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April 10, 2009


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From an actuarial point of view, according to the CDC the average US life expectancy is 77.8 years.
If Betty collects $1149 for 15.8 years she will have collected $217850.40, and left more of her original net egg intact(theoretically).
If Betty waits til she is 66 she will collect $1533 for 11.8 years collecting $217072.80, and may have had to use more of her original retirement assets.(again theoretically). If the average spend down rate for retirees is around 4% per year she will have 16% more of her assets and have collected approx$777.60 more.

A better table to use for this type of analysis would be

This table shows a 65 year old woman will live about 20 more years and thus the 66 year old woman would live about 19 more years not the 11.8 years used in the calculation above.

Additionally, the data in the tables is an "AVERGE", however some people are healthier than others and/or have families with long life spans. Thus certain people could "EXPECT" to live longer than the average and thus assume to live even longer than 19 years I have shown above.

My main point is that:
1 You have to get past the breakeven point, which happens to be average life expecancy. There are no guarantees.
2 You have to look at not only social security, but at the total picture. I wouldn't tell someone today to forgo early social security and start to draw down their portfolio in this market. Better to take a hit on Social Security and let their nest egg recover.
3. What happens when a retiree reaches 70.5 and must draw down retirement holdings? The larger SS income might get taxed anyway.

If one repays Social Security benefits received after having been taxed on 1/2 of his benefits for the years he received them can he then file amended tax returns for those years and recover taxes paid on the Social Security benefits? Will he receive some proof of the repayment that can be filed with the amended returns?

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