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A little obituary realism :o
Old 07-12-2004, 06:24 PM   #1
 
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A little obituary realism :o

Perusing the Obits today (Yes, I look once in awhile), I notice the folks ages that die. A very small Percentage hit 90+, yet most of our plans are set for 95+.

I counted 104 Obits and only 10 were over 90 in the paper today. It's obvious that we will all run out of time before we run out of money.

So the question we should ask is - Are we spending our time as wisely as our money? :-/
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Re:  A little obituary realism :o
Old 07-12-2004, 07:02 PM   #2
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Re:  A little obituary realism :o

Dont be so sure...average age is increasing linearly, and we've got a handful of revolutionary inflections that might dramatically increase our lifespans. At least if you're wealthy and/or have the right healthcare.

The human genome mapping. Stem cell research. Cloning.

I expect the next 20 years in medicine to be pretty interesting stuff.
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Re:  A little obituary realism :o
Old 07-12-2004, 09:42 PM   #3
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Re:  A little obituary realism :o

I still think of it as insurance. If you plan to spend your money by 90 and are still alive at 92, what then? Work?

Is it worse to die at 72 with $700k in the bank or be alive at 92 with nothing and having been retired since age 50?

I guess there's always Dairy Queen and Wal-Mart. Or perhaps the trick is to raise the kids and grandkids with a strong moral code of supporting their elderly partents/grandparents.

Once again, the biggest factor in retirement planning is the unkown of when we're going to die.
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Re:  A little obituary realism :o
Old 07-12-2004, 10:09 PM   #4
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Re:  A little obituary realism :o

A little further thought...it's always good to rethink the plans. There is certainly a thing as planning too conservatively.

I used the word insurance again, and using a "100% safe" withdrawal rate through age 95 may be paying very high premiums with low deductibles to ensure a comfortable late life in case of longevity.

Perhaps we're sacrificing too much from the early phases of retirement because of fear of living to 90+ and outliving our dough.

I suppose the question is: what are the alternatives? Some random ideas:

- Take 80% or 70% "safe" SWR's; in most historical cases you have money left, anyway
- Use historical returns the other way around to determine how long on average (or other statistical measure) a given withdrawal rate will last
- Plan to buy annuities at age 70, 75 or perhaps when health turns south and the active days are over. This way the annuity underwriter assumes the longevity risk and you assume inflation risk. This leaves no estate, but I think most of us think it would be ideal to run out of money just as we die (if we could be absolutely sure of not shorting our lifespans or money).

For now the "buy annuities" plan sounds promising. I sort of liked the Die Broke idea, but I have a feeling I'll do better investing my own money than buying an annuity. (Obviously the annuity companies do, too as they plan to make money on my annuity.) A hybrid plan may allow for higher withdrawals earlier in ER with 'guaranteed' income for life after a certain point. (Although before your buy the annuity you won't know how much income.)

If I weren't tired I might try running Firecalc for shorter withdrawal periods and then try different exercises (average, lowest, overall worst case) with terminal balances to try to determine likely annuity income based on using the terminal balance to buy annuities.

-----

One last thought: Cut-Throat, are you also checking the causes of death? I wouldn't think we would factor deaths due to accident or murder into our ER plans. Smoking habits, drinking habits, weight and physical activity probably play a factor in obit deaths and our lifespans. Too bad the obits don't mention whether the people were happily RE'd.
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Re:  A little obituary realism :o
Old 07-12-2004, 11:30 PM   #5
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Re:  A little obituary realism :o

Yeah, if only we all knew when we were going to die, it would make planning alot easier. But then again, let's think about this, are'nt we all capable of 'ensuring' we don't outlive our portfolio !?
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Re:  A little obituary realism :o
Old 07-12-2004, 11:47 PM   #6
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Re:  A little obituary realism :o

I just checked our local obits for the last month or so. 10 deaths, 4 older than 90, 8 older than 80. The two young outliers were 66 and 77.

Actuaries believe the maximum age that we'll hit is around 120 (for those alive today). And our demographics are such that we'll have more oldsters than youngsters pretty soon. The world is going to get ugly (and wrinkled and shrunken)....

What does this mean for investors? Diaper futures? Long on easy to chew foods? The opportunities are endless
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Re: *A little obituary realism :o
Old 07-13-2004, 03:44 AM   #7
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Re: *A little obituary realism :o

Take 80% or 70% "safe" SWR's; in most historical cases you have money left, anyway.

I hope that we will be exploring this option in more depth in future days. There are some circumstances in which an aspiring early retiree really does need a take-out number that is 95 percent safe according to the historical data. There are also many in which he does not.

If a good bit of your spending in retirement is on non-essentials, a take-out number that the historical data indicates is 80 percent safe might well work. In the event that you are unlucky enough to experience a returns sequence that puts you in the unlucky 20 percent of possible scenarios, you could always cut back on spending to bring your plan back into accord with the realities you were experiencing.

The question of whether an aspiring early retiree should go for 80 percent safety or 95 percent safety is a strategic one. The answer varies from retiree to retiree, depending on his or her particular life goals and financial circumstances. I have found SWR analysis to be a powerful tool for examining the pros and cons of the various stratagies that can be pursued.

There has not been nearly enough exploration of these strategies on the various boards until now, in my view. Our problem has been that in earlier times most of us bought into the conventional methodology SWR tool. That methodology generates SWRs that are so high for stocks and that are so low for the alternate asset classes that it makes it appear to be a no-brainer that one should invest most of his assets in stocks.

The appeal of the Data-Based SWR Tool is that it provides a more realistic examination of the SWR question, one in accord with what the historical data says on the question. When you analyze the question in a realistic manner, you find that there are some circumstances in which stocks are the best strategic choice and other circumstances in which alternate asset classes are the best strategic choice. The focus of the analysis is on determining which strategy makes sense in a given circumstance.
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Re:  A little obituary realism :o
Old 07-13-2004, 04:41 AM   #8
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Re:  A little obituary realism :o

To paraphrase Bernstein's Four Pillars - when looking at 35 to 40 years in retirement - an effective approach is to 'plan' on living forever - ie practice due diligence in the now - and recognize our ability to control the future/course of history is limited - hence his 80% confidence number that pops up in some of his articcles - ? how he picked that one - is anybody's guess?? - ? echoes of the (1830?) prudent man rule - Ben Graham and and heh heh
DeGaul and the Norwegian widow.

Sooo - enjoy and recyle a dryer sheet now and then.
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A few things about life expectancies.
Old 07-13-2004, 08:36 AM   #9
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A few things about life expectancies.

The life expectancy reported in financial media is that age where half of the population is dead and half is still alive. IOW you have a 50% chance of exceeding the life expectancy... or maybe your neighbor has that chance. None of us would retire on a 50% probability of portfolio survival, so I sure wouldn't expect to die at my life expectancy. Although my spouse seems pretty sure that I won't outlive that number... I wonder how she knows?!?

For most Boomers, the actuarial tables claim that you don't reach a 10% chance of dying until you're in your mid-60s. This rises slowly each year until your mid-80s.

If you reach your mid-80s, then physically there's not much to keep you from exceeding 100. Of course you're not reacting as quickly or running away as fast, but you're less likely to internally self-destruct between 85-100.

The 120 max age appears to be based on a cell's telomeres, which may lose of the ability to control proper cell division by that age. (Some types of cells expire sooner, some later.) Statisticians have noted that there aren't that many people living past 120, either!

And finally, if you're reading the obituaries of people who were >25 years older than you, their life expectancy probably doesn't apply to you.
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Re: *A little obituary realism :o
Old 07-13-2004, 09:15 AM   #10
 
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Re: *A little obituary realism :o

Quote:
And finally, if you're reading the obituaries of people who were >25 years older than you, their life expectancy probably doesn't apply to you.
Actually many of them were younger than me! There was quite a range of age groups.

I thought I'd research this a little more. Found some statistics for the U.S. in 2001. There were 2,416,425 deaths in the U.S. that year. 27.5% of this number were over 85 years old at time of death.

72.5% were younger than 85.

They did not have figures for the older than 90 group, but it may very well be around the 10% that I found in my small sample survey.


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Re:  A little obituary realism :o
Old 07-13-2004, 09:40 AM   #11
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Re:  A little obituary realism :o

Quote:
27.5% of this number were over 85 years old at time of death.

62.5% were younger than 85.
So 10% were exactly 85? Sorry, just clarifying.
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Re: *A little obituary realism :o
Old 07-13-2004, 09:59 AM   #12
 
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Re: *A little obituary realism :o

Quote:

So 10% were exactly 85? *Sorry, just clarifying.
Whoops you're right !! - I corrected my math error. Thanks
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Re:  A little obituary realism :o
Old 07-13-2004, 11:05 AM   #13
 
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Re:  A little obituary realism :o

I read the obits pretty closely also. Most be an ER
thing.

Regarding medical advances and increased life spans,
first of all just increasing your life span is not necessarily a good thing, quality of life being of much more importance. I have floated the question before re.
how many "healthy" years you would accept in return for
certainty in your moment of death

I also think as medicine advances, new diseases will
keep popping up to thwart science (AIDS, Lyme Disease,
and West Nile Virus, are just a few relative newcomers).
There will be many more in the future.

John Galt
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Re:  A little obituary realism :o
Old 07-13-2004, 12:53 PM   #14
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Re:  A little obituary realism :o

John -

My dad lives in a retirement community and at 70 he's one of the "yung 'uns". I get a good view of life after 80 (and sometimes post 90). Not too pretty. But as my wife who works at the hospital will tell ya, no matter how sick or lousy most people feel, neither they nor their famillies want to let go at the end. Which is one of the reasons why health care is so expensive...most of it is spent in the last 6-12 months of an older persons life and since it was the last few months, the heroic methods didnt work for long.

Last week they did major surgery on an older fella who has alzheimers to boot. The surgery didnt resolve the problem (i forget what it was), and the guy is on life support with a machine doing his breathing. The family doesnt want him disconnected, and the surgeon is feeding them good news like "theres a chance he might make it!" because any time someone dies right after surgery, the surgeon gets "blamed". So its in his best interest to keep the bloke alive for at least a few months on machines before the family realizes the guy isnt coming back.

And if he does, he's got advanced alzheimers.

Now you know why your last healthcare quote looked like a car payment on a mercedes.
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Re:  A little obituary realism :o
Old 07-13-2004, 02:27 PM   #15
 
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Re:  A little obituary realism :o

Quote:
I get a good view of life after 80 (and sometimes post 90). Not too pretty.
You are right TH, This was the main point of my post. I have friends in the mid 70's and they are no longer able to do things that they loved.

Reagan the longest living president just died at age 93, however he 'existed' mostly since age 83 with Alzheimers disease. Dying at age 83 would be far better!
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Re: *A little obituary realism :o
Old 07-13-2004, 02:48 PM   #16
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Re: *A little obituary realism :o

Quote:
I have friends in the mid 70's and they are no longer able to do things that they loved.
Don't give up on everyone. My mother-in-law is cooking my dinner as we speak. She's 85, and she does this twice a week. She can't do everything she used to do, but neither can I, and I'm only 56 :P

She does a heck of a lot, including a lot on the Internet. So it really depends.

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Re:  A little obituary realism :o
Old 07-13-2004, 03:14 PM   #17
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Re:  A little obituary realism :o

A couple of points here. If you are a life-long smoker, you have basically screwed yourself and your loved ones. According to a British study on doctors running since the 1950's, if you quit by 30 your life expectancy is the same as a non-smoker. 81% of non-smokers lived to at least 70, while 58% of smokers made it. 59% of non-smokers reached 80, while 26% of smokers lived that long. The study has found that smokers live on average 10 years less than non-smokers. SS and CPP are rooting for you smokers! A second factor is body weight. You really should stay in the BMI range for your whole life. A fat smoker makes Pension Plan actuaries salivate! :
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Re: *A little obituary realism :o
Old 07-13-2004, 03:21 PM   #18
 
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Re: *A little obituary realism :o

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Don't give up on everyone. *My mother-in-law is cooking my dinner as we speak. *She's 85, and she does this twice a week. *She can't do everything she used to do, but neither can I, and I'm only 56 *:P

She does a heck of a lot, including a lot on the Internet. *So it really depends.

arrete

Everyone is alot ! - But as Warren Buffett said "don't save sex for your old age"
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Re: *A little obituary realism :o
Old 07-13-2004, 07:05 PM   #19
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Re: *A little obituary realism :o

Zipper,

Quote:
If you are a life-long smoker, you have basically screwed yourself and your loved ones. According to a British study on doctors running since the 1950's, if you quit by 30 your life expectancy is the same as a non-smoker. 81% of non-smokers lived to at least 70, while 58% of smokers made it. 59% of non-smokers reached 80, while 26% of smokers lived that long. The study has found that smokers live on average 10 years less than non-smokers. SS and CPP are rooting for you smokers!
I recall a news blurb some years back-- tobacco company lawyers were going to defend against the massive state lawsuits by showing that, rather than costing the states money (in medical care costs) that smoking had saved the states (and US govt) billions of $$ in uncollected social security and pensions to State govt workers. It was all factual--smoking DID save the govt money--but even the cynical tobacco company lawyers realized this line of reasoning was not going to win them any points.

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Re:  A little obituary realism :o
Old 07-13-2004, 07:34 PM   #20
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Re:  A little obituary realism :o

Quote:
"don't save sex for your old age"
EWWW! And I was having a good day until you put that picture in my head. Dammit. :P
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