|
|
03-12-2012, 08:10 AM
|
#41
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,148
|
Quote:
Originally Posted by Aiming_4_55
+1 While I plan for age 95 with the various retirement calculators, no one on my side of the family lived beyond 75 on the male side or 82 on the female side, I don't want to be penniless in my 80's or 90's, so I save and target a 3 - 3.5 SWR when I pull the plug.
|
I plan for 97 (95 for DW), though I truly hope I don't live that long (yes, I know not everyone feels this way). But my parents are both 90 and completely independent, so I think I have to plan on a long life.
FWIW, when I was getting the online quotes, the site would not provide a quote beyond 90. Frankly I was surprised they didn't stop quoting at an earlier age, but maybe they want to quote case by case at advanced ages. Like Nords mentioned, you would think they'd love to sell annuities at an age.
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
|
|
|
|
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!
|
03-12-2012, 08:19 AM
|
#42
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Feb 2006
Location: Washington, DC
Posts: 11,313
|
Quote:
Originally Posted by Midpack
FWIW, when I was getting the online quotes, the site would not provide a quote beyond 90.
|
Maybe they are afraid someone that old looking for a life annuity has discovered the fountain of youth.
__________________
Idleness is fatal only to the mediocre -- Albert Camus
|
|
|
03-12-2012, 08:30 AM
|
#43
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2008
Location: NC
Posts: 21,148
|
Quote:
Originally Posted by donheff
Maybe they are afraid someone that old looking for a life annuity has discovered the fountain of youth.
|
Indeed!
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57
Target AA: 50% equity funds / 45% bonds / 5% cash
Target WR: Approx 1.5% Approx 20% SI (secure income, SS only)
|
|
|
03-12-2012, 09:02 AM
|
#44
|
Full time employment: Posting here.
Join Date: Jun 2006
Posts: 927
|
If I was selling a SPIA to a 90 year old I would at least take the time to look at them in person and try to make a dumb guess about how long they might live. Lots of money for the insurance company to make or lose depending on how long the SPIA purchaser lived. It surprises me that many (maybe even most) companies selling life insurance require a physical before they will quote a price. The same companies seem to not require a physical when selling a SPIA. Some things just seem odd to me?
__________________
CW4, USA-(ret)
RN, BSN-(ret)
|
|
|
03-12-2012, 09:10 AM
|
#45
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Posts: 5,381
|
Quote:
Originally Posted by jclarksnakes
It surprises me that many (maybe even most) companies selling life insurance require a physical before they will quote a price. The same companies seem to not require a physical when selling a SPIA. Some things just seem odd to me?
|
With life insurance the provider is at an informational disadvantage . . . they don't know if you've just been diagnosed with a terminal illness that will cause them to lose money on the policy. With an SPIA, they'd be delighted if you just got bad news from your doctor. If on the other hand, you just got a clean bill of health, they have far better information on your likely longevity than you do, and price the policy accordingly.
__________________
Retired early, traveling perpetually.
|
|
|
03-12-2012, 09:31 AM
|
#46
|
Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
|
Great thread. Otar talks about giving up and buying a SPIA. I forget what the trigger is and not sure it can be applied prospectively. I wonder if just taking dividends would increase the probability of success?
|
|
|
03-12-2012, 10:27 AM
|
#47
|
Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
|
Quote:
Originally Posted by Danmar
Great thread. Otar talks about giving up and buying a SPIA. I forget what the trigger is and not sure it can be applied prospectively. I wonder if just taking dividends would increase the probability of success?
|
Seems like just taking dividends would be a "forced" reduction in spending during bad times, in addition to a likely lower than 4% withdrawal rate to start. It will clearly work, same as taking 3% of the portfolio will always work, but you have to have good flexibility in your spending.
|
|
|
03-12-2012, 10:37 AM
|
#48
|
Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
|
Quote:
Originally Posted by Animorph
Seems like just taking dividends would be a "forced" reduction in spending during bad times, in addition to a likely lower than 4% withdrawal rate to start. It will clearly work, same as taking 3% of the portfolio will always work, but you have to have good flexibility in your spending.
|
Yes I agree although my dividends have been very stable with only one case (immaterial) of reduction during the crises. Having a large cash balance equal to more than one year's worth of dividends can also reduce the need to reduce spending.
|
|
|
03-12-2012, 11:38 AM
|
#49
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
|
The discipline of (except for 2008) of only spending, interest and dividends has kept this Y2K retiree from avoiding the fate of Radr's (I previously misidentifed him as Dory's) of soon-be-broke retiree.
It is certainly true that a 3% withdrawal (or more like 2.5-3% in my case) would accomplish the same thing. IMO psychologically and practically practically it is easier to implement this with a dividend interest strategy that a fixed percentage withdrawal.
Throughout most of the 2000s an AA of say 60/40 with bonds/cd ladder yielding 5-6% provide 2%+ of the income, an equity portfolio with a combination of index funds with a 2% dividend yield, some individual dividend payers with 3-6% (mostly master limited partnership pipeline) provided the other 2%+.
My portfolio is finally producing record income after taking some big hits in 2008 and bit in 2009. However it is worth noting that more of the income loss was from the drop in interest rates as much as the dividend slashes by banks and a few others. Still the large number of recent dividend increases are not enough to make my real income keep up with inflation.
|
|
|
03-12-2012, 12:52 PM
|
#50
|
Thinks s/he gets paid by the post
Join Date: Jan 2007
Location: Thousand Oaks
Posts: 1,111
|
Quote:
Originally Posted by donheff
Maybe they are afraid someone that old looking for a life annuity has discovered the fountain of youth.
|
I was looking at the Berkshire annuity calculator for an elderly friend of mine and it did not allow ages greater than 85 if I remember correctly.
|
|
|
03-12-2012, 01:02 PM
|
#51
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Quote:
Originally Posted by mh
I was looking at the Berkshire annuity calculator for an elderly friend of mine and it did not allow ages greater than 85 if I remember correctly.
|
The actuarial data gets pretty thin at that point.
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
03-12-2012, 05:24 PM
|
#52
|
Thinks s/he gets paid by the post
Join Date: Jan 2007
Location: Thousand Oaks
Posts: 1,111
|
Quote:
Originally Posted by haha
The actuarial data gets pretty thin at that point.
|
Yeah it wasn't suprising. i suppose at that stage in life you might as well
put it in something very conservative and just go with that..
|
|
|
03-12-2012, 05:31 PM
|
#53
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Sep 2005
Location: Northern IL
Posts: 26,806
|
Quote:
Originally Posted by mh
Yeah it wasn't suprising. i suppose at that stage in life you might as well
put it in something very conservative and just go with that..
|
I think that what haha was saying, is that the ins cos would not have very many customers at that age. They need bigger numbers to average out to their actuarial data.
I didn't look it up, but on average we'd be talking just a few years of payments. But just a few of those living past 100 (becoming more common) would throw off their averages. I think it is business they can afford to pass up.
So, I guess we should be watching as we age, and make the annuity decision before the option is no longer available.
-ERD50
|
|
|
03-12-2012, 06:43 PM
|
#54
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2006
Location: west coast, hi there!
Posts: 8,797
|
Quote:
Originally Posted by Midpack
May be explained by your earlier observation and conclusion. Look for yourself, FIRECALC does not kick out actual income withdrawals or corresponding inflation so I used their default 3% inflation constant (knowing it's not right year by year) for lack of anything else to illustrate.
|
Hi Midpack, I know you are aware of this and maybe I'm reading this too fast, but FIRECalc's default for inflation is the CPI (not 3% constant). By using CPI one will get the bad post WW2 inflation and especially important, the 1970's inflation that tends to make the retirement start year of 1968 the worst scenario (in modern market times).
Would it perhaps be better to use CPI and independently calculate the inflation adjusted spending level based on known CPI data from the St. Louis Fed? Let me know if you want a link.
|
|
|
03-12-2012, 07:40 PM
|
#55
|
Administrator
Join Date: Apr 2006
Posts: 22,923
|
Quote:
Originally Posted by haha
Even this is much more open to question than commonly assumed. It is a lot easier to cut spending if you are living on $80,000/yr than on $25,000. The other aspect is that there is a lot of non-discretionary spending.
|
Our current plan is for cola'd pension income to cover the basic cost of keeping a roof over our heads, food on the table, and gas in the car (with SS providing a 50% kicker after a few years). If things go as planned, the portfolio should (at a 4% WR) throw off at least an amount equal to the pension income. This portfolio income will go to the discretionary items, like vacations, fancy restaurants etc., so we can cut back as necessary. Of course, as Robbie Burns said, "the best laid schemes o' mice an' men gang aft agley".
__________________
Living an analog life in the Digital Age.
|
|
|
03-12-2012, 08:09 PM
|
#56
|
Thinks s/he gets paid by the post
Join Date: Dec 2009
Location: Alberta/Ontario/ Arizona
Posts: 3,393
|
Quote:
Originally Posted by clifp
IMO psychologically and practically practically it is easier to implement this with a dividend interest strategy that a fixed percentage withdrawal.
|
I totally agree with this. I figure I would always sell the wrong stock otherwise.
|
|
|
03-12-2012, 08:36 PM
|
#57
|
Moderator Emeritus
Join Date: Dec 2002
Location: Oahu
Posts: 26,855
|
Quote:
Originally Posted by clifp
IMO psychologically and practically it is easier to implement this with a dividend interest strategy that a fixed percentage withdrawal.
|
Everyone agrees with that, but I wonder how many would volunteer to work longer to achieve a dividend portfolio ER instead of a portfolio-consumption ER.
__________________
*
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.
|
|
|
03-12-2012, 08:45 PM
|
#58
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,000
|
Quote:
Originally Posted by Nords
Everyone agrees with that, but I wonder how many would volunteer to work longer to achieve a dividend portfolio ER instead of a portfolio-consumption ER.
|
I would not - and did not. My kids may not be happy about it, but I can die live with it.
__________________
Numbers is hard
|
|
|
03-12-2012, 09:16 PM
|
#59
|
Thinks s/he gets paid by the post
Join Date: Jul 2005
Posts: 4,366
|
Quote:
Originally Posted by ERD50
I think that what haha was saying, is that the ins cos would not have very many customers at that age. They need bigger numbers to average out to their actuarial data.
|
Not only a data problem, but a risk problem as well. Not enough customers that age to safely average out the results even if the actuarial data was perfect.
|
|
|
03-12-2012, 09:25 PM
|
#60
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Quote:
Originally Posted by Animorph
Not only a data problem, but a risk problem as well. Not enough customers that age to safely average out the results even if the actuarial data was perfect.
|
That is true. The reason there isn't much data, and a parallel problem, is that 90 year old annuity applicants are thin on the ground. So not very reliable data, and even more important, not enough customers. The law of large numbers only works with large numbers.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|