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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76418  
Subject: Re: What age to take SS payments? Date: 12/1/2013 4:42 PM
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You have some rather odd assumptions -
#1 You assume 3% on a savings account - where do you get that? When was the last time any bank paid 3% on a savings account?
#2 You assume a COLA of 2.8% --- on what basis?
#3 You do not appear to have applied to COLA to the benefit you would start collecting at age 70. Applying your 2.8% over the 8 years would increase the initial monthly benefit from $1,320 to $1,646 by my calculator.
#4 While deciding on a future COLA is guess work and one could project 2.8% assuming inflation happens as in the past - it is grossly wrong to apply COLA for 8 years to the age 62 withdraws, but not increase the withdraw beginning at age 70.


#1) It wouldn't be a bank savings account. It would be more something like bonds or CD's or preferred stocks. Anyway, don't make the mistake of projecting the current interest rates out to the indefinite future. [*]

#2) It says right there. That's been the average SS COLA for the last several years.

#1 & #2) Um, that's why those two cells are parameters---enter whatever value you like, to investigate different scenarios.

#3 & #4) Yeah. The SSA is not clear on whether or not they include prospective COLAs when they tell you the benefit amount at age 70. That's why I put in that disclaimer at J20-J27, and L30-L33 lets you plug in a COLA value for the defered period and tells you what to plug in.

All that is kinda fiddly details. The broad picture is that it takes around 15-20 years to break even. In most cases of reasonable assumptions of earnings rate and COLAs, the break-even age is beyond your life expectancy.

[*] The category of people who can afford to defer receiving SS to age 70 by definition have other assets and probably substantial investments. People who have substantial investments can probably make much more than 3% on their money.
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