Portfolio Balance with Early/late Social Security Payments
Posted: Sun Dec 15, 2013 8:08 am
I'm running 2 scenarios which are identical except for when Social Security payments start. The 'early' scenario has them starting at 62(me) and 63(my wife) and the 'late' scenario has them starting at 66 and 67 respectively. This effectively means that in order to cover expenses, there are larger initial withdrawals from the portfolio in the 'late' scenario. Both scenarios start at age 62 and extends out to 95. All other settings and entries are identical.
The results I'm having trouble understanding are in the time period between age 62 to 67. At age 67, the portfolio in the 'late' scenario is larger than the 'early' scenario. So both scenarios have the same starting point, one requires less withdrawals from the portfolio, the other larger withdrawals (175K over 5 years) , but after 5 years the portfolio that had more money taken out is worth $20K more. The distortion in the portfolio values get worst over time.
Shouldn't the portfolio values after 5 years be reversed? The portfolio that had less money taken out be larger? What would cause the other portfolio to grow faster?
I'm sure I'm missing something here. Any and all help is very much appreciated.
Thanks!
Paul
The results I'm having trouble understanding are in the time period between age 62 to 67. At age 67, the portfolio in the 'late' scenario is larger than the 'early' scenario. So both scenarios have the same starting point, one requires less withdrawals from the portfolio, the other larger withdrawals (175K over 5 years) , but after 5 years the portfolio that had more money taken out is worth $20K more. The distortion in the portfolio values get worst over time.
Shouldn't the portfolio values after 5 years be reversed? The portfolio that had less money taken out be larger? What would cause the other portfolio to grow faster?
I'm sure I'm missing something here. Any and all help is very much appreciated.
Thanks!
Paul