The EXPERTS told my brother to delay taking his Social Security until he turned 70 so he could get more money. Yes, his checks are larger at age 70 than if he would have collected at 62 but he will have much less money unless he lives well into his 90s. Why? The power of compounding.
Because he was not getting a Social Security Check from 62-70 while retired he had to take 7.5% of his retirement portfolio every year to pay expenses. If he would have started taking Social Security at age 62, he would only have had to take out 4% a year to pay those expenses. So every year he was pulling out an additional 3.5% of his portfolio so he could delay his Social Security to age 70.
Every year he had less and less money in his 401K to earn investment returns because of the huge 7.5% withdrawals. With a 60% total stock market and 40% total bond market portfolio, he lost about $275,000 in potential investment returns because of the accelerated withdrawals from age 62-70. Even though the SS checks will be larger from age 70 on- because he delayed- it will take a very long life and lots of digging out of the hole he is in.
Advice to older investors: If you retire early, take Social Security at age 62. Many more smaller SS checks is better than fewer larger checks late in life! If you consider investment returns.
Submitted October 16, 2018 at 09:29AM by KillingTime56 https://ift.tt/2QUjt45
