THE $2,800 DINNER FOR TWO

Click here. (Hint: she gave us Iraq, Katrina and trillions in new debt; now she’s running for Senate. The Republican leadership is so eager to have her drop out of the race, some believe they will indict her.)

SOCIAL SECURITY

Peter: ‘You blather on about starting Social Security at 65. Where you been, man? Now it starts around 66, and will soon start at 67.’

☞ It depends on when you were born. (No matter when you were born, you can elect to receive reduced benefits at 62.) The full-benefit retirement age reaches 67 in 2027.

RW: ‘There’s a third strategy for getting the most from Social Security benefits and that is to start at age 62 and not immediately consume the payments (principal). If we ask the following question . . . ‘How many months does it take for the future value of income stream 1 to equal the future value of income stream 2?’ . . . the answer is, ‘a lot longer than you might think.’ Even with a modest 3% interest rate, you won’t come out ahead by waiting to full-retirement age until you’re about 80.’

Michael Albert: ‘Not long ago, you discussed the best time to start taking Social Security payments. A few years ago I ran some Monte Carlo simulations to investigate this. I found that starting at a younger age, on average, decreases both risk and total money received. Risk diminishes because when investment returns early in retirement are low, the Social Security payments help prevent premature asset depletion. Total money received decreases because when assuming an average distribution of lifespans, the effect of the smaller payments overwhelms the effect of more total payments. Given this result I think the best strategy is to defer taking payments as long as your finances allow it. If poor returns in early retirement jeopardize your nest egg, start taking payments immediately. If all is going well, defer starting as long as it increases the monthly payment amount. This strategy offers the best of both worlds: you maximize total money received in most cases, and you draw money early only to avoid a problem. Of course this assumes that you expect to have an average or better lifespan: the sooner you expect to die, the greater the benefit of starting distributions earlier.

LET’S GO: EUROPE

Clare: Venere.com very quickly shows you what accommodations are available in a great variety of categories, all over Europe, and then makes the reservation for you within minutes. Absolutely incredible, much better than tripadvisor or anything else I’ve encountered.’

 

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