From the time I was 62 until 70, the S&P 500 return was 14.9% per annum.
That was well over the 5%-6% breakeven return.
My decision to take SS at 62 was a very good move.
For my wife, the S&P return from 62 to 70 was 12.9%
S&P has regularly returned over the 4% that most models plan for, given the right runway. I looked at S&P performance, starting back to 1926 and looked not by year (one year doesn't a plan it make). But on 5, 10, 15 and 20 year training periods. Who knows what is the "right" trailing period, but the worst case for each was -8.25%, .067%, 4.66% and 6.46%. The average and median all were well above that magical 4%, in line with your experience.
| By Year | 5 Year | 10 Year | 15 Year | 20 Year |
Max | 53.99 | 28.70 | 21.52 | 19.59 | 18.59 |
Min | -43.34 | -8.25 | 0.67 | 4.66 | 6.46 |
Average | 12.24 | 11.77 | 12.09 | 12.14 | 12.40 |
Median | 14.69 | 13.13 | 12.17 | 11.96 | 12.79 |
| | | | | |
We all know how bad things were in the depression, and perhaps changes to stock and financial markets could impact the future. I also then looked at same data, starting back in 1961. It really didn't change the returns:
| By Year | 5 Year | 10 Year | 15 Year | 20 Year |
Max | 37.58 | 28.70 | 20.06 | 19.59 | 18.59 |
Min | -37.00 | -0.77 | 0.67 | 6.09 | 7.16 |
Average | 11.89 | 11.43 | 11.39 | 11.64 | 12.09 |
Median | 15.06 | 13.12 | 10.73 | 11.40 | 11.49 |
| | | | | |
We can't predict the future, but historically we've see better than 4% return. If once uses the 20 year, which after all we are looking at the long return period if we are talking about retirement, of 6.46% or 7.16% that significantly changes the results of "when" to start SS.
As I mentioned way back in
message #15, there is no one right answer. Everyone just looks at it based on "their" financial position, lifestyle and even expected longevity. For some, SS is their only source of income, waiting isn't an option, while others may view SS as just some extra pocket money. Some may already have an illness or known condition that will limit their, their spouse or both, expected longevity, some may already be 90 and still going strong. If someone uses the same "base" return of 4% then answer will always be the same, but as chart shows above, that could be very well below what one might expect over an extended period.