haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I don't understand your choice of a 4% real interest return. Since when has that been available on a government obligation?The most relevant analytical framework for me is analogizing the incremental benefits to the purchase of a COLA-adjusted annuity.
If your FRA is age 66 and your FRA benefit is $1,000/month and you wait until 70 to claim, your benefit will be $1,320 ($1,000 + ($1,000 * 8%) * (70-66)), an increase of $320/month or $3,840/year. In the meantime, you will have foregone 48 months of benefits totalling $48,000. At 4% real interest return, that $48,000 might have grown to $51,840 or so. So the payout rate would be 7.40% comparing the $3,840 annual benefit increase to the "premium" of $51,840.
A few years ago, I priced out a CPI-U inflation adjusted annuity and for a single life annuity the payout rate was 6.98% so you get a 6% higher benefit if you "buy" your inflation adjusted annuity from the SSA rather than a commercial provider. (My analysis was for a married couple and the benefit was 50% higher since the payout rate for the SSA joint life annuity was the same 7.40% but the payout rate for a commercial joint life annuity is much lower 4.93%).
FWIW, as another point of reference, a fixed immediate annuity for a 65 yo single and couple woud be 6.74% for a single person and 5.72% for a married couple according to immediateannuities.com.
I think that there are many reasons for waiting to age 70, even for a single male. Female, married, etc etc make it even more clever to wait. In a different SS thread I posted a personal reason for wanting wait until 70. Mainly, I want a COLA annuity. Another real benefit is this is a funds source that I cannot personally screw up. Many of us tend to think that our personal investing will do much better with this money. Overall, I doubt it. I know that I sometimes cringe when I think some of the many things I have mishandled over the years. I literally sometimes cringe.
And for sure, there is a diversification benefit.
Ha
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