What if Client A waits to collect at age 70 and both spouses live to the ripe old age of 95?
With the average life expectancy for a man being approximately age 76, that is an extra 19 years with an additional $7,706 per year past the breakeven point. That is a total of an additional $146,414 ins SS income.
So while Client A may have collected a total of an additional $146,414 in total benefits by delaying benefits, we cannot ignore the investment capital that was spent down between ages 62-70, which we established earlier was equal to $297,630 with a 5% return for 8 years. While this capital using the 4% withdrawal strategy is presumed to be generating less income, it does not necessarily mean it will be spent to zero.
In fact, according to research done by Michael Kitces, if you spend at a rate of 4% per year over a 30 year period in a balanced portfolio (defined as 60% stocks & 40% bonds), statistically 2/3rds of the time you’ll have more than 2 times the amount of assets at the end of a 30 year period.