Author Topic: How do you factor social security into your withdrawal stategy  (Read 5338 times)

Monkey Uncle

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Re: How do you factor social security into your withdrawal stategy
« Reply #50 on: January 22, 2018, 12:17:49 PM »
The best you can do is model your personal situation using a tool like cFiresim to see which strategy would have optimized your metric of interest in the worst-case market return scenarios of the past.

Actually, the best thing you can do is wait until you're eligible.  Then, take one of the unknowns out of the equation. IOW, am I at high risk for a sequence issues based on real world market conditions from 62-70?  Then decide when to take SS.  If sequence issues are not a problem you have free longevity insurance, taking the other unknown out of the equation.

It's like having a lifeline against one or the other (sequence of returns nightmare or super-long life).  You get to choose when to take the lifeline based on risk factors at the time.

Well, yes, I assumed that it went without saying that the decision hasn't actually been made until you are eligible to take SS.  Of course you should assess the situation when you reach eligibility and act accordingly.  But once you hit 62, you may or may not know if you are at high risk for sequence issues.  Just because you aren't running low on money yet doesn't mean you aren't going to.  If you FIREd at 30 and your portfolio has grown in the intervening 32 years, you may be safe assuming that you aren't going to have sequence issues, at least not any issues that can be mitigated by the paltry SS benefit that you'll get for your 10 or so years that you spent in the work force.  But still, I would model both SS claiming scenarios at that time using whatever the current portfolio value is, just to be sure.  After all, you still have around 20-some years to go before you reach the average life expectancy of a 62 year old.

Where claiming early is likely to have greater value is for those who are FIREing comparatively late (50ish).  Those folks will have a higher SS benefit than early FIREees due to having worked longer.  If you retire at 50 and you've got half your portfolio left when you reach 62, taking SS early could be a lifeline that saves you from retirement failure.  But of course, you should model both claiming scenarios at that time to see if you are likely to benefit from taking the payment early.
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