Making an early social security claim when you have other assets to spend down

[cmarshall]

38 minutes ago, newnative said:

     I respectfully disagree.  The situation IS different for everyone.  You seem to be basing everything strictly on maximizing how much money you will get monthly.  Yes, everyone knows that if you wait you will get a larger monthly payment.  But, taking an early payment is not necessarily a 'mistake'.  You have to take into consideration other things, such as what a person might do when they take an early payment or retire early.  it's not all just about the 'arithmetic'.  There are human factors.  And, factors like a second pension in addition to SS also need to be taken into consideration.

    In my case, I retired early and took a reduced US state pension payment.  But, I used my extra free time, in addition to working part-time for 5 more years, to do something I wanted to try--condo flips.  With one flip I did in America I made a $70,000 profit.  The highest salary I ever made was $35,000 so that one flip earned me 2 years salary.  Not all my flips were that profitable but they made enough that my yearly income was more than when I worked full-time at my old job.

      You waited until 70 to collect SS and now get $3185 a month.  I retired at 52, took a reduced state pension, and started collecting a reduced SS at age 62.  I now receive, at age 67, $1917 in state pension and $1420 in SS for a monthly total of $3337.  Your plan looks great for your situation and mine has been great for mine.  Everybody's situation is different and there is no one right answer.

This discussion is about the decision people can still make on when to take SS benefits.  I am happy for you that you feel you have an adequate retirement income, but your example is not relevant to this discussion, because no one here without a civil servant's state pension can now decide to go out and get one.  That ship has sailed long ago.  Double-dippers like you are an exception.  For most Americans SS provides their only guaranteed lifelong retirement income even if they do have other assets.  For us the decision when to take SS benefits is the most important financial decision in late life dwarfing investment decisions in importance, but not for you.

 

So, it is not that the situation is different for everyone, but that my points are not directed to you at all.  

[newnative]

28 minutes ago, cmarshall said:

This discussion is about the decision people can still make on when to take SS benefits.  I am happy for you that you feel you have an adequate retirement income, but your example is not relevant to this discussion, because no one here without a civil servant's state pension can now decide to go out and get one.  That ship has sailed long ago.  Double-dippers like you are an exception.  For most Americans SS provides their only guaranteed lifelong retirement income even if they do have other assets.  For us the decision when to take SS benefits is the most important financial decision in late life dwarfing investment decisions in importance, but not for you.

 

So, it is not that the situation is different for everyone, but that my points are not directed to you at all.  

    But, that's exactly my point.  Everyone's 'situation' is different from everyone else's, whether you are directing your points to me or not.  And, it can't really be ignored. A simple question like is your house paid off can change the financial equation.  Your 'arithmetic' (and decision-making) doesn't take in:   Are you single?  Are you married?  Does your spouse work?  Any live-at-home deadbeat kids?  Are you an only child and sole heir with elderly, very sick, filthy rich parents?  Do you have a large gambling problem?  Expensive tastes in wine and women?  A wife with an addiction to Jimmy Choos?  And on and on.  It all boils down to how much money you need to live on--no right or wrong answer there, just different ones.  Some people choose to continue to work into their 70s to support the lifestyle they've become accustomed to; others want to stop work as soon as they can afford it and do other things while they are relatively young.  Again, no right or wrong answer.

    Yes, you can show you will have a bigger monthly benefit taking SS at age 70 but that's all you can show.  You can't show if that decision is the right one for everyone because it does not take in the human factor or any other variables. 

    Your points may not have been directed to me, but I still had to make a decision as to when to take SS, as did you.  I am simply making the point that one size does not fit all and one person selecting early SS or taking SS at 65 rather than 70 is not necessarily making a 'mistake'.  

    I responded to the OP to give my 'situation' as an example, and I don't think it is that unusual to have both a pension of some sort and SS.  Statistics vary but one site I checked said only 23% of married couples and 43% of singles rely solely on SS.  Perhaps someone debating when to take SS might benefit from a different take than yours.  I found it interesting that we both took very different paths but, here in the year 2019, we both ended up having monthly incomes not all that different.

 

    

[dontoearth]

4 hours ago, MeePeeMai said:

I already looked into it and went to the SS office in Hilo Hawaii.  They said I fall under the GPO (government Pension Offset) since I retired from the County of Hawaii and have a government pension from the State of Hawaii Employees Retirement System for life.  I also signed up online with the Social Security website and they gave me my benefit amount at various ages etc after plugging in everything.

 

They have a formula and go by the monthly amount of your pension vs how many quarters you have contributed to Social Security.  Unfortunately, I lost 50 percent of my future benefits (although there is a large movement calling for the repeal of the WEP and GPO which up until now has not been successful but they are continuing the fight and hopefully by the time I am ready to file for my benefit, I will be able to get closer to 100 percent).

 

I paid in for 30 calendar years but do not quite have 120 quarters (since for example some years I only worked a contributing job for 6 months).  

  yes I understand that.  I had 27 years in under SS but also got a state pension.  They eliminated about 10 early years when I was young and out just out of high school.  They insisted it didn't meet the yearly minimum income requirements.  There seems to be rule after rule when you get into the WEP rules.  My penalty was about 41%.  It is unlikely the WEP will be repealed unless their is a huge swing in the US senate which has refused to hear various repeal bills.

[dontoearth]

9 hours ago, Jingthing said:

You can do anything you want with the money but that would be a bad reason to take it early, just to bank it.

Many people in recent years are doing something similar. They are talking it early without needing it and putting that money in the stock market. They feel they can beat the stock market compared to the built in increases by delaying starting the claim.

Well by recent stock market history they can, but longer term, they can't. 

     I put mine in investments thru the Roth IRA.  No taxes upon withdrawl and I had a lower tax rate as work wound down during the year not giving me a full year income.   I had a unique situation that I would not accumulate more benefits because of penalties from having a govt. pension in the USA.  I did two Social Security office interviews and one consultation so I was well informed about the penalties.  

[MeePeeMai]

Just now, dontoearth said:

  yes I understand that.  I had 27 years in under SS but also got a state pension.  They eliminated about 10 early years when I was young and out just out of high school.  They insisted it didn't meet the yearly minimum income requirements.  There seems to be rule after rule when you get into the WEP rules.  My penalty was about 41%.  It is unlikely the WEP will be repealed unless their is a huge swing in the US senate which has refused to hear various repeal bills.

Yea, I agree.  I just wish I knew about this long before I worked a second job just to get SS benefits someday. 

 

When I worked for the county, we did not pay into SS because it's a government pension plan which takes out more than 12 percent of our gross pay for retirement.  Therefore, I decided to work a second job (full time) off and on for many years just to get my SS quarters in.  This now appears to have been a waste of time and will not pan out as much for me as I had hoped... but it's okay, as long as my state pension plan does not go bankrupt!

[MeePeeMai]

5 minutes ago, dontoearth said:

They insisted it didn't meet the yearly minimum income requirements

That's another one they use.  They said that they only count the quarters where you had "substantial earnings" (but they don't give you a dollar amount), they just leave it at that.  So some of my quarters were low due to taking time off from work for vacation and injuries or illnesses.  

 

It seems as though they look for any avenue they can find to reduce or eliminate your earned quarters.

[MeePeeMai]

6 minutes ago, dontoearth said:

I put mine in investments thru the Roth IRA

I'm glad you mentioned that.  I am considering rolling some of my investments into a Roth IRA as well.  The only thing holding me back right now is the initial tax burden that I have to deal with but I plan to do a conversion here real soon. It is a great deal to be tax free on your investments after just 5 years and I plan on taking advantage of this option.

[Uptooyoo]

If you can get by on a lesser amount, I wouldn't postpone retirement to boost the SS monthly payout. If you live until the actuaries predict, the total benefit paid to you is the same. If you wait until 70, you've given up some of the best years of your life that you can never get back. The inevitable decline really kicks in after 70. Yes, you'll have a bigger monthly check, but will you spend it if you're bound to a wheelchair?

Edited July 20, 2019 by Uptooyoo

[cmarshall]

2 hours ago, newnative said:

    But, that's exactly my point.  Everyone's 'situation' is different from everyone else's, whether you are directing your points to me or not.  And, it can't really be ignored. A simple question like is your house paid off can change the financial equation.  Your 'arithmetic' (and decision-making) doesn't take in:   Are you single?  Are you married?  Does your spouse work?  Any live-at-home deadbeat kids?  Are you an only child and sole heir with elderly, very sick, filthy rich parents?  Do you have a large gambling problem?  Expensive tastes in wine and women?  A wife with an addiction to Jimmy Choos?  And on and on.  It all boils down to how much money you need to live on--no right or wrong answer there, just different ones.  Some people choose to continue to work into their 70s to support the lifestyle they've become accustomed to; others want to stop work as soon as they can afford it and do other things while they are relatively young.  Again, no right or wrong answer.

    Yes, you can show you will have a bigger monthly benefit taking SS at age 70 but that's all you can show.  You can't show if that decision is the right one for everyone because it does not take in the human factor or any other variables. 

    Your points may not have been directed to me, but I still had to make a decision as to when to take SS, as did you.  I am simply making the point that one size does not fit all and one person selecting early SS or taking SS at 65 rather than 70 is not necessarily making a 'mistake'.  

    I responded to the OP to give my 'situation' as an example, and I don't think it is that unusual to have both a pension of some sort and SS.  Statistics vary but one site I checked said only 23% of married couples and 43% of singles rely solely on SS.  Perhaps someone debating when to take SS might benefit from a different take than yours.  I found it interesting that we both took very different paths but, here in the year 2019, we both ended up having monthly incomes not all that different.

 

    

 

Although you don't realize it, your own example supports my claim that delaying SS is better in all cases where the retiree is not rich, but can afford to wait.  The reason is that the discussion of whether to delay SS or not boils down to how much of our retirement assets should be allocated to a life annuity as opposed to investment.  While it's difficult to optimize mathematically in all scenarios, the answer for the average American is always the same: buy more annuity.  Although people hate annuities because they dislike forking over a big wad of cash for what seems like just a promise in return, nevertheless everyone laments the disappearance of the defined-benefit pension that gave our parents safe retirements.  

 

This, by the way, is not merely my personal opinion, but the prevailing opinion of economists, where it goes by the name of the "annuity paradox."

 

In my case I "bought" more annuity by delaying SS, which is the best annuity.  In your case you took a job that provided a state pension.  The reason that our outcomes look similar to you is because we both increased the annuity allocation in our retirement portfolios.  If you had not been eligible for the civil service pension your best option would have been to delay SS, failing that to buy a private annuity from an insurance company.  The lower the level of your total assets at retirement, the more annuity you should own because your risk of outliving your assets is greater.  Some folks who are truly strapped should put all their money into an annuity and move to a place where the cost of living is lower to reduce as much as possible the risk of going broke.

 

The rest of your argument of incorporating all the spending choices you have to make in your annuity decision is just muddled financial thinking.

Edited July 20, 2019 by cmarshall

[Jingthing]

Regarding the above post, I think it's accurate, but it comes down to the definition of the word AFFORD. I gave an example before of a person that could in theory wait but the price for that would be actual poverty and deprivation for years living on very little. How many years like that? That would depend again on the level of being able to "afford" it. It could be about four to reach "full" retirement age or about double that to reach the high limit. Those years in their 60's may be the best quality of life years healthwise such people will ever experience again. To live in deep poverty VOLUNTARILY. Just so they can in theory get more money IF they live long enough. That big IF. Would that REALLY be worth it for all or most people? So I continue to assert there are grey areas, human factors, and individual factors that come into these decisions. Also the purist number crunchers say don't even bother to guess your life expectancy. I get the purist argument but again we are human, we do have an expiration date and I consider at least considering your own  guess about life expectancy to be a human factor that is still worth considering regardless of the mainstream advice to ignore it. 

Edited July 20, 2019 by Jingthing

[TimBKK]

This free, open-source calculator by Mike Piper is generally regarded as the most useful tool in helping people decide when to take social security:

 

https://obliviousinvestor.com/new-free-open-source-social-security-calculator/

 

Reviews:

https://www.aarp.org/money/budgeting-saving/info-2018/when-to-take-social-security.html

 

https://www.bogleheads.org/forum/viewtopic.php?f=2&t=251065

 

 

[gk10002000]

On 7/18/2019 at 9:34 AM, MeePeeMai said:

If one has an IRA or 401K etc. one has to remember the mandatory RMD (required minimum distribution) kicks in at age 70 1/2 in the USA and you are required to start withdrawing your nest egg every year from then on (which will affect your tax liability). 

 

So for example if you wait until age 70 to start pulling money out of your IRA and also wait until age 70 to take your SS benefits then you might be in for a larger tax bill than expected (especially if you are still working or have rental income/dividends or other passive income to claim).

 

It is complicated and very unpredictable to try to make the right decision ahead of time since nobody knows what new tax laws or tax changes will present themselves next year, or with the next president etc.  Health and life expectancy is also a biggy like you said.  Another consideration for many is their spouse and what benefits he or she gets (if any) and what condition your spouse will be in once you check out.

I make a minor correction that not all IRA accounts have a RMD.  Roth IRA accounts do NOT have a RMD.  So if you do not have a ROTH IRA account open one ASAP!  Then every year, you should consider converting some of your Traditional IRA or 401k into your ROTH IRA.  Do so in such a way that keeps your tax bill low.  I have about 400k in my traditional IRA and I will be converting monies from that each of the next 5 or 6 years into my ROTH IRA.  When I am done doing that, then I will start social security.  I am 62 now.  Note that ROTH IRA distributions later on are NOT considered MAGI and are NOT considered in your income calculations to figure out how much of your social security will be taxed.   Keep in mind to keep your AGI and MAGI below around 85k if you are on medicare, as that will keep you in the lower medicare Supp B premium range.

 

  Remember that every year you delay your social security benefits, they increase by about 8%.  So taking benefits early is rarely the optimum choice.  Also, taking benefits as late as possible is rarely the optimum choice.  The sweet spot is somewhere in the middle and can depend a lot on one's situation. 

[MeePeeMai]

27 minutes ago, gk10002000 said:

I make a minor correction that not all IRA accounts have a RMD.  Roth IRA accounts do NOT have a RMD.  So if you do not have a ROTH IRA account open one ASAP!  Then every year, you should consider converting some of your Traditional IRA or 401k into your ROTH IRA.  Do so in such a way that keeps your tax bill low.  I have about 400k in my traditional IRA and I will be converting monies from that each of the next 5 or 6 years into my ROTH IRA.  When I am done doing that, then I will start social security.  I am 62 now.  Note that ROTH IRA distributions later on are NOT considered MAGI and are NOT considered in your income calculations to figure out how much of your social security will be taxed.   Keep in mind to keep your AGI and MAGI below around 85k if you are on medicare, as that will keep you in the lower medicare Supp B premium range.

 

  Remember that every year you delay your social security benefits, they increase by about 8%.  So taking benefits early is rarely the optimum choice.  Also, taking benefits as late as possible is rarely the optimum choice.  The sweet spot is somewhere in the middle and can depend a lot on one's situation. 

Good info thanks, I didn't know that Roth IRAs don't have a RMD.  My investments are locked up in a traditional IRA now but I plan on doing just as you said.

[IAMHERE]

I expect the Government to cut back SS benefits, even make benefits dependant on your accumulated wealth. There will be a reckoning  eventually, they can not keep kicking the can down the road. The solution to SS will be nasty and has to look forced on congress to 'save' the system. 

So some great information and decent plans have been posted but all may be altered by the solution to save SS.

Edited July 20, 2019 by IAMHERE
to add sarcasm.

[frantick]

I know I could make 5-8% per year by delaying SS and eating up my nest egg tax free, but I'm burned out at work and prefer to keep my IRA and savings for future issues that will arise. I'm closing in on 64 and plan to retire soon; hopefully to Thailand. I grew up poor, so should be able to live ok on SS and small pension until my RMD's kick in at 70. "Who know future", as my Thai lady friend says.

Sent from my SM-N920P using Tapatalk

[newnative]

1 hour ago, cmarshall said:

 

Although you don't realize it, your own example supports my claim that delaying SS is better in all cases where the retiree is not rich, but can afford to wait.  The reason is that the discussion of whether to delay SS or not boils down to how much of our retirement assets should be allocated to a life annuity as opposed to investment.  While it's difficult to optimize mathematically in all scenarios, the answer for the average American is always the same: buy more annuity.  Although people hate annuities because they dislike forking over a big wad of cash for what seems like just a promise in return, nevertheless everyone laments the disappearance of the defined-benefit pension that gave our parents safe retirements.  

 

This, by the way, is not merely my personal opinion, but the prevailing opinion of economists, where it goes by the name of the "annuity paradox."

 

In my case I "bought" more annuity by delaying SS, which is the best annuity.  In your case you took a job that provided a state pension.  The reason that our outcomes look similar to you is because we both increased the annuity allocation in our retirement portfolios.  If you had not been eligible for the civil service pension your best option would have been to delay SS, failing that to buy a private annuity from an insurance company.  The lower the level of your total assets at retirement, the more annuity you should own because your risk of outliving your assets is greater.  Some folks who are truly strapped should put all their money into an annuity and move to a place where the cost of living is lower to reduce as much as possible the risk of going broke.

 

The rest of your argument of incorporating all the spending choices you have to make in your annuity decision is just muddled financial thinking.

     I'm not disputing that it makes financial sense to defer SS.  Life, though, is not all financial.  Everybody is different, with different wants and needs, and deferring SS may not be the best answer for everyone, even if it means more money each month at age 70.  Also, just because something makes better financial sense doesn't mean it is necessarily the best course of action for someone when all factors, not just financial, are considered.   And, taking a different action from what might be the best financial option is not always a 'mistake'. 

     For example, it might be wiser for me financially to rent rather than buy a condo in Pattaya.  Rents are low right now. If your focus is solely on money and nothing else, it's probably a 'mistake' to buy.  But, I always like to own my own place so I can do what I want with it.  When I rent, I am very unhappy and depressed.  Life is short.  I don't want to rent. Simple as that.  Maybe I will lose money when I sell my condo or maybe I won't but owning it is worth the risk--for me--because it makes me happy.  Someone else may think I am nuts to buy rather than rent but that's what I mean about everyone being different.  My example probably falls under your 'muddled financial thinking'--and that's ok. For some, it's not always just about the money--which makes trying to come up with only one correct answer problematic. 

     I know you can't punch in things like happiness or more non-work time to pursue other interests as part of your math equation but the personal does matter, something that you don't touch on.  Should you work until 70 at a job you hate and be miserable the whole time in order to get a bigger SS payment?  Or, should you retire earlier from a job you hate and be happier and do other things, but make less SS each month?  Do you even want to work at a job you like until 70?   There's no one right answer.

[Jingthing]

1 hour ago, frantick said:

I know I could make 5-8% per year by delaying SS and eating up my nest egg tax free, but I'm burned out at work and prefer to keep my IRA and savings for future issues that will arise. I'm closing in on 64 and plan to retire soon; hopefully to Thailand. I grew up poor, so should be able to live ok on SS and small pension until my RMD's kick in at 70. "Who know future", as my Thai lady friend says.

Sent from my SM-N920P using Tapatalk
 

There are those human factors again.

[Jingthing]

6 hours ago, Uptooyoo said:

If you can get by on a lesser amount, I wouldn't postpone retirement to boost the SS monthly payout. If you live until the actuaries predict, the total benefit paid to you is the same. If you wait until 70, you've given up some of the best years of your life that you can never get back. The inevitable decline really kicks in after 70. Yes, you'll have a bigger monthly check, but will you spend it if you're bound to a wheelchair?

The obvious flaw with that point is that you will probably need to spend more to get personal care if you're disabled. It reminds me of health care costs in the U.S. Consider the high percentage spent on end of life phase. Sure if you're there you might want the help but there's all that money spent at the point of your life with the worst quality of life. In the long run, you can't win. 

[gamb00ler]

6 hours ago, MeePeeMai said:

That's another one they use.  They said that they only count the quarters where you had "substantial earnings" (but they don't give you a dollar amount), they just leave it at that.  So some of my quarters were low due to taking time off from work for vacation and injuries or illnesses.

Here is a >> LINK << that lists the minimum quarterly earnings required to earn credit for SS pension from 1948 through 2019.  This is the amount they call "substantial earnings".  They are not hidden and AFAIK never have been.

 

Also, you don't actually need to earn those amount per quarter.  If your total annual earnings are 4 X the amounts listed, then you get 4 quarters of "credit" regardless of how those earnings are distributed on a calendar basis.

Edited July 20, 2019 by gamb00ler

[gamb00ler]

4 hours ago, gk10002000 said:

I make a minor correction that not all IRA accounts have a RMD.  Roth IRA accounts do NOT have a RMD.  So if you do not have a ROTH IRA account open one ASAP!  Then every year, you should consider converting some of your Traditional IRA or 401k into your ROTH IRA.  Do so in such a way that keeps your tax bill low. 

THIS ^^^  in spades!  

 

You can convert from IRA/401K to ROTH precisely the amount required to boost your annual income to the boundary where taxation begins.  No one needs to completely convert any IRA/401K.  Partial conversions are simple and make it easy to precisely adjust your AGI/MAGI.

 

IMPORTANT>> If you're still working, create a ROTH IRA right now to get the earliest possible creation date to start the important required 5 year aging as soon as possible.

[frantick]

You would pity me. All my IRA and savings are in CD's earning 2.5%. But I've always been ultra conservative and I figure if the FDIC crashes at least I've done the most to protect my money. (Other than gold or hiding it in my mattress)

I do believe a reset is coming in my remaining lifetime. Maybe I'm stupid, but as the U.S. goes, so do I. (Not that I'm patriotic)

Sent from my SM-N920P using Tapatalk

[cmarshall]

7 hours ago, newnative said:

     I'm not disputing that it makes financial sense to defer SS.  Life, though, is not all financial.  Everybody is different, with different wants and needs, and deferring SS may not be the best answer for everyone, even if it means more money each month at age 70.  Also, just because something makes better financial sense doesn't mean it is necessarily the best course of action for someone when all factors, not just financial, are considered.   And, taking a different action from what might be the best financial option is not always a 'mistake'. 

     For example, it might be wiser for me financially to rent rather than buy a condo in Pattaya.  Rents are low right now. If your focus is solely on money and nothing else, it's probably a 'mistake' to buy.  But, I always like to own my own place so I can do what I want with it.  When I rent, I am very unhappy and depressed.  Life is short.  I don't want to rent. Simple as that.  Maybe I will lose money when I sell my condo or maybe I won't but owning it is worth the risk--for me--because it makes me happy.  Someone else may think I am nuts to buy rather than rent but that's what I mean about everyone being different.  My example probably falls under your 'muddled financial thinking'--and that's ok. For some, it's not always just about the money--which makes trying to come up with only one correct answer problematic. 

     I know you can't punch in things like happiness or more non-work time to pursue other interests as part of your math equation but the personal does matter, something that you don't touch on.  Should you work until 70 at a job you hate and be miserable the whole time in order to get a bigger SS payment?  Or, should you retire earlier from a job you hate and be happier and do other things, but make less SS each month?  Do you even want to work at a job you like until 70?   There's no one right answer.

As a basis for making financial decisions there are two schools of thought: feelings, i.e. buy what makes you feel good, and the cold-hearted mathematical logic of finance.  The consumer culture is fueled by the pervasive insistence that what matters is having it your way, follow you passion, and the rest of the nonsense.  On the other side is a life of avoiding debt, never paying interest on credit cards, avoiding owning an automobile, investing in low-cost passive funds, paying down the mortgage as quickly as possible, and buying more annuity in retirement, for examples.  I know which camp has served me well for my adult life.  I think there is no more foolish basis for making a financial decision than feelings.

 

Although the case can be made for home ownership in retirement back in our home country where we enjoy citizenship rights, buying a condo in Thailand strikes me a extravagantly improvident.  Lots of downside compared to the upside.  Most importantly, you do not have the right to live in Thailand.  So, you could be alienated from your asset, by not having your visa extension denied, for one example.  Or because the Thai government decides they now want to tax you on your world-wide income all of a sudden.  Or a civil war.  The adverse possibilities are endless.  The likeliest risk is not that you can't get your price when you decide to sell, but that you cannot sell it at all.  It is not necessary to regard any of these risks as likely, just to recognize that they are excess risks that we do not have to bear.  And a key point of old age is to try to minimize risks of all kinds as much possible including especially health and investment risks.  The reason is, unlike when we were younger, we now have less time to recover from a major setback in those key areas.  

 

"Money is not everything in life, but it is right up there with oxygen."  The foundation for a happy life at this stage is to be free from worry about money.  Not sufficient, but necessary.  At least that's my opinion.

[newnative]

1 hour ago, cmarshall said:

As a basis for making financial decisions there are two schools of thought: feelings, i.e. buy what makes you feel good, and the cold-hearted mathematical logic of finance.  The consumer culture is fueled by the pervasive insistence that what matters is having it your way, follow you passion, and the rest of the nonsense.  On the other side is a life of avoiding debt, never paying interest on credit cards, avoiding owning an automobile, investing in low-cost passive funds, paying down the mortgage as quickly as possible, and buying more annuity in retirement, for examples.  I know which camp has served me well for my adult life.  I think there is no more foolish basis for making a financial decision than feelings.

 

Although the case can be made for home ownership in retirement back in our home country where we enjoy citizenship rights, buying a condo in Thailand strikes me a extravagantly improvident.  Lots of downside compared to the upside.  Most importantly, you do not have the right to live in Thailand.  So, you could be alienated from your asset, by not having your visa extension denied, for one example.  Or because the Thai government decides they now want to tax you on your world-wide income all of a sudden.  Or a civil war.  The adverse possibilities are endless.  The likeliest risk is not that you can't get your price when you decide to sell, but that you cannot sell it at all.  It is not necessary to regard any of these risks as likely, just to recognize that they are excess risks that we do not have to bear.  And a key point of old age is to try to minimize risks of all kinds as much possible including especially health and investment risks.  The reason is, unlike when we were younger, we now have less time to recover from a major setback in those key areas.  

 

"Money is not everything in life, but it is right up there with oxygen."  The foundation for a happy life at this stage is to be free from worry about money.  Not sufficient, but necessary.  At least that's my opinion.

   Certainly there are times when prudence should rule over passion but I don't want to live my life with the needle always on prudence.  That might be the most financially correct way to live but my life is not solely lived by what is best financially.  I try to live my life with a balance between passion and prudence.

    In the case of my owning a condo rather than renting, you listed a whole host of reasons why it's a bad idea--financially.  On paper, with no other information, you might be right.  But, there's always 'other information' that goes into the equation, information that may not be known to someone labeling something a mistake--which is why I think there is never one correct or right answer that fits everyone.  

    One might say that, on paper, financially it's better to buy a Nissan March rather than an Audi TT coupe--they'll both get you from Point A to Point B and you'll save a ton of money for your old age.  But, that's all one can say with no other information; one cannot say buying the TT coupe is a mistake--that's a reach when you have no other information on the buyer--who might be Bill Gates.

    The 'other information' for me with buying a condo rather than renting, other than what I said about being unhappy and depressed when I rent, is I have a good track record with owning and selling. On paper, you say the likeliest risk is not that I will lose money selling but that I won't be able to sell at all.  But, I have the information that in 9 years living here I have sold 17 condos, all at a profit--the latest one just a few weeks ago during rather unstable times with the government.  Owning makes me happy and I will continue to own, while being aware that there are some financial risks. But, also possibly a profit.   When it comes to my living space, the needle is on passion. But, that's just me--everyone has their own passions.

     The points you made about renting vs. buying are still valid. As are the ones regarding taking SS at a later age. The pros and the cons should always be weighed.   I'm just making the point that everyone is different, there always is 'other information' that enters into a decision, and there is no one size fits all right answer.

     

[cmarshall]

52 minutes ago, newnative said:

   Certainly there are times when prudence should rule over passion but I don't want to live my life with the needle always on prudence.  That might be the most financially correct way to live but my life is not solely lived by what is best financially.  I try to live my life with a balance between passion and prudence.

    In the case of my owning a condo rather than renting, you listed a whole host of reasons why it's a bad idea--financially.  On paper, with no other information, you might be right.  But, there's always 'other information' that goes into the equation, information that may not be known to someone labeling something a mistake--which is why I think there is never one correct or right answer that fits everyone.  

    One might say that, on paper, financially it's better to buy a Nissan March rather than an Audi TT coupe--they'll both get you from Point A to Point B and you'll save a ton of money for your old age.  But, that's all one can say with no other information; one cannot say buying the TT coupe is a mistake--that's a reach when you have no other information on the buyer--who might be Bill Gates.

    The 'other information' for me with buying a condo rather than renting, other than what I said about being unhappy and depressed when I rent, is I have a good track record with owning and selling. On paper, you say the likeliest risk is not that I will lose money selling but that I won't be able to sell at all.  But, I have the information that in 9 years living here I have sold 17 condos, all at a profit--the latest one just a few weeks ago during rather unstable times with the government.  Owning makes me happy and I will continue to own, while being aware that there are some financial risks. But, also possibly a profit.   When it comes to my living space, the needle is on passion. But, that's just me--everyone has their own passions.

     The points you made about renting vs. buying are still valid. As are the ones regarding taking SS at a later age. The pros and the cons should always be weighed.   I'm just making the point that everyone is different, there always is 'other information' that enters into a decision, and there is no one size fits all right answer.

     

For the treatment of depression I would recommend Cognitive Behavior Therapy in preference to buying real estate in a country where you lack the right to live.  

 

The distinction between the sophisticated and the naive in money discussions is not between winners and losers, but between those who grasp the risks they are undertaking and those who do not.  

 

Nevertheless, I hope your luck continues as it very well may.  But I think I have done enough shoveling of sand on this topic and will turn now to other passtimes.

[newnative]

18 minutes ago, cmarshall said:

For the treatment of depression I would recommend Cognitive Behavior Therapy in preference to buying real estate in a country where you lack the right to live.  

 

The distinction between the sophisticated and the naive in money discussions is not between winners and losers, but between those who grasp the risks they are undertaking and those who do not.  

 

Nevertheless, I hope your luck continues as it very well may.  But I think I have done enough shoveling of sand on this topic and will turn now to other passtimes.

    I'll take sitting on my oceanfront deck watching a sunset and listening to the waves to cognitive behavior therapy--yikes!  But, good luck to you, too.

[Uptooyoo]

19 hours ago, IAMHERE said:

I expect the Government to cut back SS benefits, even make benefits dependant on your accumulated wealth.

It's just a shell game transferring a responsible person's wealth to irresponsible people who lived lives of instant gratification. Why would anyone be responsible and save for the future if that savings disqualifies them from social security benefits they earned? It would be better to spend a life having fun, spending what you would save for retirement on new cars, gambling, and going on luxury cruises. Why not have loads of fun if having money disqualifies you from Social Security.? You'll probably end up with the same monthly amount as the guy (sucker?) who became unqualified and lives on his personal savings and 401k alone. 

Better to get all your money off the books, buy gold and bury it. Then claim you blew it all gambling and are now broke. Then you'll get all of your Social Security.

[Jingthing]

It's just a shell game transferring a responsible person's wealth to irresponsible people who lived lives of instant gratification. Why would anyone be responsible and save for the future if that savings disqualifies them from social security benefits they earned? It would be better to spend a life having fun, spending what you would save for retirement on new cars, gambling, and going on luxury cruises. Why not have loads of fun if having money disqualifies you from Social Security.? You'll probably end up with the same monthly amount as the guy (sucker?) who became unqualified and lives on his personal savings and 401k alone. 
Better to get all your money off the books, buy gold and bury it. Then claim you blew it all gambling and are now broke. Then you'll get all of your Social Security.

Currently it is not that.
You need a minimum number of work credits to be eligible for dollar one of an elder claim.
Your benefit goes up to a maximum based on your earnings and there is a cap on payments for high earners.
Some changes and or cuts may be made in future.
When and what are TBD.
Personally I don't believe there is much chance of benefit cuts for people already about age 50 when any changes might be made. That's how they do.

Sent from my Lenovo A7020a48 using Thailand Forum - Thaivisa mobile app

[gk10002000]

20 hours ago, gamb00ler said:

THIS ^^^  in spades!  

 

You can convert from IRA/401K to ROTH precisely the amount required to boost your annual income to the boundary where taxation begins.  No one needs to completely convert any IRA/401K.  Partial conversions are simple and make it easy to precisely adjust your AGI/MAGI.

 

IMPORTANT>> If you're still working, create a ROTH IRA right now to get the earliest possible creation date to start the important required 5 year aging as soon as possible.

Yes.  Etrade makes it extremely easy to convert online.  You select the account(s) select the amount can even select how much fedeeral tax you want whithheld and whether you want to take that out of the converted monies or pay from another account.  I mean it can't be any easier.

[gk10002000]

On a related note:  Be aware that one can only contribute to a ROTH IRA if one has earnings for that year.  This is separate from doing conversions.  So if you want to put "new" money into a ROTH you must make at least as much in earnings/wages. 

[mania]

12 hours ago, cmarshall said:

For the treatment of depression I would recommend Cognitive Behavior Therapy in preference to buying real estate in a country where you lack the right to live.  

 

The distinction between the sophisticated and the naive in money discussions is not between winners and losers, but between those who grasp the risks they are undertaking and those who do not.  

 

Nevertheless, I hope your luck continues as it very well may.  But I think I have done enough shoveling of sand on this topic and will turn now to other passtimes.

11 hours ago, newnative said:

    I'll take sitting on my oceanfront deck watching a sunset and listening to the waves to cognitive behavior therapy--yikes!  But, good luck to you, too.

 

It is funny at times... The Pro wait till your 70 crowd talk about luck & yet they also need the luck ????

 

Actually many who use fear based scenarios to decide when to accept SS are the ones who need the treatment.

That they also like to label their fears financially sophisticated & those who do not agree with them as naive is the need for another type of treatment ????

Edited July 21, 2019 by mania