The simultaneous decline of university enrollment & shortage of doctors is 1 of the great scams. If higher education was in so much surplus that they were going out of business, they should provide more med school education & the price of healthcare should go down.
Lions have pondered the social security date over the years. Dave Ramsey: take it at 62. If you need anything from the government, you're already screwed. Other finance tubers: spend money on Bolden to calculate it.
The mane problem as lions see it is lack of trust in the government. Will it keep up with inflation or is it better off in an index fund? The COLA is based on the average of wage deflation & healthcare inflation. It's usually far below healthcare inflation. Yet it is more dependable than investments. It's about equivalent to a pension & everyone considers a pension the gold standard.
There's a good chance investments will do worse against inflation than social security. While Dave Ramsey predicted social security if 100% invested would yield the most if claimed at 62, very few are 100% invested in something that beats inflation, it adversely impacts taxes, & the investment returns require a long term. Investments are usually in cash making negative yields or they're in manely conservative ETFs. Only the very wealthy will ever have enough reserve to make the historic stonk market return.
There are cases for someone with enough money to live well for 20 years to defer it to 70. If you have a lot in IRAs, use the longer window to do more roth conversions, potentially saving more in taxes than social security would pay. There's a good chance lions will be grandfathered into the existing benefit structure at 70, the benefit at 70 will continue to be enough to live well while those taking it before 70 are going to get other edits.
The mane detractor is draining the brokerage account, resulting in a very low net worth compared to everyone else, & becoming dependent on the government. In reality, even if the benefit was still $24k at 62, would it really make that much difference in the brokerage account? Social security at 62 would realistically only spare $200k from the brokerage account.
We would all be so lucky to be rich enough to live well & still come out ahead in net worth by 70. In that case, it definitely would favor delaying social security. Lions as they are, would probably try every way possible not to drain the account but it wouldn't keep up with inflation.
Delaying social security paradoxically might encourage retiring sooner because it makes a the self funded period a known quantity & it backstops the self funded period with a known survivable income if it does run out. The biggest fear of those taking it at 62 is running out of money because they're on a path to depend on their brokerage account forever, they don't know how long they're going to live or what their investment returns are going to be. Taking it at 62 paradoxically causes them to retire later.
If you can guarantee the period after 70 is going to be a good life, no matter what, every year of delaying retirement is basically wasting time. A big motivation is the chance of never dying in our own frame of reference & needing an eternal fund.
The needs for a new car, housing, & a sideways market still put lions retiring closer to 55. Maybe a used car could move it to the left. Lions pondered 58 for a while, but employment prospects during the current downturn, parent health, & the social security paradox have it moving closer to 55.
https://www.youtube.com/watch?v=hpQ_BGY6r3s
Now they're predicting an 8% cut in 2032 & a 28% cut thereafter. Everyone currently on would see a 28% cut, which would dramatically impact the economy. As far as preserving benefits by claiming sooner, lions won't be eligible until 2037 so there's no avoiding the 1st cuts. There's probably going to be a grandfathering of benefits at least. They could create a 75 year bracket.
It doesn't seem life expectancy has increased enough for a 75 year bracket to make any difference.
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Lions also again pondered moving stonks from the IRA to the taxable account. It would have to be done during a new high, to maximize the value of the IRA. If you sell the IRA during a dip, buy in the taxable account, & realize a gain, there's no way to backfill the IRA with the gain. The IRA is locked into the loss, but you want more cash in the IRA earning interest.
The taxable account naturally becomes cash heavy because it always has more cash going in. Since the stonk positions are forever positions in mutual funds, there's less incentive to protect them from capital gains taxes. The IRA would be for short term trades & gains which are taxed as regular income. There's more incentive to protect cash & short term stonks than protect long term stonks in an IRA.
The motivation for a cash heavy taxable account was during a time when no interest was being made & there was no tax penalty for keeping cash in a taxable account. In that case, you would want to protect realized capital gains, which were the only investment income, by keeping them in an IRA.
The money for a down payment & survival would come from the taxable account with no tax penalty. If the taxable account was in stonk, the down payment & survival would have entailed capital gains tax. This strategy can lose if interest rates turn positive & cash makes taxable income while stonks in the IRA are going nowhere.
No matter what the internet says, an IRA is always a win during a sideways market. It reduces the tax burden going in & allows flexibility when taking it out, with no tax penalty because there are no capital gains. In a bull market, the IRA can penalize stonk positions by charging regular income tax instead of capital gains tax & reward cash positions by deferring regular income tax.
Lions tried to keep every option open by diversifying in each account.
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