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Old 06-12-2011, 04:25 PM   #21
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Upon further reflection, one way to do that would be to put every penny of your assets in an annuity.
Good point Nords. Not such a good time to purchase annuities though. If I were inclined to take this path, I'd wait a while before investing my entire nest egg in an annuity.
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Old 06-12-2011, 10:17 PM   #22
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Good point Nords.
Not such a good point. An annuity is a conceptual solution to the problem of putting all your money to work to achieve your end of supporting yourself to end of life. The problem, IMO, is that it isn't a quantitative solution. You could find that the annuity costs you more, for a given level of support, than that cash flow spreadsheet says you'd get, even if it were extended from 100 out to 200 years. It wouldn't be surprising to me if it turned out that way, because annuities have to be purchased from insurance companies which will be doing their best to maximize their profits at your expense. Their profits will be part of the price you pay for the annuity.

Still, the price of an annuity with payments equal to the withdrawals is something to look at, as a sanity check on what your spreadsheet is telling you. If an annuity would give you a better return, then you've got a problem.

(Disclaimer: I have a profound distrust of insurance companies.)
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Old 06-12-2011, 10:39 PM   #23
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If you knew exactly when you were going to die, you would have some chance of solving this puzzle, but you don't, unless you are on death row. Anyhow, you could still be off by a wide margin since it is impossible to predict financial and political events with such precision. If, on the other hand, your objective is to have $0 in the bank on the day you die, there are only two surefire options to achieve it.
1. Spend all your savings on an annuity or
2. Spend all your money, and when it runs out, kill yourself.
Your money, your life, your choice.
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Old 06-13-2011, 08:28 AM   #24
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Originally Posted by GregLee
Not such a good point. An annuity is a conceptual solution to the problem of putting all your money to work to achieve your end of supporting yourself to end of life. The problem, IMO, is that it isn't a quantitative solution. You could find that the annuity costs you more, for a given level of support, than that cash flow spreadsheet says you'd get, even if it were extended from 100 out to 200 years. It wouldn't be surprising to me if it turned out that way, because annuities have to be purchased from insurance companies which will be doing their best to maximize their profits at your expense. Their profits will be part of the price you pay for the annuity.
Irrelevant.

The problem in question is to fully use all of one's assets and have none left at death. Maybe a spreadsheet shows you can get more than with an annuity, but even if that's the case, you may have some left at death (especially if, as you say, you extended it from 100 to 200 years).

Now maybe the OP would, upon reflection, rather have some left at death and get more every month (as opposed to getting less every month, and having none at death), but how much the annuity pays out is irrelevant to it being a solution of having nothing left at death.
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Old 06-13-2011, 05:10 PM   #25
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Spreadsheet

Thanks for the tip on
Bud Hebeler's "Analyze Now!" system
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Thanks for all your input
Old 06-14-2011, 11:15 AM   #26
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Thanks for all your input

Thanks for all your input,

I didnít realize how much fun was going to be
asking for someone to double check my spreadsheet

I should have explained that previously I did calculate
How much do I need?
How much do I want?
How much do I have?
How much should I keep in reserve?
How long will it last?
How much should I spend?

But I DID NOT calculate

How much could I spend if I wanted to spend it all?
So I set up a spreadsheet that can do that
And all the other senarios
Iím getting input from some of you (Thanks) and after I update it, Iíll let you know.

In the meantime Ö. Whatís wrong with
Finding out how much you could spend each year if you want to die broke?

Ric
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Old 06-14-2011, 11:21 AM   #27
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In the meantime …. What’s wrong with
Finding out how much you could spend each year if you want to die broke?

Ric
The main "data points" are missing.

- Tell me what assets you have, to spend in retirement.
- Tell me the date of your actual "departure" ... (no "guesstimates" - only actual dates, if you please).

I'll give you my thoughts on how much you can/should spend.

It's as easy as that ...
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Old 06-14-2011, 11:37 AM   #28
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In the meantime …. What’s wrong with
Finding out how much you could spend each year if you want to die broke?

Ric
Nothing, provided you understand there is no way to do so other than spend every penny you have to buy a SPIA or spend your entire nest egg now. Either way you'll be broke when you're dead.

Barring suicide on a planned date, your spreadsheet calculations are a misguided waste of your time.
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