My head may not be working properly today (or most days
) , so Im wondering if someone can please explain this to me?
I read this scenario somewhere on Bogleheads a long while back about taking SS early versus late.
Lets say I’m 62 and have a portfolio valued 1.4M and Im trying to decide whether to take SS now or at 70. Ive used AnyPia to determine that at 62 I would get 23500/yr and 40464/yr at 70.
Heres the example that gets me:
I take 8 years of 40464 (what I get at 70) and place it in a separate account, paying 1-2%. (and I know that money is fungible etc.) I used this account to pay myself 40464 a year until SS starts at 70. So about 300k would cover it, maybe a little more. My new portfolio value would be 1.1M.
Then I take 3% (or any number) of the remaining portfolio every year. Thus I get 40464 + 33000 = 73464/year.
If, instead I take it at 62, then I get 23500 + 42000 (3% of 1.4M) = 65500.
What accounts for this large difference? Could my SS number from AnyPia be incorrect? Or is it just the 6-8% increase in SS every year, or is there some funny assumptions or math here that is tricking me?