AUTHOR: John Enright on 1/13/2025 FIRST: Andrew Forsythe on 1/13 | RECENT: Rob Jennings on 1/18
Comments
I'm a big Vanguard fan and am happy about this announcement. However, I have a question on it. Since Vanguard returns profits to its funds, does this really have the full $350 million of annual impact as noted by Vanguard of dollars flowing to fund-holders? It would seem to reduce income going to Vanguard upfront to spend on salaries and technology (!) for example, but weren't some of these dollars coming back to us anyway?
Jan, we have a similar perspective as Michael1. Since we don't need the SS income right now, we would prefer to secure the highest benefit payouts for some cushion if we do beat the mortality table predictions (i.e. a longevity hedge). Best of luck with your decision. A crystal ball would be quite handy!
Hi Bill. Thanks for sharing your plan. There is definitely a nice bump in the benefit that you get by waiting. I believe it is about 8% each year on top of inflation until you reach 70. Edit: I removed an earlier reference to "compounding" on Social Security benefit payouts. The 8% annual increase is applied to your original benefit amount, so it is not compounded. See James McGlynn's excellent article on delaying Social Security for more details at: https://humbledollar.com/2024/04/dont-delay-2/
For my wife and me, we like the idea of treating Social Security as a kind of longevity insurance or hedge. Fortunately, we will be comfortable delaying SS and living off of our other investments without impacting our lifestyle. We plan to maximize the COLA adjusted lifetime benefits of Social Security. For us, it is tough to beat a risk-free 8% return on top of inflation for each year we can delay. Like many of these financial decisions, everyone has to determine what is right for them...this feels right for us.
Thanks Don. It is good for me to hear that others have had similar results since I had heard so much on claiming at 62 and 70 for couples. It is also nice to be able to contribute to the conversation on this forum after getting so much from it as well as the articles. Jonathan has created a really interesting and engaging financial community here.
Andrew, thanks for sharing your situation. I'm glad to hear of someone else who went down a non-standard path but still basing it on some sort of optimization calculation. I was slightly surprised when I saw the OSS recommendation change when I used a different mortality table.
I have been very happy modeling with "Flexible Retirement Planner". It does Monte Carlo simulations and has a nice combination of graphical and numerical outputs. It also has a good amount of flexibility (must be the name!) without being overly complicated.
Jonathan, I was shocked to read about your diagnosis this morning. We are the same age, and your ideas and philosophies have shaped my financial investment perspective and actions for decades. You have been my silent financial partner over those years helping me explain and rationalize my investment approach with my wife through the many articles of yours that I have shared with her. My wife and I have been retired for five years this month--your insight helped us to achieve that goal. You have built a wonderful place at Humble Dollar complete with a diverse set of writers that hosts an open and civil exchange of ideas (which is not easy these days). I read it every morning. I wish you and your family strength for the battle ahead. We are sending lots of positive energy your way for support.
Thanks for sharing that. I'm at 60/40 stocks/bonds but already into the official retirement phase. With the bond outlook seemingly not so great, I've been considering taking on a bit more risk by shifting slightly. That is also why I liked carving out the Roth part of the portfolio that is looking like it could go the kids. That way I can keep "our" part at 60/40 and feel like I'm at least being a little more aggressive with the Roth portion.
Comments
I'm a big Vanguard fan and am happy about this announcement. However, I have a question on it. Since Vanguard returns profits to its funds, does this really have the full $350 million of annual impact as noted by Vanguard of dollars flowing to fund-holders? It would seem to reduce income going to Vanguard upfront to spend on salaries and technology (!) for example, but weren't some of these dollars coming back to us anyway?
Post: Some Good News
Link to comment from February 4, 2025
Jan, we have a similar perspective as Michael1. Since we don't need the SS income right now, we would prefer to secure the highest benefit payouts for some cushion if we do beat the mortality table predictions (i.e. a longevity hedge). Best of luck with your decision. A crystal ball would be quite handy!
Post: Open Social Security – interesting finding on optimization and mortality tables
Link to comment from January 17, 2025
Hi Bill. Thanks for sharing your plan. There is definitely a nice bump in the benefit that you get by waiting. I believe it is about 8% each year on top of inflation until you reach 70. Edit: I removed an earlier reference to "compounding" on Social Security benefit payouts. The 8% annual increase is applied to your original benefit amount, so it is not compounded. See James McGlynn's excellent article on delaying Social Security for more details at: https://humbledollar.com/2024/04/dont-delay-2/
Post: Open Social Security – interesting finding on optimization and mortality tables
Link to comment from January 14, 2025
For my wife and me, we like the idea of treating Social Security as a kind of longevity insurance or hedge. Fortunately, we will be comfortable delaying SS and living off of our other investments without impacting our lifestyle. We plan to maximize the COLA adjusted lifetime benefits of Social Security. For us, it is tough to beat a risk-free 8% return on top of inflation for each year we can delay. Like many of these financial decisions, everyone has to determine what is right for them...this feels right for us.
Post: Open Social Security – interesting finding on optimization and mortality tables
Link to comment from January 14, 2025
Thanks Dan. Glad it was worth reading!
Post: Open Social Security – interesting finding on optimization and mortality tables
Link to comment from January 14, 2025
Thanks Don. It is good for me to hear that others have had similar results since I had heard so much on claiming at 62 and 70 for couples. It is also nice to be able to contribute to the conversation on this forum after getting so much from it as well as the articles. Jonathan has created a really interesting and engaging financial community here.
Post: Open Social Security – interesting finding on optimization and mortality tables
Link to comment from January 14, 2025
Andrew, thanks for sharing your situation. I'm glad to hear of someone else who went down a non-standard path but still basing it on some sort of optimization calculation. I was slightly surprised when I saw the OSS recommendation change when I used a different mortality table.
Post: Open Social Security – interesting finding on optimization and mortality tables
Link to comment from January 13, 2025
I have been very happy modeling with "Flexible Retirement Planner". It does Monte Carlo simulations and has a nice combination of graphical and numerical outputs. It also has a good amount of flexibility (must be the name!) without being overly complicated.
Post: Retirement Calculators
Link to comment from August 29, 2024
Jonathan, I was shocked to read about your diagnosis this morning. We are the same age, and your ideas and philosophies have shaped my financial investment perspective and actions for decades. You have been my silent financial partner over those years helping me explain and rationalize my investment approach with my wife through the many articles of yours that I have shared with her. My wife and I have been retired for five years this month--your insight helped us to achieve that goal. You have built a wonderful place at Humble Dollar complete with a diverse set of writers that hosts an open and civil exchange of ideas (which is not easy these days). I read it every morning. I wish you and your family strength for the battle ahead. We are sending lots of positive energy your way for support.
Post: The C Word
Link to comment from June 15, 2024
Thanks for sharing that. I'm at 60/40 stocks/bonds but already into the official retirement phase. With the bond outlook seemingly not so great, I've been considering taking on a bit more risk by shifting slightly. That is also why I liked carving out the Roth part of the portfolio that is looking like it could go the kids. That way I can keep "our" part at 60/40 and feel like I'm at least being a little more aggressive with the Roth portion.
Post: Paying It Forward
Link to comment from February 3, 2022