Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[MagicHef]

Originally Posted by Rain Man

Occasionally I'll hear some truth that boggles my mind in its non-obvious brilliance, and I heard something about retirement savings the other day that I have to share.

One of the obstacles to retirement savings is the amount that's needed. If you don't have a high income, or if you start saving later, it can be easy to see the task as insurmountable.

But what I heard was something I'd never thought of before.

If you're behind on your savings, consider this as a motivator. It's really tempting to take early social security, or even full-age social security (at age 67 for most of us). But there's a huge benefit to waiting until you're 70 to take social security. If you take it at 70 instead of 62, the amount will be roughly 75 percent more for the rest of your life.

So if you're behind on retirement savings or you can't save much, target being able to support yourself until age 70 without social security. Then when you take it you'll get a lot more money to support yourself later, with no extra cost. It represents a huge ROI on the savings you can build, and leverages your money to a massive extent.

That's a really good way to look at it. I don't know much about SS, how does it affect the amount you get if you stop working at 62 and live off savings from 62 to 70 versus working until 70?

[DaFace]

Originally Posted by EPodolak

All index portfolio for me too, for a long time now. It's what I'm comfortable with.

Was tempted a couple of years ago to buy into Shopify at $60 though, it's $500+ this week.

While those kinds of stories suck, the problem is that no one (except Clay) likes to talk about all of the pitfalls they avoided. I've been a follower of TSLA for years now, and it would have been pretty sweet to grab some of their stock back when it was around $150. But at the same time, I thought MoviePass was a great idea back in the day, and now they're bankrupt.

[ChiTown]

Originally Posted by Rain Man

Occasionally I'll hear some truth that boggles my mind in its non-obvious brilliance, and I heard something about retirement savings the other day that I have to share.

One of the obstacles to retirement savings is the amount that's needed. If you don't have a high income, or if you start saving later, it can be easy to see the task as insurmountable.

But what I heard was something I'd never thought of before.

If you're behind on your savings, consider this as a motivator. It's really tempting to take early social security, or even full-age social security (at age 67 for most of us). But there's a huge benefit to waiting until you're 70 to take social security. If you take it at 70 instead of 62, the amount will be roughly 75 percent more for the rest of your life.

So if you're behind on retirement savings or you can't save much, target being able to support yourself until age 70 without social security. Then when you take it you'll get a lot more money to support yourself later, with no extra cost. It represents a huge ROI on the savings you can build, and leverages your money to a massive extent.

My Dad scared the shit out of me when I was a kid. He told me to NEVER count on SS being around when I get ready to retire. So I didn't. It'll be like getting a bonus check in the mail every month......if it's still around when I retire

[rydogg58]

Originally Posted by MagicHef

That's a really good way to look at it. I don't know much about SS, how does it affect the amount you get if you stop working at 62 and live off savings from 62 to 70 versus working until 70?

It varies based on your earnings history. Generally, you shouldn't think about drawing SS if you are still working or planning on working past 62 as there's an earnings limit. Last year it was a little over 17k. It's been a few years since I've worked there, but trust me...I can't tell you HOW many people ****ed it alllll up. Overpayments are a total bitch to pay back if you are living on a fixed income. If you are working, it WILL get found out, and if you are over the limit, you WILL be paying that money back.

I'm taking it as early as I can. Simply because I"m not sure how long past 70 I'm going to live. Another reason is when you factor in how long it will take you to make up the lost money from age 62-70, it's just not worth it to me to break even at 77.

You can go to the Social Security website and review your earnings history and you can even get an estimate as to how much you can draw at what age. It's really good information to have, especially if you are within a few years of retirement.

[Rain Man]

Originally Posted by MagicHef

That's a really good way to look at it. I don't know much about SS, how does it affect the amount you get if you stop working at 62 and live off savings from 62 to 70 versus working until 70?

There's a "full retirement age" that determines your base benefit. For most of us it's age 67 now, though it's a little lower if you're older than 60. You can take your social security as young as age 62, but if you do you get notably less money. Apparently it's 70 percent of the base benefit if you take it at 62. And for every year you take it after age 67, the amount is increased by 8 percent above the base benefit.

For people without savings, it's really tempting to take it as early as possible, but if you're in good health and have a long life expectancy, there's a huge benefit to waiting longer.

Here are a couple of random articles about it:

https://www.nasi.org/learn/socialsec...retirement-age

https://www.fidelity.com/viewpoints/...security-at-62

These changes are independent of the amount you put in. So if you can live off savings until age 70, your social security payments will be 75 percent larger from that point on than if you took it at 62.

[Rain Man]

Originally Posted by rydogg58

It varies based on your earnings history. Generally, you shouldn't think about drawing SS if you are still working or planning on working past 62 as there's an earnings limit. Last year it was a little over 17k. It's been a few years since I've worked there, but trust me...I can't tell you HOW many people ****ed it alllll up. Overpayments are a total bitch to pay back if you are living on a fixed income. If you are working, it WILL get found out, and if you are over the limit, you WILL be paying that money back.

I'm taking it as early as I can. Simply because I"m not sure how long past 70 I'm going to live. Another reason is when you factor in how long it will take you to make up the lost money from age 62-70, it's just not worth it to me to break even at 77.

You can go to the Social Security website and review your earnings history and you can even get an estimate as to how much you can draw at what age. It's really good information to have, especially if you are within a few years of retirement.

You worked at the Social Security Administration? Let me ask you a question I haven't figured out yet.

There's a maximum social security payment that a person can get. But does that maximum go up if you take a delayed payout? In other words, if I'm eligible for the maximum amount at age 67, is the amount still going to be higher if I wait until 70? Or is the cap always the cap?

[rydogg58]

Good post by Rain Man. He must have been a Claims Rep in another life.

[Rain Man]

Originally Posted by Buehler445

Yeah, That's all good and well unless you die at 71.

Yeah, taking SS and working as late as possible is typically the best approach.

However, getting on Medicare ASAP, even if you have to pay out of pocket, typically also pays.

Yeah, the goal is to not die at 71, because then you've left money on the table. I've built that into my plan.

[eDave]

Burst.

[Rain Man]

Originally Posted by rydogg58

I'm taking it as early as I can. Simply because I"m not sure how long past 70 I'm going to live. Another reason is when you factor in how long it will take you to make up the lost money from age 62-70, it's just not worth it to me to break even at 77.

Yeah, I guess you want to take into account your own genetics. If you don't think your odds are good of living a long life, then take it early. But I think there's a risk in that that may not offset the reward for most people.

My family tends to be long-lived, and barring some bad luck I've saved enough to live well until age 70. So for me, taking a delayed social security minimizes my chances of being evicted penniless from a flophouse at age 97.

[Buehler445]

Originally Posted by MagicHef

That's a really good way to look at it. I don't know much about SS, how does it affect the amount you get if you stop working at 62 and live off savings from 62 to 70 versus working until 70?

If you quit working at 62 you’re epically boned. I can’t remember the percentages but it’s prorated. It’s the same percentage lower for early as it is higher for late.

Big deal is you can’t take Medicare until 65 so you’re either buying health coverage on a prorated social security check or flying naked for 3 years.

Don’t do it. My recommendation is always work as long as you can and don’t take anything RMD Or SS until they make you.

[ChiTown]

Originally Posted by Buehler445

If you quit working at 62 you’re epically boned. I can’t remember the percentages but it’s prorated. It’s the same percentage lower for early as it is higher for late.

Big deal is you can’t take Medicare until 65 so you’re either buying health coverage on a prorated social security check or flying naked for 3 years.

Don’t do it. My recommendation is always work as long as you can and don’t take anything RMD Or SS until they make you.

Well, I’m working 5 more years, and will be retiring at 58. Social security be damned

[rydogg58]

Originally Posted by Rain Man

You worked at the Social Security Administration? Let me ask you a question I haven't figure out yet.

There's a maximum social security payment that a person can get. But does that maximum go up if you take a delayed payout? In other words, if I'm eligible for the maximum amount at age 67, is the amount still going to be higher if I wait until 70? Or is the cap always the cap?

I worked there for a little over 6 years. It has the most convoluted, obscure, ridiculously obtuse rules. The manual, called POMS, would take you a year to read every single entry, and they add or remove shit to a line or paragraph all the time. I'm much happier not working there. It didn't matter what you did, you never ever ever ever caught up on your work. If someone wants a challenging, never-ending mountain of thankless work, by all means work for SSA.

Delayed retirement is a separate beast itself. If I remember right, I think you can earn a MAXIMUM of 8% per year AFTER your FRA (Full Retirement Age). The benefits accrue each month after you reach FRA, and terminate at age 70. You can't earn anymore past 70. So, you can up your age 70 benefits. Again, this would be wise if you are making a decent living and working/have enough saved to wait.

[Buehler445]

Originally Posted by ChiTown

Well, I’m working 5 more years, and will be retiring at 58. Social security be damned

Congrats man.

Hope it all goes well for you. I’m looking at retiring in...

Pokes calculator....


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Furiously pokes calculator....


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Approximately 95 years at age 131.

[ChiTown]

Originally Posted by Buehler445

Congrats man.

Hope it all goes well for you. I’m looking at retiring in...

Pokes calculator....


...

Furiously pokes calculator....


....

Approximately 95 years at age 131.

Men in my Family don’t live very long. Got to enjoy while you can