Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
3 of 5 Retirees Projected To Outlive Their Savings
Old 07-15-2008, 08:17 AM   #1
Full time employment: Posting here.
tangomonster's Avatar
 
Join Date: Mar 2006
Posts: 756
3 of 5 Retirees Projected To Outlive Their Savings

According to a new study (commissioned by an organization that lobbies "for policies to help Americans retire'), three of five retirees will outlive their savings if they don't cut their spending and live more modestly. People retiring today may face a 24% cut in their living standard; in seven years, 37 percent.

"Baby boomers" may still outlive assets - Yahoo! News

Personally I don't know that I could cut my spending since it's always been so low.

I'm trying not to worry about this too much since they are talking about "typical" people who haven't saved very much; the study cites:

so-called near retirees, at age 58, have an average nest egg of $105,000 if their yearly income is $50,000. Their savings rise to an average of $280,000 if they earn $100,000 a year. New retirees, with an average age of 65, have $175,000 in savings if they earned $50,000, and $585,000 if they earned $100,000 a year


But when I read "The very real possibility of living to age 90 or 100 combined with the volatility of inflation and investment returns means that the risk of outliving one's assets is quite high," I can't help worrying. Words of wisdom from those of you who don't get concerned reading this stuff?
__________________

__________________
“It is not a sign of good health to be well adjusted to a sick society”.------Krishnamurti
tangomonster is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 07-15-2008, 08:26 AM   #2
Full time employment: Posting here.
CitricAcid's Avatar
 
Join Date: May 2008
Posts: 546
Don't worry, Medicare and Social Security will pick up the slack and there is no WAY those are going to ever go under, right?
__________________

__________________
CitricAcid is offline   Reply With Quote
Old 07-15-2008, 08:30 AM   #3
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,078
Quote:
Originally Posted by tangomonster View Post
Words of wisdom from those of you who don't get concerned reading this stuff?
If 3 of 5 are predicted to outlive their assets, then 2 of 5 (40%) aren't. That could be due to having a large nest egg, investing wisely, LBYM, dying "early", or any combination of those or other factors. I managed to build a large enough nest egg to retire somewhat early (58 ) certainly something 40% of the population isn't willing or able to do. If I can do that, then I'm fairly certain I can maintain myself in the 40% category.

And if not, I always have the option of dying early.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 07-15-2008, 08:47 AM   #4
Recycles dryer sheets
Robert the Red's Avatar
 
Join Date: Aug 2005
Posts: 325
Well -- the fact that you read this and worry about it means you are less likely to be in the "outlive savings" category.

I read this article in the Washington Post when it came out a couple days ago and was distinctly unimpressed with its almost complete lack of detail. The best way to inoculate yourself against such information-free worry dispensers is to keep track of your own information and plans.

Quick, look over there! The market is plummeting! We're doomed, horribly horribly doomed! This has never happened before!
__________________
Robert the Red is offline   Reply With Quote
Upon further review
Old 07-15-2008, 09:05 AM   #5
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,424
Upon further review

So the study was "commissioned by Americans for Secure Retirement, a lobbying coalition for policies to help Americans retire."

Their web site is named Americans For Secure Retirement | Home but the address is paycheckforlife.com

Clearly a group of concerned citizens and altruistic businesses. I wonder what they propose to resolve this problem.
__________________
MichaelB is offline   Reply With Quote
Old 07-15-2008, 09:13 AM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
calmloki's Avatar
 
Join Date: Jan 2007
Location: Independence
Posts: 5,459
I'm concerned - and have amassed almost enough social security to keep our cats fed. if they go to that great litter box in the sky early. Not sure being concerned will pay the bills, but i figure stressing over stuff might help me check out early, reducing the need for mass sums of cash, so that is a comfort. How many greeters can Walmart afford - wonder if i should get my application in before the rush?

Calm "want fries with that"? Loki
__________________
calmloki is offline   Reply With Quote
Old 07-15-2008, 09:41 AM   #7
Recycles dryer sheets
 
Join Date: Jul 2008
Posts: 150
The key point here is to be able to outlive your saving. As long as you are alive, what else do we want?
__________________
huusom is offline   Reply With Quote
Old 07-15-2008, 10:00 AM   #8
Full time employment: Posting here.
tangomonster's Avatar
 
Join Date: Mar 2006
Posts: 756
Thanks, everyone----I knew you could help me keep this in perspective.

I agree, REW and Robert---there are differences between us and the people they are talking about.

Michael, the agenda that "Americans for a Secure Retirement" have is to make annuities more attractive by the following (appears on their website):

"We believe Congress should create incentives that encourage the use of retirement vehicles that pay a guaranteed lifetime income. Our proposal would work this way: An individual would not pay federal income taxes on one-half of the income payments from annuities that make lifetime payments. No more than $20,000 annually could be excluded. For a typical American in the 25% tax bracket, this would provide an annual tax savings of up to $5,000.
Such an incentive would involve a relatively modest investment of federal revenues. This amount does not reflect cost savings to public social-services programs that would be generated by the greater use of life annuities. Nor does it account for the salutary effects of a guaranteed income stream on the quality of life of millions of seniors"


This group must obviously have some ties to the insurance/annuities industry and think that if this tax reform took place, they would sell more annuities. Think this is the next subprime mortgage/"predatory" lending crisis in the making?


I understand and agree with enticing people to save more---but if the issue is that boomers who are close to or in retirement having saved anything/enough and don't have the ability/experience to save, I don't see how tax free annuity income is going to provide them with what they need/want since most won't have enough assets to buy a sizeable annuity....
__________________
“It is not a sign of good health to be well adjusted to a sick society”.------Krishnamurti
tangomonster is offline   Reply With Quote
Old 07-15-2008, 10:04 AM   #9
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 987
Quote:
Originally Posted by tangomonster View Post
I don't see how tax free annuity income is going to provide them with what they need/want since most won't have enough assets to buy a sizeable annuity....
Hey - I'm not wanting to start an argument but if there is going to be somebody who is going to give me a "bye" on federal taxes on my SPIA income (purchased with tax advantaged funds - and yes, it is "sizeable") I'm willing to take it!

- Ron
__________________
rs0460a is offline   Reply With Quote
Old 07-15-2008, 10:13 AM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
cute fuzzy bunny's Avatar
 
Join Date: Dec 2003
Location: Losing my whump
Posts: 22,697
Hey, you folks are getting pretty good at looking into who produces all these fun statistics!

Also from their "about us" mission statement:

"Specifically, that means making it easier to secure a guaranteed paycheck for life through products like life-contingent annuities."

As far as the "three out of five", many people are forced to retire due to a medical or other condition that keeps them from working, and we've already seen well established data showing that only a small percentage of people have put aside anything more than a token amount for retirement.

Unfortunately, most of these situations result in people with inadequate savings to even consider purchasing an annuity.

But that wont stop these guys from using it as a stick to try to scare the other 2 out of 5...
__________________
Be fearful when others are greedy, and greedy when others are fearful. Just another form of "buy low, sell high" for those who have trouble with things. This rule is not universal. Do not buy a 1973 Pinto because everyone else is afraid of it.
cute fuzzy bunny is offline   Reply With Quote
Old 07-15-2008, 10:13 AM   #11
Full time employment: Posting here.
tangomonster's Avatar
 
Join Date: Mar 2006
Posts: 756
Quote:
Originally Posted by rs0460a View Post
Hey - I'm not wanting to start an argument but if there is going to be somebody who is going to give me a "bye" on federal taxes on my SPIA income (purchased with tax advantaged funds - and yes, it is "sizeable") I'm willing to take it!

- Ron
Yes, Ron, but my point was that you, like most here, do have sizeable assets or are working towards this. How are those who they talked about who are 58 and have an average nest egg of $100,000 going to survive, even if the half the income from an annuity was tax-free?
__________________
“It is not a sign of good health to be well adjusted to a sick society”.------Krishnamurti
tangomonster is offline   Reply With Quote
Old 07-15-2008, 10:41 AM   #12
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 987
Quote:
Originally Posted by tangomonster View Post
Yes, Ron, but my point was that you, like most here, do have sizeable assets or are working towards this. How are those who they talked about who are 58 and have an average nest egg of $100,000 going to survive, even if the half the income from an annuity was tax-free?
If the annuity (specifically an SPIA, as mine is) is purchased with "tax advantaged funds" (as mine is), would result in taxes not being paid on tax deferred funds (like roll-over 401k's and traditional IRA's).

That means that the annuity (again, speaking of an SPIA) would become "tax free" (like a Roth IRA).

It would be an advantage to anybody - even those folks that have "average" savings/investments for retirement. Their annuity distributions would be minumal on an annual basis and probably would put them in a low/no tax basis, anyway.

BTW, I purchased my SPIA at age 59, so I guess I'm within the "target age" of the article...

That what I'm speaking of ...

- Ron
__________________
rs0460a is offline   Reply With Quote
Old 07-15-2008, 11:03 AM   #13
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by rs0460a View Post
That means that the annuity (again, speaking of an SPIA) would become "tax free" (like a Roth IRA).

It would be an advantage to anybody - even those folks that have "average" savings/investments for retirement. Their annuity distributions would be minumal on an annual basis and probably would put them in a low/no tax basis, anyway.
- Ron
- It's not exactly an "advantage to anybody" is it? If the individual's (low) yearly annuity payouts would have resulted in no taxes given today's laws, then he doesn't benefit. So, only those who are above this income level gain an advantage.

- If Congress wants to accomplish the same thing without making the annuity execs rich, then why not just re-write the law so I can withdraw my Traditonal IRA sums tax free? If they want to assure that these payments are spread out in a fiscally responsible way , they could stipulate a max payout % based on expected longevity remaining--above this would be taxed at a high rate.

- And, if they do this, I'd appreciate a rebate on all the taxes I paid to do a Roth conversion years ago, since those taxes I paid would have been for nothing.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 07-15-2008, 11:05 AM   #14
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by tangomonster View Post
Yes, Ron, but my point was that you, like most here, do have sizeable assets or are working towards this. How are those who they talked about who are 58 and have an average nest egg of $100,000 going to survive, even if the half the income from an annuity was tax-free?

Work till 75?
__________________
Notmuchlonger is offline   Reply With Quote
Old 07-15-2008, 11:06 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,815
Quote:
Originally Posted by rs0460a View Post
If the annuity (specifically an SPIA, as mine is) is purchased with "tax advantaged funds" (as mine is), would result in taxes not being paid on tax deferred funds (like roll-over 401k's and traditional IRA's).

That means that the annuity (again, speaking of an SPIA) would become "tax free" (like a Roth IRA).

It would be an advantage to anybody - even those folks that have "average" savings/investments for retirement. Their annuity distributions would be minumal on an annual basis and probably would put them in a low/no tax basis, anyway.

BTW, I purchased my SPIA at age 59, so I guess I'm within the "target age" of the article...

That what I'm speaking of ...

- Ron
It looks like even these guys aren't asking for that much.

See paragraph C(i) one page 3. It looks like this change does not apply to qualified money. http://www.paycheckforlife.org/images/1010.pdf

That said, my recollection is that the tax treatment of non-qualified SPIAs is somewhat unfavorable.
__________________
Independent is online now   Reply With Quote
Old 07-15-2008, 11:08 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 3,815
Quote:
Originally Posted by tangomonster View Post

I understand and agree with enticing people to save more---but if the issue is that boomers who are close to or in retirement having saved anything/enough and don't have the ability/experience to save, I don't see how tax free annuity income is going to provide them with what they need/want since most won't have enough assets to buy a sizeable annuity....
Right, even if you believed the study, it doesn't support their proposal.
__________________
Independent is online now   Reply With Quote
Old 07-15-2008, 11:09 AM   #17
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 987
Quote:
Originally Posted by samclem View Post
- It's not exactly an "advantage to anybody" is it? If the individual's (low) yearly annuity payouts would have resulted in no taxes given today's laws, then he doesn't benefit. So, only those who are above this income level gain an advantage.
Not quite. I receive a part of my principal (never taxed) as a monthly part of my SPIA payment. That (along with earnings) makes the payment totally taxable (for Federal, but not state/local, where I live).

I could not afford to do any Roth conversions, since I don't have "other funds" to pay the taxes (I could say that's only for the "rich folks", but that might make you mad - sorry!)

Hey - I'm always looking to save taxes ... If some group is going to "tilt windmills" to save me a buck, I'm willing to listen...

- Ron
__________________
rs0460a is offline   Reply With Quote
Old 07-15-2008, 11:11 AM   #18
Full time employment: Posting here.
 
Join Date: Feb 2006
Posts: 987
Quote:
Originally Posted by Notmuchlonger View Post
Work till 75?

Don't think so...

- ?
__________________
rs0460a is offline   Reply With Quote
Old 07-15-2008, 11:13 AM   #19
Full time employment: Posting here.
Helena's Avatar
 
Join Date: Aug 2006
Posts: 597
TPTB have figured out how to keep all those the baby boomers from retiring.


Their fear-mongering has come too late for me.

~
__________________
Helena is offline   Reply With Quote
Old 07-15-2008, 11:25 AM   #20
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
NM

Annuity talk I should stay out of it
__________________

__________________
Notmuchlonger is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Will you outlive your money? W2R Other topics 13 08-16-2007 02:41 AM
ER Consumption (Projected Spending Habits) chinaco Life after FIRE 15 04-09-2007 12:47 PM
How to determine projected annual real growth of capital? Dude FIRE and Money 8 02-04-2007 02:38 PM
Yet another online savings account over 5% - Etrade Complete Savings maddythebeagle FIRE and Money 0 11-28-2006 01:53 PM
Social Security Trust Fund is now projected to run out earlier! Cut-Throat FIRE and Money 2 05-01-2006 06:06 PM

 

 
All times are GMT -6. The time now is 09:33 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.