Re: [TSP_Strategy] Re: Best Bet on Social Security

 

Thanks for sharing your thoughtful comments on this. If you are well enough off to invest Social Security (SS) income as soon as you can take it, you (and your heirs) might come out ahead. You never know if you'll live long enough to see the break even point!

Another (of many) factors to consider is the TSP's Required Minimum Distribution (MRD) that starts on April Fool's Day of the year after you turn age 70.5. See https://www.tsp.gov/PlanParticipation/BeneficiaryParticipants/rmdbp.html  MRD income could come very soon after starting deferred SS benefits. Those who defer and have a traditional TSP (non-Roth) may experience a larger tax bill than they were used to due to suddenly increased taxable income. 

Speaking of "fools" here is what The Motley Fool has to say about investing SS income and its impact on break-even analysis: http://www.fool.com/investing/2016/06/10/if-i-wait-until-66-to-claim-social-security-when-w.aspx

One last reference on this topic suggests the higher earner of a two-income couple defer taking SS income as long as possible while the lower earning spouse starts sooner. https://www.kitces.com/blog/why-it-rarely-pays-for-both-spouses-to-delay-social-security-benefits/

May we all "live long and prosper!"

Jim

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On Fri, Dec 16, 2016 at 8:13 AM, khp3655@yahoo.com [TSP_Strategy] <TSP_Strategy@yahoogroups.com> wrote:

 

I've done some rough calculations and not matter when you take SS the amount you get from the government converges at age 78. I am certain that matches up with life expectancy. After 78, the longer you waited, the more total money you will get. And the earlier you took it, the faster you fall behind.

One fly in the ointment is that most people don't have a lot of needs as they move into their 80s, so getting more SS per month may not matter so much by then.

The other factor is that when taking funds early, some/all of funds can be kept and invested instead of spent. THis creates an asset instread of an entitlement. In theory a typical someone at 62 could have around $130000 to invest in an annuity at age 67 by not waiting. That annuity could pay up to $1000 per month at today's returns. Or at 4% interest in dividend stocks, it would spit out $425 per month in yield and you retain an asset.

I am not saying anyone should do this but the numbers are real.

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Posted by: JM Bud <jmbud2@gmail.com>

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