BAR wrote:
In article ,
says...

On Sun, 10 Aug 2014 15:30:01 -0500, amdx wrote:

On 8/10/2014 10:22 AM, wrote:
On Sun, 10 Aug 2014 09:54:41 -0500, amdx wrote:


I want to clarify the method used to calculate the value of S.S. When
taken at 62yrs vs 66yrs.


I'll assume the following benefits $1,500 at 62 and $2,049 at 66.

1500 x 1nn% = yy or one month benefit plus interest
yy x 1nn% = yy or two months benefit plus interest
?....
?....
yy x 1nn% =yy or 12 months benefit plus interest

yy minus taxes paid = new yy

repeat for 4 years and save yearly values


""I will use this calculator to do this.""
http://www.thecalculatorsite.com/fin...calculator.php


Using 8% annual growth compounded monthly.

year one $18,799 minus 15% = $15,979
year two $36,105 minus 15% = $30,689
year three $52,036 minus 15% = $44,231
year four $66,702 minus 15% = $56,697

$56,697 x 0.08% = $4,536*
$4,536 is the interest earned on four years of savings.

$1,500 x 12 mo = $18,000 Yearly Benefit at 62.

If I add $4,536* to $18,000 = $22,436
Benefit at 62 plus interested earned on 4 years of savings.

$2,049 x 12mo = $24,588 Benefit at 66

$24,588 - $22,436 = ($2,052)

So the 62yr benefit saved for four years plus interest is $2052 less
than 66 yr benefit.
Or you could make up the difference for about 20 years by spending
enough of the savings to be even. This has to be calculated to find
exactly how many years, but it's not simple.


Ok this is my first iteration.
I think 8% interest is optimistic.
I know I could add in COLA, but it goes into both so I think it's a wash.
What should I change?

Mikek



All of these calculations assume SS will continue forever at the
current pace. (benefits ratio, COLAs, tax treatment etc)

That's about all we can do, my crystal ball works great except when
I use it to predict the future.

It is clear that there is a move to "reform" the program and that
means reduced benefits somewhere.
The last "reform" started taxing 85% of the benefits at normal tax
rates for anyone who has any other significant income.
Taking your required withdrawals from your 401k will put most people
over this threshold. A pension is a slam dunk.

I just hope they don't means test or asset test.
I suspect if you earned it and saved it, they'll find a way
to get it.
Mikek


Count on it. The millennials are going to throw grandma from the
(gravy) train as soon as they figure out how to vote.
The idea that the money in your 401k will be taxed at a lower rate
than when you were working is a joke.

SS is going to be a means tested welfare program.

There is nothing stopping you from pulling money out of your 401k/IRA
when you are 59 1/2 and investing it in other investment vehicles.

You pay taxes now or later. I go later. And all my 401k's are now IRAs.