren't contributing to social security in the first place. I'm not buying the lack of financial education either. Someone old enough to be collecting social security has had decades to educate themselves about their own retirement. Sorry, but that isn't my responsibility.



That's exactly why I said, "in a perfect world," which we obviously don't live in.

You and I are about the same age. If absolutely nothing is done about social security -- not a single bill passed, not a single budget readjusted, not a single politician running on a "fix social security" campaign -- by the time you and I retire we will still be able to collect almost 80% of what we otherwise would have. Social security is not going away in our lifetimes, even if nothing is done to "fix" it.
Skeptic
Skeptic
  • Threads: 5
  • Posts: 169
Joined: Dec 9, 2015
June 12th, 2017 at 2:19:13 PM permalink
Of course it's not going away but the purchasing power of $1 will be nothing in 20 years just as $1 today buys a whole lot less than it did 20 years ago. Our SS payments are based on the dollars we are earning today (and the last 20 years), not the value of a dollar 20 years from now. The only thing that can stop that is serious deflation which will wipe out asset values (meaning a segment of retirees will have even less to work with at retirement).
TigerWu
TigerWu
  • Threads: 25
  • Posts: 5505
Joined: May 23, 2016
June 12th, 2017 at 2:23:05 PM permalink
Quote: Skeptic

Of course it's not going away but the purchasing power of $1 will be nothing in 20 years just as $1 today buys a whole lot less than it did 20 years ago.



What are you going to do with your Social Security money in 20 years when you start drawing?
Skeptic
Skeptic
  • Threads: 5
  • Posts: 169
Joined: Dec 9, 2015
June 12th, 2017 at 2:28:39 PM permalink
Quote:

What are you going to do with your Social Security money in 20 years when you start drawing?



At this rate the ATM fees for a withdrawal may exceed the monthly payment.
odiousgambit
odiousgambit 
  • Threads: 326
  • Posts: 9556
Joined: Nov 9, 2009
June 12th, 2017 at 5:24:20 PM permalink
Quote: lilredrooster

there is yet another option. according to the linked annuity calculator you and your wife if you were both age 65 you could buy a single premium joint immediate lifetime annuity for $100K which would generate $5616 per year or $468 per month which is considerably more than 4%. One of the two of you would have to live about to age 83 in order to have been paid back the entire $100K. One of the two of you would need to live about to 92 to have generated $150K in annuity payments. the downside of course is that if you both leave early you will be able to bequeath less to your heirs. there is also an option to have the monthly payments increased each year according to an inflation calculation but that will of course lower your initial monthly payouts. i plan to do this for myself when the time comes. of course you are paying the house to assume the risk but i'm willing to trade that for the certainty. in this situation i'm not looking for an advantage play. just a fair deal.

https://www.immediateannuities.com/information/annuity-rates-step-1.html



I'd be very slow to accept this is a good deal. I mistrust this calculator. To buy an annuity in and of itself isn't necessarily a bad deal, but insurance companies - and, I am inclined to believe, this outfit - are notorious for bad ones. They often promise 7% returns these days but insurance companies for reasons I am unsure of generally will generate something similar to banks as far as interest in all their products, such as 'term life'. So how do they return 7%? [or whatever] ... they return part of the principal as needed to keep this promise. And, since they keep the money basically when you die, they are happy to do the actuarial work to make sure this works out for them. If you discover you have made a bad deal, you can't get out of it properly because a commission has been paid to whoever sold it - a very powerful incentive to misrepresent what is being offered.

Every once in a while some outfit gets in trouble for selling inappropriate products to seniors.

Like most things, there are positives. Usually you pay no income tax. A younger retiree who is scared to death of other investments other than bank savings accounts and what he would get in 'term life' products might as well go for a shitty annuity product too. Often such people would never save anything if it weren't for these vehicles.

Having said all that I am no expert and have my prejudices as you can see.

BTW I'd probably shoot myself if I only go 4% return on my investments in the long run.
the next time Dame Fortune toys with your heart, your soul and your wallet, raise your glass and praise her thus: “Thanks for nothing, you cold-hearted, evil, damnable, nefarious, low-life, malicious monster from Hell!”   She is, after all, stone deaf. ... Arnold Snyder
Wizard
Administrator
Wizard 
  • Threads: 1491
  • Posts: 26435
Joined: Oct 14, 2009
June 12th, 2017 at 5:31:27 PM permalink
Quote: Ibeatyouraces

Abolish it and give everyone their money back! It's been a scam from the get go.



The money doesn't exist to give. While there in theory exist "trust funds," it is money that future generations owe the current one.
"For with much wisdom comes much sorrow." -- Ecclesiastes 1:18 (NIV)
Ibeatyouraces
Ibeatyouraces
  • Threads: 68
  • Posts: 11933
Joined: Jan 12, 2010
June 12th, 2017 at 6:06:39 PM permalink
Quote: Wizard

The money doesn't exist to give. While there in theory exist "trust funds," it is money that future generations owe the current one.


True definition of a ponzi scheme.
DUHHIIIIIIIII HEARD THAT!
lilredrooster
lilredrooster 
  • Threads: 232
  • Posts: 6504
Joined: May 8, 2015
June 13th, 2017 at 1:53:44 AM permalink
Quote: odiousgambit

I'd be very slow to accept this is a good deal. I mistrust this calculator.


i believe that the one annuity that i mentioned; single premium lifetime immediate, with no other conditions, is the one in which the house accepts the lowest edge. but anyway, the figures the calculator gives you can easily be checked with no obligation. but it sounds like you're not comfortable with annuities or insurance companies. of course, it's very important that you are comfortable with your investments. i think you already know this, but just in case or for others, the reason the payout seems large is that of course, sometimes the annuitants will die early and the house will receive a windfall.
Last edited by: lilredrooster on Jun 13, 2017
Please don't feed the trolls
lilredrooster
lilredrooster 
  • Threads: 232
  • Posts: 6504
Joined: May 8, 2015
June 13th, 2017 at 2:13:26 AM permalink
Quote: Skeptic

Of course it's not going away but the purchasing power of $1 will be nothing in 20 years just as $1 today buys a whole lot less than it did 20 years ago. Our SS payments are based on the dollars we are earning today (and the last 20 years), not the value of a dollar 20 years from now. The only thing that can stop that is serious deflation which will wipe out asset values (meaning a segment of retirees will have even less to work with at retirement).



it sounds like you are not aware of COLA (cost of living adjustment) which is an annual calculation for adjusting the payments upwards due to inflation. in December of 2016 the s.s. payouts were increased by 3% due to the COLA. this is done every year if some abstruse calculation that they make warrants it. but maybe you are aware of this and are pointing out something deeper. i'm not sure.
Please don't feed the trolls
Doc
Doc
  • Threads: 46
  • Posts: 7287
Joined: Feb 27, 2010
June 13th, 2017 at 7:18:09 AM permalink
Quote: lilredrooster

... in December of 2016 the s.s. payouts were increased by 3% due to the COLA.

That is an interesting point, and as a Social Security recipient, I have some first-hand info.

Yes, the Social Security monthly gross benefits were increased. However, the Medicare premiums that are deducted from those payments were increased by the exact same dollar amount. There was no increase in the net benefits deposited in my bank account each month. It was strictly a matter of transferring funds from one government program to another related program.



I don't think I really have anything to offer on the basic topic of this thread.
lilredrooster
lilredrooster 
  • Threads: 232
  • Posts: 6504
Joined: May 8, 2015
June 13th, 2017 at 7:53:06 AM permalink
Quote: Doc

Yes, the Social Security monthly gross benefits were increased. However, the Medicare premiums that are deducted from those payments were increased by the exact same dollar amount. There was no increase in the net benefits deposited in my bank account each month. It was strictly a matter of transferring funds from one government program to another related program.



i made a mistake in my earlier post. the increase was not 3% it was 0.3%. so that may partly explain it. i think this is a very complicated issue and the possible reason for this is that the cost of medical insurance is inflating by a greater amount than inflation as a whole.
Please don't feed the trolls
terapined
terapined
  • Threads: 89
  • Posts: 6087
Joined: Dec 1, 2012
June 13th, 2017 at 8:16:50 AM permalink
Quote: Doc

That is an interesting point, and as a Social Security recipient, I have some first-hand info.

I don't think I really have anything to offer on the basic topic of this thread.


At what age did you retire. Do you work part time?
I am thinking about retirement. I am 58.5 yrs old. Thinking of going for it at 62. I doubt I will live long. Lifestyle and health problems. I figure i will be lucky to hit 75. My understanding is you can make up to 17k part time with no penalty. Thinking of retirement at 62 and working part time
billryan
billryan
  • Threads: 240
  • Posts: 16282
Joined: Nov 2, 2009
June 13th, 2017 at 10:13:01 AM permalink
I retired at 57 and most certainly will collect at 62. My father died of a heart attack at 53, his brother at 57.
My mother had four brothers. Three died between 56 and 67.
Years ago, my Internist shared a suite with an orthopedic surgeon who worked with many pro athletes.
During an exam, he walked me into the OS office and asked him how many eighty year old patients he had that weighed 300 pounds or more. He could not think of a single one.
The difference between fiction and reality is that fiction is supposed to make sense.
Doc
Doc
  • Threads: 46
  • Posts: 7287
Joined: Feb 27, 2010
June 13th, 2017 at 12:47:07 PM permalink
Quote: terapined

At what age did you retire. Do you work part time?

I retired at 58 with a (reduced) pension from my employer and started drawing Social Security benefits at 62 and Medicare benefits at 65. I do not work (at least not for any compensation) at all. I describe my status as "delightfully unemployed." I occasionally comment that unemployment is quite nice for those who can afford it. I consider it to be my full-time responsibility to have fun.

As noted in your post and that by billryan, I had some doubts about living a long life, and therein lies part of my reasoning for the early retirement and early start to drawing Social Security benefits. While I am overweight (close to 100 pounds heavier than when I first finished college -- you can check my photo in several of the group shots of WoV gatherings), my concerns are less about an unhealthy lifestyle or health problems than about family history.

My father died a couple of weeks after turning 70, having spent six months of his final year in a hospital, three months of that in intensive care. His father died at the age of 76 but with little well being after 70 or 72. He had complications from diabetes, had lost both legs, and in one week had two strokes that left him paralyzed on one side of what was left of his body. He had dementia in his last six months to a year.

My mother's father died at the age of 51 from what was at least his third heart attack. My older brother died of cancer at the age of 65. My younger brother went out jogging at the age of 51 and woke up while being loaded into an ambulance. At the ER, they couldn't figure out how he had survived. Later that week, he had quadruple bypass surgery. Not a family history that leads one to expect to experience being truly old and healthy.

I am now 71. About two months ago, I was helping a neighbor with a little home repair task, felt tired, passed out, and woke up as the EMTs arrived. They ran an EKG and told me it showed an anomaly. Based on their recommendation, I spent a night in the hospital connected to monitors, had an echo-cardiogram the next day, and was later discharged with what sounded like a clean bill of health. I don't really know what to think about my current health status, but I plan to keep trying to have a little fun in whatever time I have left, hopefully plenty (of both time and fun.)
Paradigm
Paradigm
  • Threads: 42
  • Posts: 2226
Joined: Feb 24, 2011
June 13th, 2017 at 2:57:09 PM permalink
I advise clients to think about when dollars are important to them as part of the financial break even points...for most clients the break even points are 80+ years old using various inflation rates...would you really give up dollars between age 66/67 and age 70 so you could have more $$ post ae 80? For most folks they are worried about being able to get around without a scooter at age 80+, let alone what to do with extra SS money.
  • Jump to: