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Good read on deferring SS versus QLAC
Old 02-01-2016, 12:31 PM   #1
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Good read on deferring SS versus QLAC

How much can I afford to spend in retirement?
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Old 02-01-2016, 01:33 PM   #2
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What is the spending assumed in the model?... doesn't say that I can find.... or is he just looking at income but if so how is he including investment results on the retirement assets.
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Old 02-01-2016, 04:15 PM   #3
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His conclusion is based on when the subject is going to die. Rather not helpful for most.
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Old 02-01-2016, 04:22 PM   #4
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What is the spending assumed in the model?... doesn't say that I can find.... or is he just looking at income but if so how is he including investment results on the retirement assets.
Not sure he models spending - he's a retired actuary
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Old 02-01-2016, 04:23 PM   #5
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His conclusion is based on when the subject is going to die. Rather not helpful for most.
we all have finite lifetimes
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Old 02-01-2016, 07:21 PM   #6
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Not sure he models spending - he's a retired actuary
I'm not sure his approach makes a lot of sense but it is less than totally clear what he is calculating and how it is relevant to assessing the optimal alternative. Like many actuaries, his communication skills could be better. (From a former life finance guy who spent a lot of time with life actuaries - most very good and some much less so.)
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Old 02-02-2016, 09:14 AM   #7
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Quote:
Originally Posted by pb4uski View Post
I'm not sure his approach makes a lot of sense but it is less than totally clear what he is calculating and how it is relevant to assessing the optimal alternative. Like many actuaries, his communication skills could be better. (From a former life finance guy who spent a lot of time with life actuaries - most very good and some much less so.)
words, pictures and numbers

instead of using an annuity factor he's estimating a present value at 65 depending on age at death. as you can see on the chart, the longer you live the better the qlac option
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Old 02-02-2016, 09:18 AM   #8
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.....instead of using an annuity factor he's estimating a present value at 65 depending on age at death. as you can see on the chart, the longer you live the better the qlac option
Yeah... perceptive glimpse of the obvious.
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Old 02-02-2016, 09:20 AM   #9
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Yeah... perceptive glimpse of the obvious.
I would have used an annuity factor at 65 to compare the options rather than an assumed age at death. Not my blog though.
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Old 02-02-2016, 09:26 AM   #10
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I agree... an expected present value approach combining mortality and the time value of money to assess which approach is optimal.
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Old 02-02-2016, 09:30 AM   #11
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well when I finally pull the chute I'll probably do a lot of blogging on this and other subjects
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Old 02-02-2016, 06:39 PM   #12
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I can't match his numbers.

In the first column, it appears that the pv of the first 5 SS benefits is $96,227.
And, the pv of the next 5 SS benefits is ( $183,551 - $96,227 ) = $87,324.

In the second column, the pv of the first 5 SS benefits is, of course, $0.
Each of the second 5 SS benefits should be 1.4143 times the corresponding SS benefit in the first column. (I'm using the factor he provides for the SS increase from deferring to age 70.)
Therefore, in the second column, I expect the pv of the second 5 SS benefits to be 1.4143 x $87,324 = $123,501.

But, his table shows it as $113,330.
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Old 02-03-2016, 10:20 AM   #13
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In all my planning I simply assume I'll live an average lifespan....83.....as I have no way to come up with a better number. I have longevity insurance as I have a small COLAed pension so the higher income past 83 that deferring SS would give me isn't a big factor for me. In my projections when I take SS has an insignificant difference to my net worth at age 83. So when I take it will just depend on my desire for the extra income.
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