I retired 7 years ago at age 62 and went on SS at that time. Why? Simple, because time is worth more to me than money. SS offers that carrot of more per month if you wait. Don't fall for it. I got a paper prior to going on SS that gave me monthly rates for age 62, 66 and 70, The longer you wait, the more per month you get. Don't be confused into thinking that more per month means more total. It doesn't. The only way to know for sure is to know when you are going to die. All three ages come even around 80 years of age which means you to live to 80 before waiting gains you anything. So I asked myself this question. Would I rather have more time retired while I was young enough to enjoy it, or more money when I was 80. Seemed like a no brainer to me. 7 years in and I have zero doubts that I made the right decision.
I retired at 55. I took Social Security at 62. Social Security is about 20% of my income. The remainder of my income is my work pension. Both my work pension and SS are COLA’d. At the time I estimated my life expectancy to be 85-90 and had serious doubts about the health of the SS system. Since SS is such a small % of my total income I am not much concerned about the differences of collecting at 62 vs 66 vs 70. I am 12 years into retirement and sleeping very well.
I was in the same situation except my pension did not have a cola, which is more common. I decided to take my pension as a lump sum and roll it into a newly created IRA. Using this strategy my lump sum can double in value every eight years. I can survive on that....
I did the same math you did and for me the lines crossed at age 82. I did consider opportunity cost as you did but I also considered expense ratio. When we retired we moved to a warmer state with no snow and ice and more importantly - no state income tax. We planned to travel, make some improvements to the house we bought, put some money into the grandkids 529 plans, etc. We figured by the time we were in our 80s most of those expenses would be gone and we wouldn't need as much to live on. We decided to start drawing at 62 and we are sure it was the right decision for us.
This is one of the best videos I have seen on this topic. You are so correct that one size does not fit all. Everyone must assess their own situation. I turned 62 last year and decided to take Social Security in 2023. It works well for me because I have a pension as well. I invest 50% of my Social Security as I don't need it to pay bills right now. Also, this allows me to let my 401k and IRA grow more. I was a mid-level IT Manager and just got to the point that I knew it was time to move out of the stressful environment. One thing we can never buy back is years of quality life. My health is good at 62, which always allows us to travel or do anything we want, but above all, peace of mind. Keep up the good work with these videos.
The conversation really needs to begin with whether or not you need Social Security as an insurance policy for retirement income, or if it will be a supplement to an already-established and resilient stream of retirement income. I would imagine most people watching this channel are in the latter group. And in the case of the latter, I would rather have the money as soon as possible so that my family and I could enjoy it while I am young and healthy enough to travel and be active. While delaying could result in having more total dollars over the course of your life, if you’re already financially secure, how much does that really matter when many of those dollars would be claimed between ages 80 and 100 when you are too immobile to enjoy them? This aspect is substantially overlooked in the SS discussion.
Thank you for the content! I am planning on taking SS at my FRA as this will maximize my wife's spousal benefit. She is almost a full year older than me and will take her SS at her FRA, as well. I plan on having 1/3 pension annuity with a 50% survivor benefit, 1/3 combined Social Security, and 1/3 from retirement accounts, approximately.
Very good thought provoking video. Social Security is something a lot of people really don't understand, and this is a great intro for people. When to collect, as you stated, really has no one size fits all answer. Here are few other considerations. 1. Spousal benefits. When you start can greatly impact spousal benefits for a non-working spouse. 2. Maritsl status. Along with #1, if you are single, with no beneficiaries, collecting early has less implications in the long run. 3. Does collecting early offer enough to fill the gap between needs and other savings. If it allows to to retire, and you really don't want to continue working, claiming early makes sense. 4. Probably the most important is taxes. If you have large tax deferred savings, and take SS early, and your savings continues to grow, when RMD's kick in, you will have a lot of taxable income. This could cause your SS to be taxed, up to 85% of it. In this case, delay SS and spend down some of your tax deferred account.
Great summation and as maybe an extension of your #2 on marital status - "Divorced" factors in based on number years married (14?) and whether or not former spouse has drawn benefits already before you apply (2?). I'm running the numbers myself. Again, great comment. :)
Erin knocked it out of the park on this one! This is by far the best (ie, most easy to understand) video I've watched on what tends to be a dry, boring, yet extremely important subject. As a Self-Employed Chiropractic Physician who loves the 3.5 day per week job which I've created for myself, I don't plan to draw on my Social Security until at least reaching my FRA of 67. I'm in IL where all kinds of taxes (Property, Sales, Income, Gas, etc.) are completely out of control!
Yep! If you're only working 3.5 days a week, why retire? I work 3 days a week and no way I am retiring. Now that said, if I worked 5 days a week, I might think differently.
Other considerations many people don’t consider. First is that the larger benefit goes to the spouse as a survivor benefit, and two lives have a longer life expectancy than one. So having the person with the larger benefit defer raises the benefit for either spouse after the death of the first. Second, the system of taxes on SS, RMDs and progressive tax rates all combine to increase the total tax a person pays if they increase their taxable retirement accounts by taking SS early. Deferring creates a tax planning window. Finally, a higher SS benefit can act as longevity insurance. My money can run out, but my SS benefit will be there forever. If my nest egg is small, I can use it over the defined time while I delay SS, then let that bigger benefit keep growing with inflation. Just some more things to think about.
Erin - excellent video and spot on! Only a few RU-vidrs have analyzed this correctly, and you are in that tiny club! I am 63.5 and started my SS this month. What stood out when I did my analysis is that we seem to think of average life expectancy as being a valid pout to use for analysis, when actually, when life expectancy is chartering, then chart is quite wide! For instance, my average life expectancy may be 79, but there may be a 20% chance of dying before 70. (Not factual…just used as an example, but I worked in a hospital long enough to know I am probably not far off. I know in my family, no man has lived beyond one of my two brothers, who is 76, while my other brother died last year at 72. So, I had to make some adjustment in my life expectancy assumption calculations! It became obvious - at least for me - that taken SS early (if I am not working, which I’m not as of last month), was beneficial. Then, once I realized that we could almost live off my wife’s income and I could invest most of my monthly benefit, plus factoring in the 8.7% COLA, and I realized I would never be better off in SS terms than starting now. (And even if I live too long, imputing a rate of return into my invested SS increased my break even into my 90’s.) Thanks again for helping me realize I made the right decision
Turning 65 soon. 66.5 is my FRA. Will be getting Medicare soon. Not retired but not working either. No debts, no motgage, great health. Frugal minimalist living other than a few trips a year to national parks, monuments and free camping in natural forests , etc. Thinking of waiting to 70 to start S.S. . Not needed the extra money. No employment since 58 years old. I have gotten buy so far. Do have about 38 years of employment history. Saved and invested most of those years starting at 20 with a union scale job. After completing 2 years of community college and 300 total dollars that I paid for with no college debt for an associate's degree went to work for a major oil company. Worked in Michigan, Texas, Oklahoma, offshore Louisiana / Texas in the gulf of Mexico, northern California and finally Moab Utah. Due to cycles of boom and bust not knowing if job would last , learned to be frugal. Took transfers rather than quit. I just pretended that I was making 1/ 2 and invested the other 1/2. Currently To stay busy a member of rotary club. Lions club as treasurer and church service. Living exspenses low other than tithing , fast offerings, humanitarian aid, and donations for dues in Rotary , I seem to have surplus funds to invest with vanguard. I noticed that the SP 500 index fund had dropped some 2022.
The only reason I could retire at 55 was by moving out of NYS 25 years ago. The property taxes are out of control. We moved to NC. They are a fraction of NYS. At 62 I started SS. $2143.00 per month. Are nice home is paid for. I started working at 13. My wife receives a little less than I do. In January we will get another $350.00 Per month. COLA. we no longer touch are retirement accounts. We don't need the money. It's so nice every 4 weeks. They deposit the money and we start all over. We do just fine. My whole life I worked all the overtime I could. The plan was always to get out at 55. People make choices. I'm not rich man. You don't need all that money to retire. It's all about choices. Start early and get out early.
Thank you for talking about opportunity cost. Money has a certain utility whether you spend it or not. When I compare taking SS at 62 vs 70 and factor in a 6% return the breakeven point is 91--Now to be fair you may live to 100 or more , but you are far more likely to pass prior 70 which is a huge risk. So I believe taking SS as early as possible after you retire is the best course of action. The SS dollars today are far more valuable and are tax advantaged income .
Great video, I like that you covered the wide range of issues related to the questions of when to take SS, many others just do a simplistic (Break even on SS proceeds). Your point that while you need to consider the statistics it’s what works for you in the end is awesome advice. I’m 59 and while I’ve run the all the numbers I still haven’t decided. Thanks, Oh yeah… I love the outtakes at the end, they are a blast
I attended a retirement class that had a speaker from the Social Security Administration speaking. He opened his presentation by saying, most people have one question for him and it is, 'when should I start my benefit to get the largest payout over my lifetime' he then says 'it's a very simple, easy answer... just tell me your death date and I can tell you the best possible time to start your benefit 🤣 There's a lot of moving parts in this question, great video Erin
PS, killer hair today, Erin... you're ready to do cartwheels on jaguars and give Tawny Kitaen a run for her money 🤘 Who am I kidding, you're probably too young to even know what that reference is about 🤣
Great video Erin. Love the graphs that tell the real story. The lost oppertunity cost is in fact a big factor, or typically it is , other than this year. You might consider doing a separate video on when to take spousal benefits if married. For many couples it makes more sense to take spousal benefits early because they eventually end up getting half of the other spouses benefit which is often much larger. This was the case with my wife and I. This comes into play more often for couples when one stops working when they start a family but still has enough credits to get SS.
If the spouse claims at 62 the maximum spousal benefit is 35%, not 50%. Also it isn't able to be claimed until after the higher earning spouse also claims, so age of the higher earner is also significant.
My perspective as someone planning to retire in my 50s with a solid net worth: I’m going to start collecting SS as soon as I can (if it even still exists). Why? Derisking my Safe Withdrawal Rate. I hopefully won’t need SS to make it through my retirement without running out of $, but by offsetting X% monthly as early as possible, thus reducing the underlying assets I have to sell, my horizon should lengthen. I’m investing at a high risk level now (95% equities 5% alternative investments), but will be looking to derisk heavily once I start to approach 50
I’m retiring at 62 in 1 year and can live comfortablly on my pension and taking my social security at 62. I can leave my savings to keep growing. I think that is they way to go if you dont need withdraw hard from your savings. I also believe having more money from 62 to 80 in the break even age is better. I want to enjoy my 62 to 80 years…..
Great video Erin, Wish you were my adviser about 20 years ago! I always planned to retire at 64.5. I have added to my and my wife's IRAs and Roth accounts every year. We paid off our house a long time ago and always planned to take our SS at 66.8 . Every month for the last 20 years I have added extra money to high-yield savings account at Charles Schwab. it makes next to nothing and looking back it was stupid but it was always my plan to use that money to get through the two-plus years before SS kicked in. The account has twice what I would ever need but the sale of my company and monthly income from that would have been more than I would have needed even if I waited till 70. Now I'm thinking it's just one more account my kids will inherit. I did a lot of things right but this was not one of them. Now I always used the account to buy things like cars, roofs and remodels. Take care, Erin.
it's was probably far better to have too much available in that account rather than too little, haha, might have helped you sleep netter at night - now you can use it to have fun ad spoil your kids
Nice video as always Erin. For me it will be age 70 until I collect social security. The main deciding factor for me is my Wife who is 9 years and 9 months younger. She depends on me. I am going to work and save as long as I can to ensure she is set financially when I am not here. My goal is for there not to be any financial hardship for either my Wife or our Daughter taking of her Mother when I am not here. My plan is to save enough retirement money to where we can live off the return/income of the principal balance. (plus social security) Then when my Wife and me are both not here, our retirement savings could then become part of our Daughter's retirement.
My wife is 58 y/o she will join me in retirement next year. She was diagnosed with early stage breast cancer in 2018 & treated. Even though we don’t need the money she will take SS at 62 y/o.
I have only recently been studying the implications of when to take SS since I am 10 years from early retirement and my wife is 12 years away. I feel fortunate that I will have a very secure pension and substantial personal investments. I will most likely retire at 62 and start benefits at 67 while my wife will begin when she is 62 (I will be 64 at that time). We plan on downsizing and our expenses will more than be covered by my pension assuming no large scale issues emerge between now and then. I have tried many retirement calculators and software (New Retirement and Personal Capital) and both seem to say it really doesn't matter when we collect unless you want to leave a bigger legacy but our standard of living can be supported in each scenario. Good video as always.
Erin, very good initial breakdown on Social Security. Not an easy topic with all the confusing pieces. I’ve seen some others comment about the impacts on when to take SS regarding a spouse. This would be a great topic next time you cover SS. You’ve done a good job communicating oftentimes difficult or complex topics for those newer to financial information. Keep up the good work!
Great analysis Erin. It definitely depends on your situation. For me, I will not be working when I retire at 60. I will take SS at 62 because I don't want to draw down my own savings which I hope to pass on to my kids. Nobody knows how long we will live but once you pass on, SS will not give the balance of what you put in to your adult children.
Well done, Erin. Your videos are really very meaningful and helpful. I plan on taking SS at age 62, I'm already retired and I am 56 but I actively manage my own investments and primarily rely on dividends and options income to pay the bills. I could rely on my investments and delay SS but for personal reasons I prefer to receive it once I can. I will be receiving around $2,100 a month even with the discount and that is more than sufficient for me.
When to withdraw Social Security is very situational. For example, here is a common situation. For people who retire married with their retirement accounts primarily in a 401K or traditional IRA. You should draw down/convert to Roth IRA early where possible. If you are using the ACA for medical be sure to manage your taxable income for subsidies. I would advocate for delaying filing for social security in this situation. The reason has to do with taxes and the widow's tax trap. When one spouse passes away it has potential to increase taxes because they lose the married filing jointly status and that lowers their standard deduction. You could also be facing increased RMDs at this time which in turn potentially increases the amount of SS that is taxable. To avoid this situation, drawing down/converting on the taxable retirement accounts would be better while your SS value increases by delaying filing. It will reduce the amount you have to take as RMDs in the future and also reduce the amount of taxes on your SS income. The best situation would be to have most of those assets in a Roth IRA which is no longer taxable and draw the SS with no taxes at that time. This is just one scenario, but I thought worth mentioning because I think it is fairly common.
Erin, great video. We are 46 and 47 and are planning on retiring at 55. Your video gave me some insight. The hardest part of the equation is when will we leave this earth. If we knew we would make it till 85 to 90 it would be an easy choice. 70. I have 20 yrs to decide providing ss isn't bankrupt by then...
I grapple with this as well. I plan to retire next summer at 63 and will have a pension that will pay my bills. I plan to take Social security at 67 (FRA), but I also have much of my retirement savings in pre-tax accounts and want to avoid having large RMD's later - or worse, saddle my kids with large annual taxable withdrawals. I plan to do some Roth conversions, but not for 100% of these accounts. Perhaps it would be better to withdraw some of that money before age 67 or delay until age 70.
I decided to start collecting SS at age 65 (full retirement age), but I also continued to work until I retired at age 72 last May. My spouse is 11 years younger and still working. So, our situation is a little unusual. Calculating the SS amount I've received in the past 8 years (close to $250K), I'm happy to have taken those dollars instead of waiting until age 70...the unknown of life expectancy triggered my decision, along with the flexibility of receiving those dollars to save, spend and invest was also a positive for us. Everyone's situation is different, so best to all in thinking through your strategy.
Hi Erin, I'm a subscriber but, as I'm 63 and plan to wait to 70 for S.S. I came upon a couple other considerations. One huge one that's not addressed is the very favorable tax treatment of social security. Would love to see you get into that in a video (provisional income, etc.). If I wait till 70, my wife and I will collect $7k/month in s.s. We won't need to withdrawal any money from savings/retirement. Also, converting IRA's to Roths so my taxes will be minimal in the future.
Erin: Generally, if you wanted to start benefits at age 62 and invest the proceeds, all other things being equal, 6% average annual return, will equalize with starting benefits at 70. So the question is, can you be confident that you can grow your investments by a 65 annual return. You also have to factor in tax implications and RMDs and the age of your spouse and how your start age affects him or her. People overwhelmingly start benefits at age of 62 mostly due to ignorance.
I am thinking of withdrawing 401k money first to avoid RMD's at 72, but I will try to stuff as much as I can into my Roth IRA and the rest I will spend or put into an investment account. I also have a pension that will cover a portion of my living expenses until I am ready to collect Social Security. I can get FRA at 67, but I am not opposed to signing up at 65 if I feel like I should preserve more savings. I think there are a lot of questions in the environment at the moment that are affecting my retirement strategy, or even when I can retire with enough to enjoy being retired
I retired at 60, with a pension. Still able to save some of my pension. If needed I would take dividends that I have been reinvesting for the last 32 years. If I need more I put a lot of cash away if I needed it, and I would take sone of that. At FRA I will reassess on whether I need more money, and should I take it from retirement accounts or social security. I am personally more concerned with have adequate income to cover expenses than playing the game on when will I recoup.
With average lifespans becomming increasingly longer, there are a few more advantages to a larger SS income ( deferring to later). One consideration is SS has the advantage of being adjusted for inflation. Secondly the SS income is more favorable from a tax vantagepoint. You get to keep more of your income.
Love your hair and especially that smile… keep it coming great info… you just helped me decide for sure at62 for me might do 63 but no later. I don’t know any men that’s 80 years of age. My goal is to make it to 80 and healthy mentally and physically of course. So thank you so much for your content.
Erin, wife is 5 years older and lower earner, so when I start drawing SS , her payment will increase to 50% of my payment. Question: does her taking her SS early change what she’ll get when I retire and start collecting?
@@ekimdoog Nope. The amount she receives will be the same. She just would claim her's long as you are not yet receiving your benefits. Then once you start to draw, she can switch. How it works since she is eligible for her own benefits, SS would pay her benefit - then the remainder as spousal benefit up to that 50% amount of your benefit. So she would end up getting a combo of the two once she becomes eligible. (Up to the total amount of 50% of your benefit) faq.ssa.gov/en-us/Topic/article/KA-02011
@@ErinTalksMoney OK so what will determine her benefit longer-term after we are both receiving benefits is ultimately what my monthly benefit ends up being depending on when I start receiving benefits. Is that correct?
Another great video. Since there are so many pieces to the puzzle, it is tough to provide a singular answer. At the very least, you described all the pieces and the variety of ways they could fit together based on different personal circumstances. PS - Thanks for bringing back the out-takes. They were missing from your last video, and I thought they had gone by the wayside.
I think for some people, it's a part of a diversified portfolio that is known. Taking it sooner or later can depend on what kind of stability you are looking for in terms of what you can draw on at any given point.
Social Security goes up in value the longer you wait to draw……..8% per year on an average. Will your 401K grow that much?…..all questions you should ask……Do your research!!
I plan to delay SS until age 70 because I want the security of that higher guaranteed income later in life when my investment income may not be as stable. For me, this decision is all about income stability, not opportunity cost.
Ran all the numbers on the social security site and it recommended my wife take it at 62 and me at 70 but honestly I don't think my life expectancy is that high as my family history suggests along with some health issues so I think we'll both take it at 62.
This is great information thank you! I am a federal employee. Will my pension count against m social security as earned income and thus take away some of my social security benefit if I draw at age 62?
There are multiple variables. However, in the simpliest case, and assuming you intend to live beyond 82 years old, then it comes down to your rate of return. If the rate of return on your investments exceed the 8% rate of return from delaying your benefits, then take your benefits and let your investments grow. If you are doing Roth conversions, still working, want to use social security benefits as your hedge against the stock market, etc. then delay taking the benefits. Keep in mind that your benefits can be mostly tax exempt depending on state and other income.
"Best Age" is completely dependent upon your situation. It can be even more complicated if you have a spouse and need to consider when they should draw social security, spousal benefits, and survivor's benefits. While social security is great, the more financial streams you have can provide a lot of flexibility in your decisions. I do think it's important to make it two different decisions: when to retire and when to draw social security. Those are two completely different questions that do not necessarily have the same answer.
I do have a question for Erin and the community here. If I start collecting my 401k and pension at 59-1/2, once I start collecting my SS payment at 62, will I be penalized if I’m collecting say 6-7k a month from my 401k/pension and also SS payment?
That $1 for $2 clawback crushed my business partner. He hadn’t planned for it because he wasn’t told about it. Kept working and got the end of year surprise. The recalculation won’t make up for the time value of money.
Personally, since I am only 30, I don't spend my time worrying about SS since it will most likely look completely different by the time it is important to me. But still a great video and I'm sure the older crowd got a lot of use from this 👍
I've been an investor for 40+ years and have experienced all the emotions that a bear market brings, many times. That said, perspective can change. My plan was always to take S.S. at 62 to preserve my investments. All of my retirement income comes from my investments so I have no guaranteed income outside of S.S. After 6-1/2 years of retirement and now at 62, my plan has changed to wait to 67, if not 70. Just as when I accelerated my mortgage payments to pay off my 3% mortgage, emotions are winning out again. It just feels better to know I will have a guaranteed income that will comfortably cover my living expenses. Besides, the additional income would reduce the amount I could rollover to my Roth.
Love the outtakes at the end. LOL The plan I'm own is Pension + Social Security starting at 62. All things going to plan, I shouldn't to have to touch 401K or other investments. Have to admit ---- market returns are pretty spooky (Halloween - see what I did there?) Current market nowhere near 6% returns and watching investments go down is like a domino run. I'm sure I will have to "check & adjust" after midterms. Again, great video and I am now a new subscriber. Tango Yankee
Holy cow so much good information in this video! I will have to watch it several time. :-) Question: does earned income prior to full retirement age that can reduce your SSA payout include income streams like pensions, rental property income etc. or do they just care about W2 jobs?
I cannot find your email address to apply to be on open money. I love your channel. Can you do a show on the benefits of lowering your income through tax write offs so that you pay less in student loan payments, for loan forgiveness programs?
I am nearing retirement and maxing out on 401 contributions. Should I continue this contribution? Is it true that I’m buying low and will benefit in the future?
Thank you for a great Social Security advice, when to collect Social Security is really your life priorities, what do you value the most, your time,,or your money
No, I think you are assuming you can't retire and delay social security. I will delay social security because of taxes (RMDs) it has nothing to do with when I actually stop working
Wow! I’m very surprised of the social security the US people get! I worked in Canada for 22 years contributing maximum to the pension plan and will get less than 500 per month. That is less than most condo buildings charge for monthly maintenance.
In the US, the better amounts you hear are based higher income citizens on a solid 35 years and more working, Enid. Also the average SSI recipient makes around $1500.00. Finally, have you compared our required social security withheld along with the US employers contribution to whatever your max contributions are in Canada? I just don’t know if you’re comparing apples to apples. I’m 62 and started paying into social security at age 16 😊
@@Iamwithspirit thanks for the reply. I understand. I’m 59 and worked 42 years full time. The pension from both countries I worked on, I’ll get a total of approx $800 CAD when I’ll be 62. You are still 3x better in US.
Yours is lower for sure (so sorry 💗) but it is still hard to compare without knowing how much Canadians are contributing overall versus US citizens plus their employers contributions on behalf of each employee.
Your slide deck showed the max SS benefit for age 70 as $4,194. My most recent Social Security statement (Q2 2022) shows my benefit at age 70 as $4,217.00
Excellent. I am so tired of hearing the financial "experts" saying to wait until you are 70 to start SS. I will throw out 2 more CURRENT points about living in the world today -- 1) Since the Covid pandemic has hit, life expectancy in the US has reversed and people are dying younger. According to the CDC, life expectancy in the US has dropped from 78.8 in 2019 to 76.1 in 2021. That means over half of us will likely die before we hit even the 62 to 67 breakeven point. 2) There is that nagging little detail that SS TRUST account might run out of money by 2035 and then SS payouts might have to decrease by 25%. If you start collecting SS at 62 you will have potentially 5 extra years of collecting the "full allowance" over the time you would have if you delayed until 67 and you would have 8 extra years of collecting the "full allowance" over the time you would have if you delayed until 70. Do we really know what SS will be like in an ADDITIONAL 5 to 7 years? Perhaps starting SS earlier is not such a bad approach??
On the other hand, if you delay til 70 and get 25% more per month then if SSI decreases in 2034 by 25% you still have more per month to live on. Can you live on subsistence - 25%?
Full Retirement Age (FRA) is the best time to start Social Security. Social Security should NEVER be the primary source of retirement income. The timing of when to draw is a tricky customized decision that is specific for the individual. Study, reflect and then "pull the trigger" ....and don't look back. But most importantly DO YOUR HOMEWORK...study your own personal needs and circumstances and then make the decision.......it may never be perfect......but sibleyour goal should be to get as close to perfect as humanly possible...................go for "sorta perfect"......Hey ...this is the real world....
You should really put this information up in charts or graphs. You should also look at lifetime taxes. Delaying spending retirement savings could mean much more tax later. I have been told a good plan is to level off annual taxes through retirement. People do spend too much time on the breakeven point. After you are dead, it does not matter. You briefly mentioned drawing down savings and delaying SS benefits. If one is looking for guaranteed income for life, putting more burden on government benefits can give a better outcome. Next year SS rises 8.3%, this year your portofolio fell many percent. The year after, SS will rise again, your portfolio may fall again. Of course, SS has to remain solvent, has to be supported by congress. But an old retiree told me that there are too many voters on SS, so it will be supported.
@@bryanwhitton1784 SS is going nowhere! I was told back in the '80's that when I was eligable for SS, it wouldn't be here. I will be eligable in Dec, and it's still here. Changes have been made, and will again in the future. As for one party wanting to do away with SS, that is not true.
@@bryanwhitton1784 I don't want to turn Erin's channel into politics, but one comment. I have looked at their plans, and those of other democrats and republicans. NOBODY has suggested ending SS, but they all know something needs to be done if it is to survive.
I will take my Social Security at 62, not one day later :-) My wife will retire at 50 and she will not start receiving her pension until she is 60. The additional Social Security income coupled with my military retirement and VA disability will allow me to invest in our taxable brokerage while we are retired. And honestly, I have zero idea how long I am going to be on this earth, so I might as well start taking it as early as possible. :-)
@@ErinTalksMoney, We don't plan to stop investing at all. Our goal is to educate or son to ensure he doesn't blow what we leave him. He's 9 and I already have his UTMA opened and we're investing monthly. I have him go in there with me to purchase the FZROX fund when we do it. He wants to save his change and keeps asking me when we can add it to his account. We didn't talk about it when I was a kid, but I make certain to talk about it often while he is.
I notice that you didn’t talk about the risk associated with the future financial health of the Social Security system itself. It has been a concern in my lifetime but I think even more so with the current state of the US, the world, and the state of US politics. (glass half full/half empty?)
So true! It's impossible to fit everything into one 12 min video on this subject matter - I will definitely have more videos on SS down the road, and I imagine one covering the future of the SS system would likely draw very differing opinions
Hey, Erin, hope you see this. There is a scammer using your profile photo who is responding to comments. As soon as I saw it on my previous comment I knew right away that it wasn't you, but some may not. You'll find it if you start scrolling thru the comments, or check my last comment, it was on there. Maybe you can block them or something. Cheers!
Well if 49% of the population have only social security to retire on then they would probably be taking it at 62 wouldn't you think? And 20 out of 100 people do not even live to age 65. I retired from my job at 65 started drawing social security and went on medicare. The lord blessed me.
6:58 SS returns are guaranteed.... The SS puts out a statement that starting in 2034 only 70% of benefits will actually be paid and the news sources are saying that the entire thing may be gone in as little as 9 years. The SS will continue to have everyone pay in their full share until such does happen. If SS is positioned to fail or come up short, I'd rather they let me invest the 6.2% that they compel me to give (and equal amount from my employer). This could jump my 15% (an arbitrary figure based on Ramsey's suggestions) savings rate to a nice 27.4% (topping the figure most often suggested by the Money Guy). And, if done the right way, this could end up leading to a nice tax-free nest egg (something that SS will not give you unless you are in the lowest levels of retirement). Honestly, we are looking at only receiving 70% of what we are supposed to receive and still get taxed on it??
@@ErinTalksMoney Erin - US government wants U and everyone else to keep working and not collect money, it's a pay as u go system, not a savings account...
@@ErinTalksMoney Erin - US government wants U and everyone else to keep working and never collect SS payments, it's pay as u go system, SS is no savings account...
No it's not immediately for everybody. Social Security isn't going anywhere, seriously 66 million people get it and it would crash the economy if it went away. Fixing Social Security is not a mathematical problem it's a political problem on deciding who pays for it
Oy vey. Unfortunately, this is missing two huge components of the calculus. One is inflation, and the other is taxes. For example, if you have a balance to cover even one year of expenses in a tax deferred account such as a 401k, it completely changes the calculation that can save you thousands in taxes. You may be able to take money out of you 401k completely tax free, never having paid taxes on it. Once you draw social security, it may be subject to income tax. This savings can more than make up the return you get keeping the money invested. Another consideration is getting dividends that you pay no taxes on when you stop working and are under the income threshold for taxed dividends. There are tons of articles that talk about breakeven calculations being overly simplistic due to the effect of inflation. Not going to go into here, but sufficed it to say, social security cola increases do not keep up with true inflation. As usual, good production quality and some good information, but like a lot of the other videos, the "math" is too simplistic to the point that the analysis is dangerous.
