[Safe Withdrawal Rate] Are you 3% and why/why not?

[Tom_T]

What if both people are making the same wage? My wife and I have been +/- $5,000 from each other’s annual salary for years and will continue with me being 3 years older and planning on retiring before her? I understand the advantages of ROTH conversions but for drawing SS, waiting doesn’t make sense (62 vs 65 vs 70) as the benefits decline.

The benefits decline? What makes you say that?

[boglegirl]

...
Enjoying the new 2024 Tacoma, 50 nights of camping a year plus 4 weeks annually of softer travel.
I'm definitely doing poorly in the richest person in the graveyard contest but oh well......
Can't overachieve at everything.

You mentioned the truck - but what type of camper is this? We're looking at a TAB or TAG trailer which looks similar.

[smitcat]

The SWR % is calculated on the funds desired/used from the portfolio after all other incomes such as SS/pensions/annuities/rentals etc. are considered.

I'm not sure you can calculate a SWR (safe withdrawal rate) a priori. Do you just mean how to calculate the "withdrawal rate"? Or required withdrawal rate?

No one knows what the SWR is for a particular retirement start year, but based on past data, but the Trinity study says a 4% rate should be safe for a 30-year retirement.

Studies on SWR are calculated on the funds desired/used from the portfolio after all other incomes such as SS/pensions/annuities/rentals etc. are considered.

"the Trinity study says a 4% rate should be safe for a 30-year retirement."
Extensions of that study show various success rates for various AA's over various time frames.
Believing that 4% is completely safe for 30 years with all AA's is not understanding these studies and/or data.

[smitcat]

What if both people are making the same wage? My wife and I have been +/- $5,000 from each other’s annual salary for years and will continue with me being 3 years older and planning on retiring before her? I understand the advantages of ROTH conversions but for drawing SS, waiting doesn’t make sense (62 vs 65 vs 70) as the benefits decline.

You would need to run your own numbers as each persons numbers and goals vary and in turn vary the value of Roth conversions and SS election.
Running your numbers and goals on RPM and/or Pralana will allow you to model and review those results.
Delaying for SS may help (or not) with these other areas directly affected by waiting:
- extra Roth conversions
- taxes
- spousal/personal totals
- ACA subsidies
- existing portfolio draw
- heirs/chaities

[tibbitts]

What if both people are making the same wage? My wife and I have been +/- $5,000 from each other’s annual salary for years and will continue with me being 3 years older and planning on retiring before her? I understand the advantages of ROTH conversions but for drawing SS, waiting doesn’t make sense (62 vs 65 vs 70) as the benefits decline.

Can you clarify how the benefits decline?

[RyeBourbon]

The SWR % is calculated on the funds desired/used from the portfolio after all other incomes such as SS/pensions/annuities/rentals etc. are considered.

I'm not sure you can calculate a SWR (safe withdrawal rate) a priori. Do you just mean how to calculate the "withdrawal rate"? Or required withdrawal rate?

No one knows what the SWR is for a particular retirement start year, but based on past data, but the Trinity study says a 4% rate should be safe for a 30-year retirement.

Studies on SWR are calculated on the funds desired/used from the portfolio after all other incomes such as SS/pensions/annuities/rentals etc. are considered.

"the Trinity study says a 4% rate should be safe for a 30-year retirement."
Extensions of that study show various success rates for various AA's over various time frames.
Believing that 4% is completely safe for 30 years with all AA's is not understanding these studies and/or data.

OK, maybe I misunderstand what you are trying to say. I was addressing someone saying, "my SWR is 3.5%" - we don't know what anyone's SWR is a priori. But, as you say, the studies give us expected success rates based on past data. I didn't mean to imply "completely safe" but merely safe within most people's perception of a small failure rate.

The SWR for a particular starting year of retirement won't be known until the portfolio fails or you get 30 years out. Most retirement years have had an SWR vastly higher than 4%.

[Saintor]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

[RyeBourbon]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

It looks like you said always withdraw 6% of the current portfolio, which of course can never fail.

Look at this one... 6% of 3,000,000 = $180,000/yr adjusted for inflation.
https://ficalc.app?additionalIncome=%5B ... tantDollar

[Saintor]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

It looks like you said always withdraw 6% of the current portfolio, which of course can never fail.

Look at this one... 6% of 3,000,000 = $180,000/yr adjusted for inflation.
https://ficalc.app/?additionalIncome=%5 ... lioPercent

Ok it seems that some people confused my 6% with a constant dollars withdrawal method, which I didn't suggest .... no idea why.

5.5-6% works historically and I can adjust.

[typical.investor]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

This is the problems with SWRs. Nobody understands them or talks about them in the same way. It is seen repeatedly in this thread.

For your results, why would taking 6% of the portfolio value ever fail? It can't. Even if you have only $100, you can still take out $6.

Try this ... take out a constant dollar amount. If you choose 6%, that is $180,000. Then inflation adjust the returns. Now it shows less than a 50% success rate.

Most in this thread simply are citing their current withdrawal rate (current withdrawal/current portfolio value). Nobody is really taking the original portfolio value and calculating as a percentage of that. The SWR studies have withdrawal amounts that are based on original portfolio value and modified by subsequent inflation adjustments. So it's apple to oranges. Can you take 6% from your portfolio each year. Yes, easily. Can you take 6% + inflation adjustment of the original portfolio value each year. Doubtful and even 5% is risky but again it depends on the exact year you start.

https://ficalc.app?additionalIncome=%5B ... tantDollar

[Saintor]

Try this ... take out a constant dollar amount. If you choose 6%, that is $180,000. Then inflation adjust the returns. Now it shows less than a 50% success rate.

Again, you would have not selected a 6% withdrawal rate, but rather a 180K constant dollars...just not the same...

[FactualFran]

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

According to the details for 1966-1998, "1975 had a year-over-year change in available spending of -28.1%". Some are not willing to tolerate that much of a reduction in spending. The SWR approach adjusts the withdrawal amount for inflation. It is not clear whether the available spending reported by ficalc is adjusted for inflation.

[Saintor]

It is not clear whether the available spending reported by ficalc is adjusted for inflation.

Oh yeah they are. Just under the Results title; "All dollars and returns shown in the results are real."

[Leesbro63]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

I don’t know, but you missed something. And it’s not just about surviving 30 years. It’s also about the maximum drawdown. And if yin go almost broke at 30 years, you don’t know that things will get better in the next three. You did something wrong.

[Saintor]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

I don’t know, but you missed something. And it’s not just about surviving 30 years. It’s also about the maximum drawdown. And if yin go almost broke at 30 years, you don’t know that things will get better in the next three. You did something wrong.

Nope. I will respectfully challenge that. I get similar results whether it is ficalc or cfiresim.

The median income from a 3M portfolio (circa 2024) over 30+ yrs is actually about 5.3%, with plenty of end value. Back-tested since 1871 with success, no matter the maximum dragdown.

IMO; the 4% rule was never really a 4% rule. It was a 40K constant dollars on a 1M, adjusted for inflation.

If you go with the last 50 years (1974-2024), it is even higher than 6%.

[FactualFran]

It is not clear whether the available spending reported by ficalc is adjusted for inflation.

Oh yeah they are. Just under the Results title; "All dollars and returns shown in the results are real."

Those words are not on the page with the details for 1966-1998 that my post was about. Any comments about the rest of the paragraph, rather about only the last of four sentences?

[Leesbro63]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

I don’t know, but you missed something. And it’s not just about surviving 30 years. It’s also about the maximum drawdown. And if yin go almost broke at 30 years, you don’t know that things will get better in the next three. You did something wrong.

Nope. I will respectfully challenge that. I get similar results whether it is ficalc or cfiresim.

The median income from a 3M portfolio (circa 2024) over 30+ yrs is actually about 5.3%, with plenty of end value. Back-tested since 1871 with success, no matter the maximum dragdown.

IMO; the 4% rule was never really a 4% rule. It was a 40K constant dollars on a 1M, adjusted for inflation.

If you go with the last 50 years (1974-2024), it is even higher than 6%.

The median doesn’t help if you are not the median. Maybe someone else can chime in here. For years and years the discussion here has been that 4% (3.8 actually) inflation adjusted barely survived 1966-1996. And even that seems to ignore the shocking drawdown by 1981. I don’t know where you’re coming up with 5.3%. Hopefully someone else does.

[smitcat]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

I don’t know, but you missed something. And it’s not just about surviving 30 years. It’s also about the maximum drawdown. And if yin go almost broke at 30 years, you don’t know that things will get better in the next three. You did something wrong.

Nope. I will respectfully challenge that. I get similar results whether it is ficalc or cfiresim.

The median income from a 3M portfolio (circa 2024) over 30+ yrs is actually about 5.3%, with plenty of end value. Back-tested since 1871 with success, no matter the maximum dragdown.

IMO; the 4% rule was never really a 4% rule. It was a 40K constant dollars on a 1M, adjusted for inflation.

If you go with the last 50 years (1974-2024), it is even higher than 6%.

At 99% success a 4% withdrawal rate worked for 30 years utilizing an AA of 75% equities and a zero account balance at the end of the 30 year time period. Varying the % of equities, or the length of time and using success rates of 95%+ the withdrawal % drops from 4% rather rapidly.
Here is a good summary of these historical calculations....
https://earlyretirementnow.com/2016/12/ ... t-1-intro/

[RyeBourbon]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

It looks like you said always withdraw 6% of the current portfolio, which of course can never fail.

Look at this one... 6% of 3,000,000 = $180,000/yr adjusted for inflation.
https://ficalc.app/?additionalIncome=%5 ... lioPercent

Ok it seems that some people confused my 6% with a constant dollars withdrawal method, which I didn't suggest .... no idea why.

5.5-6% works historically and I can adjust.

OK, when people talk about a SWR they mean starting with a specified % of the initial portfolio and adjusting that dollar amount each year for inflation. That provides a constant real amount each year for spending.

If you are taking 6% of the portfolio balance (or any %), you can't exhaust the portfolio but you will have varying amounts each year. If you started in 1966, with 6% of 3M, you start at $180,000. In 1982, you only get $52,000. If you can adjust your spending to less than 1/3 of your starting withdrawal, that's great. But I don't think anyone wants to have to do that.

[Leesbro63]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

I took another look at your link. Here's what you missed: You started with $3M in 1966 and by 1982 you were down to $803,500. That's not a retirement plan; that's an Rx for depression! Yeah, things did turn around, finally after 16 years, and got progressively better. But you only know that in hindsight. No sane retiree could blindly keep spending, at that rate, rapidly toward poverty, along the way. This is data mining without applying one's brain.

[Alex GR]

This is a very interesting thread that I've learned a lot from as far as the intricacies of interpreting SWR. But I do have a question:
Suppose the portfolio is 50/50 stocks/bonds (something like VTI/VXUS/BND) and SWR is not a pre-set percentage but rather amounts to whatever is the interest, dividends and capital gains that those funds pay out.
(I understand the stock portion pays a bit less and BND a bit more)
What SWR would that amount to over a long time period? (10-20 yrs)
Tnx!

[James.534]

50/50 stocks/bonds (something like VTI/VXUS/BND) and SWR is not a pre-set percentage but rather amounts to whatever is the interest, dividends and capital gains that those funds pay out.

The problem with this idea, it will work well in and up market , but in a down market , how well will you survive financially on say 0 returns for a couple of years with out a capital draw down?

[Leesbro63]

This is a very interesting thread that I've learned a lot from as far as the intricacies of interpreting SWR. But I do have a question:
Suppose the portfolio is 50/50 stocks/bonds (something like VTI/VXUS/BND) and SWR is not a pre-set percentage but rather amounts to whatever is the interest, dividends and capital gains that those funds pay out.
(I understand the stock portion pays a bit less and BND a bit more)
What SWR would that amount to over a long time period? (10-20 yrs)
Tnx!

This should yield about 2-2.5%. Some would say that’s the perfect perpetual portfolio. If you can live on 2.5%, this makes a lot of sense.

And as a practical matter, even if you are a 4%er, you’ll still take that 2.5%ish income and sell 1.5%ish to get to 4%. So it’s a non-issue. Unless you spend less than 2%, in which case you’ll just reinvest the non-spent income.

[Alex GR]

This is a very interesting thread that I've learned a lot from as far as the intricacies of interpreting SWR. But I do have a question:
Suppose the portfolio is 50/50 stocks/bonds (something like VTI/VXUS/BND) and SWR is not a pre-set percentage but rather amounts to whatever is the interest, dividends and capital gains that those funds pay out.
(I understand the stock portion pays a bit less and BND a bit more)
What SWR would that amount to over a long time period? (10-20 yrs)
Tnx!

This should yield about 2-2.5%. Some would say that’s the perfect perpetual portfolio. If you can live on 2.5%, this makes a lot of sense.

And as a practical matter, even if you are a 4%er, you’ll still take that 2.5%ish income and sell 1.5%ish to get to 4%. So it’s a non-issue. Unless you spend less than 2%, in which case you’ll just reinvest the non-spent income.

Yes, that's exactly what I am talking about. I believe I can live on 2% when I start SS. So I would just direct all dividends and capital gains to a bank account (I remember reading there's even an automatic way of doing this?) and I don't have to sell anything from the portfolio.
Purely psychological, I know, but I really like the idea.

[Saintor]

I want to enjoy my money and don't want to leave a taxable estate; I plan to withdraw annually 5.5-6% in the next 25 years and still have 50% of my initial portfolio.

If it’s 1966 all over again, you’ll be well below 50% in 15 years, using a 60/40 portfolio, according to FICALC. You lost half your money in 8.5 years and the whole thing was gone in 17 years. But you will have accomplished not leaving a taxable estate.

Funny, I happen to play a lot with those simulators. I did plug 60/40, 6% withdrawal. Not only I will still have 72% of my initial portfolio 33 years later if I started in 1966, but I got a 100% success. And I didn't even put the other incomes that I will get.
https://ficalc.app?additionalIncome=%5B ... lioPercent

What did I miss?

I took another look at your link. Here's what you missed: You started with $3M in 1966 and by 1982 you were down to $803,500. That's not a retirement plan; that's an Rx for depression! Yeah, things did turn around, finally after 16 years, and got progressively better. But you only know that in hindsight. No sane retiree could blindly keep spending, at that rate, rapidly toward poverty, along the way. This is data mining without applying one's brain.

Well then prepare to be depressed.

• If you took in 1965 an initial 3% withdrawal and adjusted for inflation, you'd be left in 1981 with $1175199 out of that 3M.

• If you took in 1966 an initial 4% withdrawal and adjusted for inflation (the "Vanguard 4% rule"), you'd be left in 1982 with $725545 out of that 3M, WORSE than my plan that you called out.

And instead of pulling only 120K/yr, my "6%" withdrawal rate would bring me a median & average 175K/yr.

This brings me to a notion that I believe is crucial for an optimal withdrawal strategy in retirement; guardrails. Absolutely necessary to prevent the situations above IMO. I believe the 3-4% is way too low and unnecessary for me. Guardrails will adjust up or down the 6%. As I wrote, my goal is to have 50% of my money in my early 80s.

People think that withdrawal methods such as Guyton-Klinger and Vanguard Dynamic Spending are too complicated (or they don't understand them) so they dismiss them for everybody. Err. I find them easy to understand and I am a fan of dynamic withdrawal methods.

[Random Poster]

This is a very interesting thread that I've learned a lot from as far as the intricacies of interpreting SWR. But I do have a question:
Suppose the portfolio is 50/50 stocks/bonds (something like VTI/VXUS/BND) and SWR is not a pre-set percentage but rather amounts to whatever is the interest, dividends and capital gains that those funds pay out.
(I understand the stock portion pays a bit less and BND a bit more)
What SWR would that amount to over a long time period? (10-20 yrs)
Tnx!

Depends on the interest rate during the “long time period.”

The interest rate could be near zero for a substantial tine during your “long time period,” or it could be in the 2-3% range. Or slightly higher, I guess.

But considering that half of your portfolio is dependent on what that interest rate is, that number really matters in determining the answer.

[Nebraska_Drought]

What if both people are making the same wage? My wife and I have been +/- $5,000 from each other’s annual salary for years and will continue with me being 3 years older and planning on retiring before her? I understand the advantages of ROTH conversions but for drawing SS, waiting doesn’t make sense (62 vs 65 vs 70) as the benefits decline.

Can you clarify how the benefits decline?

Sorry, that was worded badly. The overall monetary benefit of SS declining with an earlier withdrawal age (62 vs 67 for example). In many instances, the "break even" point is right around age 78-80 (depending on when you start taking SS) and since my wife and I make the same annual income, I am having a hard time understanding how waiting is a benefit. Yes, very helpful on ROTH conversions and maybe ACA (we will still be making too much unless 100% of our IRA's were converted). I'm the type of personality that I'd rather have the SS $ in hand and doing what I want with it and at the same time not depending on my own accounts. Any leftover money in our estates are going to our two kids when we no longer grace this world.

[tibbitts]

What if both people are making the same wage? My wife and I have been +/- $5,000 from each other’s annual salary for years and will continue with me being 3 years older and planning on retiring before her? I understand the advantages of ROTH conversions but for drawing SS, waiting doesn’t make sense (62 vs 65 vs 70) as the benefits decline.

Can you clarify how the benefits decline?

Sorry, that was worded badly. The overall monetary benefit of SS declining with an earlier withdrawal age (62 vs 67 for example). In many instances, the "break even" point is right around age 78-80 (depending on when you start taking SS) and since my wife and I make the same annual income, I am having a hard time understanding how waiting is a benefit. Yes, very helpful on ROTH conversions and maybe ACA (we will still be making too much unless 100% of our IRA's were converted). I'm the type of personality that I'd rather have the SS $ in hand and doing what I want with it and at the same time not depending on my own accounts. Any leftover money in our estates are going to our two kids when we no longer grace this world.

I think of delaying more as longevity insurance, especially since I have no other COLA-adjusted income streams.

[smitcat]

What if both people are making the same wage? My wife and I have been +/- $5,000 from each other’s annual salary for years and will continue with me being 3 years older and planning on retiring before her? I understand the advantages of ROTH conversions but for drawing SS, waiting doesn’t make sense (62 vs 65 vs 70) as the benefits decline.

Can you clarify how the benefits decline?

Sorry, that was worded badly. The overall monetary benefit of SS declining with an earlier withdrawal age (62 vs 67 for example). In many instances, the "break even" point is right around age 78-80 (depending on when you start taking SS) and since my wife and I make the same annual income, I am having a hard time understanding how waiting is a benefit. Yes, very helpful on ROTH conversions and maybe ACA (we will still be making too much unless 100% of our IRA's were converted). I'm the type of personality that I'd rather have the SS $ in hand and doing what I want with it and at the same time not depending on my own accounts. Any leftover money in our estates are going to our two kids when we no longer grace this world.

You want to figure out which choices are more likely to produce the most after tax dollars adjusted for inflation for your entire portfolio over its entire lifetime (including heirs and/or charities). If you want to do any 'breakeven' modeling please mke sure that all the data and goals are considered.
- most heirs will benefit most from Roth accounts
- some plans for retirment draw favor delaying
- dependent upon desired draw and account sizes delaying may be preferred
Only way to know is to run your numbers along with your goals and review the results. Preferably also run any other combinations that may interest or concern you to see the pros and cons of them as well.
FWIW - our SS amounts are similar, our ages are not , we are delaying based on our numbers and goals but that does not mean that it is best for your numbers and goals.

[Leesbro63]

I think of delaying more as longevity insurance, especially since I have no other COLA-adjusted income streams.

Most people miss this and think only of the breakeven point. I agree with you...that the proper way to think about it, if you don't absolutely need the money before age 70, is if you and/or your lower earning surviving spouse live long, you'll be glad you have the extra money every month. And if you both die before "breakeven", you won't care because you're dead. Not exactly but similar to paying IRMAA for Medicare. Despite having to pay it, I'll be much happier if I never have a big Medicare claim.