Author Topic: Why 76 is the Key Number for Retirement  (Read 6375 times)

Trudie

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Why 76 is the Key Number for Retirement
« on: August 23, 2015, 07:28:21 AM »
Maybe I should have put this one on the "Wall of Shame":
http://www.nextavenue.org/for-retirement-planning-get-the-spirit-of-76/

This whole thing depressed me, but is so typical of "conventional wisdom."  Let's not level with people about their consumer habits, tell them why it's great and feasible to work longer... Meanwhile, they fritter away their good health, freedom, and any chance they actually would have had to enjoy their retirement.

Yikes.  And these are the "experts."

Abe

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Re: Why 76 is the Key Number for Retirement
« Reply #1 on: August 23, 2015, 08:06:03 AM »
I'll be surprised if the majority of people needing to work at age 76 are healthy enough to do so. In clinic, we routinely see people in their 50s who couldn't spend 8 hours a day doing blue-collar work if they wanted.

Papa bear

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Re: Why 76 is the Key Number for Retirement
« Reply #2 on: August 23, 2015, 08:55:50 AM »
The gist of the article is to delay taking SS until age 70, when the benefits are 76% higher than taking at 62.  NOT working until 76. (Can be a good idea for some people)

Although the author suggests working until 70 when you take SS.  (A dumb idea for us here!)


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nereo

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Re: Why 76 is the Key Number for Retirement
« Reply #3 on: August 23, 2015, 09:46:55 AM »
It's occurred to me that using the oft-cited "median 401(k) account balance" of $110k is stupid when discussing 'traditional retirement'.  Is it really surprising that hoards of 20 and 30-somethings have very low 401(k) balances?*  They just pull down the median-average.  Furthermore, what difference does it make when discussing retirement in a person's late 60s to mid 70s?  A far more useful statistic would be to look at total net worth of people aged 59-65.
::rant over::

*present company excluded - obviously this forum attracts the sort that realize they CAN max out their 401(k)s by not falling into debt traps and consumer-sucka lifestyles.

Trudie

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Re: Why 76 is the Key Number for Retirement
« Reply #4 on: August 23, 2015, 02:05:35 PM »
The gist of the article is to delay taking SS until age 70, when the benefits are 76% higher than taking at 62.  NOT working until 76. (Can be a good idea for some people)

Although the author suggests working until 70 when you take SS.  (A dumb idea for us here!)


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Even 70 is too long!  It's sad to think of the number who are SS dependent and may not feel as if they have a choice!

Trudie

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Re: Why 76 is the Key Number for Retirement
« Reply #5 on: August 23, 2015, 02:09:00 PM »
It's occurred to me that using the oft-cited "median 401(k) account balance" of $110k is stupid when discussing 'traditional retirement'.  Is it really surprising that hoards of 20 and 30-somethings have very low 401(k) balances?*  They just pull down the median-average.  Furthermore, what difference does it make when discussing retirement in a person's late 60s to mid 70s?  A far more useful statistic would be to look at total net worth of people aged 59-65.
::rant over::

*present company excluded - obviously this forum attracts the sort that realize they CAN max out their 401(k)s by not falling into debt traps and consumer-sucka lifestyles.

I agree.  For instance, my company's average 401k balance is $120K.  I have just a little over that at $150K.  Thus, it would look like we're not super-savers.  But we have various other retirement accounts (from rollovers) and Roths, as well as unqualified savings.  Allocation is important too.  All told our NW is $1.25M.

But I am preaching to the choir...

AZDude

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Re: Why 76 is the Key Number for Retirement
« Reply #6 on: August 24, 2015, 02:19:34 PM »
A poster above hit the nail on the head with the ignorance of both advice to keep working until age XX, or the statutory reform of SS by just raising the minimum retirement age. People already get into forced retirement for health reasons long before age 65, and the government pays them disability.

I mean, if becoming disabled and then living off the $1000 a month or so from the government is your idea of a grand retirement plan, then so be it, but its such startlingly stupid advice, for many different reasons, to just work longer to have a happier retirement.

I'm a red panda

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Re: Why 76 is the Key Number for Retirement
« Reply #7 on: August 24, 2015, 02:21:25 PM »
76?

Man, I think there is a good chance I'll be dead by then.

nereo

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Re: Why 76 is the Key Number for Retirement
« Reply #8 on: August 24, 2015, 05:18:01 PM »
76?

Man, I think there is a good chance I'll be dead by then.
Gosh, I hope not.  If you're a male living in the US, here's the median projected life expectancy*
Age Currently:          Median Life Expectancy
65                           84.3
55                           82.8
45                           82.1
35                           82.2
25                           82.3

If you are female:
65                           86.7
55                           85.8
45                           85.4
35                           85.6
25                           86.0

*source: CDC government data

Trudie

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Re: Why 76 is the Key Number for Retirement
« Reply #9 on: August 31, 2015, 10:09:02 AM »
Again, probably preaching to the choir, but even if you're alive well beyond 76 what are the odds that you will be footloose and fancy free and able to do what you were (physically) at 46 or 56??  That's the bummer for me and why I am so obsessed with FIRE.

Of course, the years will NEVER march across my face.  And I will be running marathons until I am at least 75.  LOL.  :-)

I'm a red panda

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Re: Why 76 is the Key Number for Retirement
« Reply #10 on: August 31, 2015, 10:39:37 AM »
76?

Man, I think there is a good chance I'll be dead by then.
Gosh, I hope not.  If you're a male living in the US, here's the median projected life expectancy*


If you are female:


I'm really going off family history and my personal health history, rather than country-wide averages. I don't drink or smoke, I eat healthful foods, so I'm doing what I can to prolong my life, but well, there are just some things about my health I can't change.

Now, I'm planning a 'stash that takes me well past that, but it wouldn't surprise me if I don't make it.  And I'd rather be dead than have a god awful quality of life anyway.

Either way, there is no effing way I would plan to work until 76!

Brilliantine

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Re: Why 76 is the Key Number for Retirement
« Reply #11 on: August 31, 2015, 01:34:31 PM »
Dear people freaking out about "working till you are 76 years old",

Read the article, or at least the comments in this thread.

76 is not the age until you work. The article suggests that if you delay receiving SS benefits until 70, you get 76% more.

Left

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Re: Why 76 is the Key Number for Retirement
« Reply #12 on: August 31, 2015, 01:40:54 PM »
still... it's 70 :S if life expectancy is averaging in the mid 80s... and if someone spends the last 5 years much less 10 years in hospice? That isn't much of a retirement...


I'm a red panda

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Re: Why 76 is the Key Number for Retirement
« Reply #13 on: August 31, 2015, 01:45:14 PM »

76 is not the age until you work. The article suggests that if you delay receiving SS benefits until 70, you get 76% more.

Okay... (I had opened the article and read a bit, but they really buried the lead on this one and the article bored me) then let me rephrase- there is no way I'm waiting until I'm 70 to retire.

Of course, my retirement plans do not in any way hinge on receiving Social Security.  But that is just not true of the average American.
« Last Edit: August 31, 2015, 02:06:03 PM by iowajes »

Mississippi Mudstache

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Re: Why 76 is the Key Number for Retirement
« Reply #14 on: August 31, 2015, 01:56:17 PM »
As usual, the article fails to even mention the fact that if you delay SS benefits for 8 years, you don't get SS benefits for those 8 years. You have to live 10 more years past 70 just to break even, and that's without considering the effects of compounding if you still have money invested when you start drawing benefits.

Let's consider a typical Mustachian, whose early retirement has gone according to plan and still has sufficient investments to live off of, so the SS money just gets dumped into an index fund. If she takes SS at age 62 and invests it at an average return of 6%, then it will take 33 years for someone with identical SS benefits - but delays them until age 70 -to catch up. They'll be 95! This whole nonsense about delaying SS is complete BS, as usual.

nereo

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Re: Why 76 is the Key Number for Retirement
« Reply #15 on: August 31, 2015, 02:35:17 PM »
As usual, the article fails to even mention the fact that if you delay SS benefits for 8 years, you don't get SS benefits for those 8 years. You have to live 10 more years past 70 just to break even, and that's without considering the effects of compounding if you still have money invested when you start drawing benefits.

Let's consider a typical Mustachian, whose early retirement has gone according to plan and still has sufficient investments to live off of, so the SS money just gets dumped into an index fund. If she takes SS at age 62 and invests it at an average return of 6%, then it will take 33 years for someone with identical SS benefits - but delays them until age 70 -to catch up. They'll be 95! This whole nonsense about delaying SS is complete BS, as usual.

But, presumably the mustache might be living off of investments already.  In which case, there is no sense in investing the Asa's payouts; it would be the same as reducing the WR on existing accounts by the same amount.

Like all finances, SS payouts don't exist in a vacuum.

Mississippi Mudstache

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Re: Why 76 is the Key Number for Retirement
« Reply #16 on: August 31, 2015, 03:06:56 PM »
As usual, the article fails to even mention the fact that if you delay SS benefits for 8 years, you don't get SS benefits for those 8 years. You have to live 10 more years past 70 just to break even, and that's without considering the effects of compounding if you still have money invested when you start drawing benefits.

Let's consider a typical Mustachian, whose early retirement has gone according to plan and still has sufficient investments to live off of, so the SS money just gets dumped into an index fund. If she takes SS at age 62 and invests it at an average return of 6%, then it will take 33 years for someone with identical SS benefits - but delays them until age 70 -to catch up. They'll be 95! This whole nonsense about delaying SS is complete BS, as usual.

But, presumably the mustache might be living off of investments already.  In which case, there is no sense in investing the Asa's payouts; it would be the same as reducing the WR on existing accounts by the same amount.

Like all finances, SS payouts don't exist in a vacuum.

Yes, of course. My post was intended to illustrate two extreme options: take the SS payout and spend every dime (in which case, you break even after 10 years if you wait until 70), or take the SS payout and invest every dime (in which case, you break even after 33 years). Obviously the reality is likely somewhere in between.

nereo

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Re: Why 76 is the Key Number for Retirement
« Reply #17 on: August 31, 2015, 03:39:02 PM »
As usual, the article fails to even mention the fact that if you delay SS benefits for 8 years, you don't get SS benefits for those 8 years. You have to live 10 more years past 70 just to break even, and that's without considering the effects of compounding if you still have money invested when you start drawing benefits.

Let's consider a typical Mustachian, whose early retirement has gone according to plan and still has sufficient investments to live off of, so the SS money just gets dumped into an index fund. If she takes SS at age 62 and invests it at an average return of 6%, then it will take 33 years for someone with identical SS benefits - but delays them until age 70 -to catch up. They'll be 95! This whole nonsense about delaying SS is complete BS, as usual.

But, presumably the mustache might be living off of investments already.  In which case, there is no sense in investing the Asa's payouts; it would be the same as reducing the WR on existing accounts by the same amount.

Like all finances, SS payouts don't exist in a vacuum.

Yes, of course. My post was intended to illustrate two extreme options: take the SS payout and spend every dime (in which case, you break even after 10 years if you wait until 70), or take the SS payout and invest every dime (in which case, you break even after 33 years). Obviously the reality is likely somewhere in between.
Alright, just checking.  I agree that the "it's always best to do "x" are oversimplified, and each situation should be evaluated individually. 

Trudie

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Re: Why 76 is the Key Number for Retirement
« Reply #18 on: August 31, 2015, 07:54:05 PM »
As usual, the article fails to even mention the fact that if you delay SS benefits for 8 years, you don't get SS benefits for those 8 years. You have to live 10 more years past 70 just to break even, and that's without considering the effects of compounding if you still have money invested when you start drawing benefits.

Let's consider a typical Mustachian, whose early retirement has gone according to plan and still has sufficient investments to live off of, so the SS money just gets dumped into an index fund. If she takes SS at age 62 and invests it at an average return of 6%, then it will take 33 years for someone with identical SS benefits - but delays them until age 70 -to catch up. They'll be 95! This whole nonsense about delaying SS is complete BS, as usual.

Exactly!!  I threw Social Security payouts on a spreadsheet awhile back, then discounted them and came to the same conclusion.

For most Mustachians Social Security is icing, not the cake.  We're going to draw at 62 because, in my estimation, the payments will cut us some slack in the early years of our retirement when we are purchasing ACA insurance.  That is to say, I think they can actually do more for us at 62 and they are worth more to us than when we're in our older years, living on less, probably staying home more, and collecting Medicare benefits for health care.

Seventy, schmeventy... whatever.  Bottom line with this article:  they want people to put things off WAYYYY too long and spout the "conventional" wisdom which has failed so many people.

meadow lark

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Re: Why 76 is the Key Number for Retirement
« Reply #19 on: September 01, 2015, 01:38:06 PM »
Interesting.  I had always figured we would wait as long as possible for my wife, b/c I thought the taxes on SS would be so high.  Isn't it taxed more aggressively than income?  I should ask this on the tax thread.

Trudie

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Re: Why 76 is the Key Number for Retirement
« Reply #20 on: September 01, 2015, 06:06:40 PM »
Interesting.  I had always figured we would wait as long as possible for my wife, b/c I thought the taxes on SS would be so high.  Isn't it taxed more aggressively than income?  I should ask this on the tax thread.

Here is how Social Security benefits are taxed:
http://ssa.gov/planners/taxes.html

You can be taxed on up to 85 percent of your benefits.  But they are included with all your other sources of income, so ultimately taxed at the same rates.