Cheat Sheet Q & A:

Today’s question:  Timing Social Security payments

Brian, I heard your segment on Social Security but what about this.  I have gone to numerous sites that give you an educated guess on how long you would live by answering questions on your family history, health, lifestyle, and so on. I have tremendous longevity in my family and wonder what you think if I worked the numbers on my estimated time I would leave my mortal coil.  If I used that metric I would be ahead if I waited till 70?

Bottom Line:  This is a follow up to a recent story of mine depicting the payouts of Social Security payments.  If you missed it here’s a bit of an overview.

• The average life expectancy in the US is currently just over 78.8
• I based payout on an average income of \$100,000

So let’s see what this would mean:

• The payout at 62 would average \$19,300
• The payout at 67 would average \$28,300
• The payout at 70 would average \$35,700

So over the course of the average American’s life (with a life expectancy of 78.8 years):

• The total received with payment starting at 62 would be:  \$324,240
• The total received with payment starting at 67 would be:  \$333,940
• The total received with payment starting at 70 would be:  \$314,160

Therefore for the average person the best effective payout age would be 67.  So with that in mind let’s tackle today’s question.

If you have a pretty good idea that you’re going to live well above the average age at what point is it better to wait to collect until 70?

• The magic age is…  84

If you’re going to live beyond the age of 84 you will receive more total payment by waiting until 84 vs. any other age.  Since I’m back on this topic though let me add one other wrinkle to the equation.  The time value of money.

My analysis above is in sheer dollar payouts.  It doesn’t factor in a return on the money.  Or the value of having money you have access to for additional years.  While most spend their Social Security payments what if you saved and invested in low risk investments yielding 4% per year?

By 78.8 the actual compound rate of your Social Security payouts would be:

• The payout at 62:  \$462,789
• The payout at 67:  \$427,291
• The payout at 70:  \$377,063

That demonstrates the power of compound interest at just 4%.  So based on what you would actually do with your Social Security payouts I could make an argument that you’d be better of taking the payout at 62 regardless of how old you turn out to be.

If you have a topic or question you’d like me to address email me:  brianmudd@clearchannel.com

Audio Report:

It’s clear that as the housing market goes, so goes the rate of Florida's population growth:

Bottom Line:  I was wondering what Florida’s population growth would look like compared to the housing market to determine just how closely related they are…  Turns out, very...

Here’s Florida’s population growth by year:

• 2001:  320,000
• 2002:  330,000
• 2003:  345,000
• 2004:  395,000
• 2005:  405,000
• 2006:  375,000
• 2007:  290,000
• 2008:  165,000
• 2009:  75,000
• 2010:  115,000
• 2011:  105,000
• 2012:  165,000
• 2013:  230,000

Florida’s housing boom of course began in 2000 and peaked in May of 2006.  You can see the direct connection between population growth rates and the housing market.  The housing recovery of the last two years has sent us into a higher rate of grow yet again which tells us that 2014 should bring us likely more than 250,000 new Floridians.  This should be good news for our overall economy.

Audio Report:

We could soon see a boom of first time home buyers:

While the housing recovery has been impressive the last two years, it’s been leaving one typically key buyer behind.  The first time home buyer…  There are many reasons why first timers, which typically account for about 40% of all home buyers, have been under represented (accounting for only 26% of all home sales in 2013).  Among them:

• The younger you are the higher the un and underemployment rate
• Family formation is starting later in life
• People are having fewer children
• Many Millennial’s have moved into large cities looking for work

Well the trend could soon change in a big way.  According to Zillow’s research team…

• 10% of all renters intend to buy a home this year

So what would that mean?

• 4.2 million 1st time or return home buyers would enter the market this year or
• More than double the anticipated 1st or return home buyers vs. 2013

Now it’s unlikely that all 4.2 million would be renters turned home buyers will decided to pull the trigger.  It’s also unlikely that all who do try to buy will be able to obtain a loan.  But if even half of those who expressed the intent to buy this year actually do, we’ll see more first time home buyers than in 2013.

Audio Report:

Foreclosures?  That's so 5 years ago:

Bottom Line:  One more housing related story for you today.  If you’ve followed the Cheat Sheet for long you know that the only foreclosure number that I’m really concerned with is the new foreclosure filing number.  That’s the best barometer of what’s taking place right now in the housing market vs. foreclosures redemptions that are a story of what occurred in past years.  With that in mind…:

• New foreclosure filings are down 27% year over year to start 2014
• We now have the lowest level of new foreclosure filings that we’ve seen since 2006

So the foreclosure crisis is clearly well past us.  The recession didn’t even begin until the end of 2007.  The overall US economy was healthier than it is now and the housing market was still booming the last time we had foreclosure rates this low.

Audio Report:

It's no longer rumor.  Its reality - Amazon Prime jumps in price:

Bottom Line:  So later this year the new price of Amazon Prime’s service will jump to \$99 from \$79.  If you’re not familiar with the service it offers unlimited 2 day shipping for no charge with the annual membership.  It’s worth nothing:

• You can still obtain a new Prime membership for \$79 right now and have your price rise next year upon renewal
• Student rates are unchanged at \$49 per year
• For those markets in which Amazon offers same day grocery delivery the service is unchanged at \$299 (non in Florida yet)

Audio Report:

The best cities to start a new business in today (#1 is a Florida based city):

Bottom Line:  Wallet Hub studied 14 different metrics to determine which cites provided the best opportunity for new businesses.  Among them:

• Education of potential workforce
• Cost of living
• Business outcomes (Odds of succeeding or failing)

So here are the cities:

Memphis, TN

Jackson, Miss

Augusta, GA

Fayetteville, NC

Jacksonville, FL

So notice a trend?  All southern cities.  All in business friendly (conservatively Governed) states.  All cities that are business friendly (conservatively).  In fact the first city that shows up on the list that’s north of the Mason – Dixon line is number 48.  This clearly demonstrates the benefit of providing a positive climate for businesses which is good for the local and state economy and of course will drive Federal income as well.  We need politicians at all levels of Government, especially the President.  Our economy could be so much better off if we just had the right people in the right places in Government.

Audio Report: