If you delay SS you are raising your WR initially, and lowering it at age 70 when the higher SS kicks in (assuming constant spending in age-62 dollars). All I know is that a 3% SWR has never experienced a FIRECALC failure. Whether one can start at 4% (which has failed 5% of the time) and make that up by reducing the WR starting at age 70, I believe, is highly path-dependent.
IOW, since the age-70 SS is 75% more than the age 62 SS, the SWR reduction would be 1.75 percentage points at age 70 rather than one percentage point at age 62, so if the portfolio (at age 70) still had a value of $1.5 million (my example) in age-62 dollars, the SWR would be 2.25%, which we know is 100% safe using FIRECALC runs of 30 years (let alone 22 years). The question then becomes what will the value of the portfolio be at age 70 in age-62 dollars? This is where the path dependence comes in. One could run FIRECALC for 22 years and see what the maximum 100% successful SWR for 22 years is, and calculate what minimum portfolio value this would require. So long as the portfolio is above that value at age 70, things should work out as you claim. But I don't see how you can know that that will be the case.
apparently i am still not making myself understood. what i was talking about in my previous post (that there would be a 3.4% portfolio WR) must be confusing so let me try again, with the same example, just described a little differently. i am going to use zero's SS numbers
Actuals from SS form:
SS est at 62 = $1568 or $18,816
SS est at 70 = $2745 or $32,940
the assumptions:
1) a single person at the age of 61.75 yoa is deciding whether to take his/her SS at age 62 or age 70. his/her SS numbers are given above.
2) this single person has determined that s/he needs $52,940/yr to live on for the rest of his/her life but
would like to minimize his/her portfolio WR
3) this single person has a portfolio of $853,100, all in a tax defered account.
4) this single person has access to an account (bank, S&L, CU, MM) that pays interest that keeps up with inflation inside his/her tax defered account.
5) since everything i will talk about is adjusted for inflation i will assume, for ease of computation, inflation = 0%
now i will examine 2 cases, starting to take SS at 2 ages:62 and 70.
a) taking SS at age 62:
required income = $52,940
SS income = $18,816
portfolio income per 4% rule = $853,100*4% = $34,124
total income = $18,816 + $34,124 = $52,940
therefore, in this example, this single person has just enough SS income and portfolio size to provide the $52,940 required to live but this person has an initial portfolio WR of 4%, a little risky as it has only a 95% success rate for 30 yrs.
b) taking SS at age 70:
to address this case i will break this person's assets into 3 pieces: 1) the life time, inflation adjusted income provided by SS starting at age 70 ($32,940), 2) a virtual annuity to cover $32,940/yr for the 8 years before s/he starts SS. this virtual annuity will require the liquidation of ($32,940/yr * 8 yrs) $263,520 worth of his/her portfolio. from here on this is refered to as the virtual annuity and is no longer a part of his/her portfolio. this $263,520 is put in the account that keeps up with inflation, making the yearly virtual annuity payments (WDs from this account) inflation adjusted. these 2 pieces provide an inflation adjusted $32,940/yr for this person's full lifetime. and now for 3) which is the remaining portfolio after the liquidation (creation of the virtual annuity) above. the new portfolio size will be = $853,100 - $263,520 = $589,580. now to achieve the required spending this portfolio needs to throw off
$52,940/yr - $32,940/yr = $20,000/yr.
this results in an initial portfolio WR of $20,000/$589,580 = 3.392% and this is inflation adjusted also. given the low WR this probably has a 100% success rate for longer than 30 yrs.
so in conclusion, to achieve the required spending amount taking SS at age 62 requires an initial portfolio WR of 4%. but to achieve the same required spending amount if this person puts off taking SS till age 70 s/he can reduce his/her initial portfolio WR to 3.392%. and 3.392% is considerably safer than a 4% WR. therefore, this example shows how it is safer for your portfolio survival to start SS at age 70 instead of age 62.