I was surprised by FireCalc result of SS at 62 vs 70

[Time2]

Maybe I shouldn't be, because of the nest egg withdrawals while waiting until 70.
First waiting until 70 only required reducing the starting nest egg from $2M to $1.95M
to stay basically equal. EDIT to add, $75,000 starting withdrawal 30 yrs.
I figured in the SS at 62 for a married couple $1,190 ea and at 70 $2,108 ea and the different starting time.

The result starting SS at 62.

"FIRECalc looked at the 125 possible 30 year periods in the available data, starting with a portfolio of $2,000,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 125 cycles. The lowest and highest portfolio balance at the end of your retirement was $-83,056 (the one failure) to $11,991,967, with an average at the end of $4,396,349. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 1 cycles failed, for a success rate of 99.2%."

The result starting SS at 70,

FIRECalc looked at the 125 possible 30 year periods in the available data, starting with a portfolio of $1,950,000 and spending your specified amounts each year thereafter.
Here is how your portfolio would have fared in each of the 125 cycles. The lowest and highest portfolio balance at the end of your retirement was $-150,831 (the one failure) to $11,574,977, with an average at the end of $4,195,209. (Note: this is looking at all the possible periods; values are in terms of the dollars as of the beginning of the retirement period for each cycle.)
For our purposes, failure means the portfolio was depleted before the end of the 30 years. FIRECalc found that 1 cycles failed, for a success rate of 99.2%.

Being this is so close to equal, why not start at 62, it does have a very small balance advantage? The only disadvantage is if you want to be able to do Roth Conversions in a lower tax bracket.

For us it comes back to, the extra years waiting until 70, gave me more time to do Roth Conversions in a lower tax bracket, and I earned more and want my wife to get my bigger SS check when I'm gone. But we don't fit the scenario I have posted, it was for someone else.
Any Comments?

 

[mrfeh]

For a couple, it is often best for one to start early and one to start late.

I dig firecalc, but you might want to look at this: Open Social Security: Free, Open-Source Social Security Calculator

And, of course, there's no way to really optimize without knowing the unknowable.

 

[COcheesehead]

We’re going to take it early. I ran the numbers and we’ll get more than 90% of the benefit and get them in years when the money will have more utility to us. I watched my Dad write checks to charity in his old age because he couldn’t do anything else with the money.
My assumptions when doing our analysis to take it early were: 1. We had LTC covered by self insuring. We have a separate fund set aside already for that. 2. We have our legacy giving needs covered as well. No kids. It will all go to scholarships we created.
So all in all we’re taking it early and blowing the dough. Plus it’s a nice way to have our taxes withdrawn each check vs other methods. I am having 22% pulled from each check to pay as we go.
Yes if you wait, you’ll likely earn more over your lifetime, but does that matter? For us, no. You can pass any unspent SS you’ve saved to charity, but you can’t pass unpaid checks.

 

[FREE866]

Please don't make me go back and start playing around with these numbers

 

[engineernerd]

Hmmm...you didn't share all your assumptions so here's what I did in FIRECalc:
$100k annual expenses
Start SS in 2026 ($14,280 each annual benefit), or in 2034 with SS $25,296 each

I got 99.2% success rate with minimum balance -55,350 for starting in 2026, and
100% success rate with minimum balance +421,043 for starting SS in 2034

EDIT:

Forgot to reduce the portfolio, result for $1,950,000 was still 100% but with minimum balance +226,529.

 

[Sarah S]

Aren’t you looking at 30 years for both? 62 assumes end at 92 70 at 100. What do you get when you adjust so you end at the same age?

 

[Time2]

Aren’t you looking at 30 years for both? 62 assumes end at 92 70 at 100. What do you get when you adjust so you end at the same age?

Ah! I didn't think about that.

 

[Koolau]

As stated many times, I waited to 70 1) Because I could. 2) The survivor income to DW is much higher that way.

 

[pb4uski]

I think it is preferable to look at safe spending using the Investigate tab with $2m portfolio, 30 year time horizon solving for safe spending at 95%.

$21,000 of SS at 62 (starting in 2025): $101,768 spending per year

$37,200 of SS at 70 (starting in 2033): $105,879 spending per year

4% more. Not life changing but still worthwhile IMO.

 

[engineernerd]

I think I've figured it out...FIRECalc wants the SS inputs as annual amounts. I reproduced your "$-83,056 to $11,991,967, with an average at the end of $4,396,349" output by putting in $1190 each starting in 2027.

Though the second scenario, with $1,950,000 portfolio and $2108 each SS starting in 2035 gave different results ("$-215,726 to $11,510,861, with an average at the end of $4,134,663") from what you reported, not sure why.

 

[Time2]

I think I've figured it out...FIRECalc wants the SS inputs as annual amounts. I reproduced your "$-83,056 to $11,991,967, with an average at the end of $4,396,349" output by putting in $1190 each starting in 2027.

Though the second scenario, with $1,950,000 portfolio and $2108 each SS starting in 2035 gave different results ("$-215,726 to $11,510,861, with an average at the end of $4,134,663") from what you reported, not sure why.

Oh, ya that monthly instead of yearly was a mistake on my part, in fact I think I also messed up the collection year for SS at 70. This why you people are here!

 

[Time2]

As stated many times, I waited to 70 1) Because I could. 2) The survivor income to DW is much higher that way.

Same reasons I use, but I add, because I could do larger Roth Conversions by waiting until 70.

 

[pb4uski]

I think it is preferable to look at safe spending using the Investigate tab with $2m portfolio, 30 year time horizon solving for safe spending at 95%.

$21,000 of SS at 62 (starting in 2025): $101,768 spending per year

$37,200 of SS at 70 (starting in 2033): $105,879 spending per year

4% more. Not life changing but still worthwhile IMO.

The above FIRECalc result is very similar to the SS bridge strategy. You're 62 and have $2m and your PIA is $30,000 a year.

Your age 70 SS is $37,200 a year. (124% of your PIA). You carve 8 years of age 70 SS or $297,600 from the $2m and invest the $297,600 in an 8 year TIPS ladder that is a SS replacement for those first 8 years. The remaining $1,704,200 is subject to 4% inflation adjusted withdrawals of $68,096, which combined with the $37,200 from the TZiPS ladder and then from SS provides $105,296 of safe spending.

Alternatively, take $21,000 of SS at 62 and $80,000 of portfolio withdrawals for a total of $101,000 of safe spending.

Would you rather have $101,000 of safe spending or $105,296 of safe spending.

 

[skyking1]

For a couple, it is often best for one to start early and one to start late.

I dig firecalc, but you might want to look at this: Open Social Security: Free, Open-Source Social Security Calculator

And, of course, there's no way to really optimize without knowing the unknowable.

I'm 4 years older so that is a natural for us. Our accounts are remarkably similar. I am ready to flip that switch any time, though.

 

[Koolau]

Same reasons I use, but I add, because I could do larger Roth Conversions by waiting until 70.

Another excellent reason I also used.