Well, today I got my SS Statement with the future income of $0 assumption, as I had requested via the SS web site. I was looking at the options for early, normal, and late payouts, and they were:
Age 62 - $1264 a month
Age 66 - $1676 a month
Age 70 - $2212 a month
Ok, it looks like it is set up so that if you live longer, waiting for age 66 or 70 is better. Kind of what I have heard. Now I have to see what the payback periods are for some assumptions, and also think of running the different scenerios in Firecalc. I did Firecalc first, but here I am writing up the FV calculations first.
Assuming no discount rate, no inflation, the payout for waiting to age 66 catches up with the age 62 payout at age 78. And waiting to age 70 catches up with the age 66 payout at age 82. Kind of what I expected.
Then adding 3% inflation, and a discount rate (i.e. investment return rate) of 6%, I see the point where waiting to age 66 instead of 62 pays back move out to 82. ok, still good. Also the age 70 vs. age 66 point moves out to age 86. So, if you live past 86, waiting to age 70 is better.
Now I am 50 and run retirement calculations for 50 years. So I wondered what rate of return would be needed to push the payback period out to age 100. It turns out (still with 3% inflation) that setting the discount rate at 9.7% moves the payback for waiting to age 66 vs 62 out to age 100. The 70 vs 66 comparison payback moves to age 100 with a 9.2% rate.
9+% is kind of high to use for a rate of return assumption, so it seems that waiting is better if I am being conservative and planning to age 100. Now for Firecalc data!
I used 60k/yr, 800k portfolio, 50 yrs, withdrawal change of -38400 non inflation adjusted in year 0 (to model a fixed pension), 80% stocks, and defaults for the rest. I then looked for the 95% point max safe withdrawal returned by Firecalc. With SS as below, here are the max withdrawals:
$15168 in year 12 (1264/mo at 62): $62880
$20112 in year 16 (1676/mo at 66): $61680
$26500 in year 20 (2212/mo at 70): $60560
Not quite what I expected! Any insight on this out there? This seems to indicate that the earlier payout at age 62 is the best!