If you outlive your SWR time horizon?

[Nords]

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Originally Posted by bamsphd The first issue I see with that approach is that while immediate annuities certainly tend to decline in cost as the applicant increases in age, they are also strongly correlated with interest rates. Wouldn't such continuous comparisons cause one to buy the annuity when the price of the annuity was unusually high?

The only time you'd be whipping out your wallet to actually purchase the annuity would be when your portfolio was failing. It seems that you'd have two choices under those circumstances:
1. Bite your lip and buy the annuity, or
2. Stop spending from your portfolio, put it into CDs or Treasuries, get a job (or cut your spending back to Social Security or live off your kids), ... and wait for annuity prices to improve.

Otar would suggest not even retiring until the portfolio was bulked up enough (or buttressed with annuity protection) to avoid that failure in the first place.

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Originally Posted by kumquat In our case, we have a WR of 2.5 - 3%. We aren't trying to be safe, it's just that we don't need want to spend more. There is a good chance that our assets will allow our kids to ER. Is that a bad thing?

We don't seem to be spending it fast enough either, but I still haven't found a good solution to our concerns of affluenza & entitlement. It's interesting that the IRS' annual gifting limits aren't too far off from the max amount of money that can be socked away in tax-deferred accounts each year.

Of course we could skip a generation, make a (hypothetical) grandkid a Roth IRA beneficiary, and essentially gift them their own annuity. But again affluenza, entitlement...

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Originally Posted by rescueme That means that (my) portfolio withdrawls are in excess of that magic 4% (even with the SPIA income), but by the age of 70 when all of our "income sources" come on-line (including two small single-life non-COLA'ed pensions for DW), our WD rate drops to just over 2% (even with "excess withdraws" in the previous 11 years), and stays there for our expected passing.

Our ER epiphany was realizing that our portfolio didn't have to last the rest of our lives. It only has to last until spouse's military pension starts in 2022. That's when we started loosening the purse strings...

[MasterBlaster]

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Originally Posted by donheff +1 If your evaluation shows a benefit to replacing a portion of your portfolio with an SPIA isn't sooner safer than later? If you wait and it turns out we are at the beginning of a bad scenario your portfolio will erode with each passing year making it more difficult to divert money into an SPIA.

if you can cover your basic income needs with SPIAs/pensions/SS then the remaining nestegg can be treated somewhat more aggressively.

You could either have a more aggressive asset allocation with (expected) better returns on the nestegg. Or use a somewhat higher (ie. non-safe withdrawal rate in worst case scenarios) to decumulate the nestegg better.

An approach like that just could give you more spendable income in the living years.

[rescueme]

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Originally Posted by MasterBlaster if you can cover your basic income needs with SPIAs/pensions/SS then the remaining nestegg can be treated somewhat more aggressively.

True.

Ours is 50/50 (50% equity, 50% bond/cash) at this time.

While some would argue that is an agressive target in our situation (mid-60's; I'm retired - DW is expected to do so in the next year), it certainly is down from our 90/10 during our accumulation years when we both were working on "our number".

We could probably get by with a less agressive AA at this time in life, (like the 10% equity discussion going on), but than again, we're investing for the future for our adult (disabled) "child".

Our forecast along with our risk profile allows us to be comfortable with our 50/50 AA, at this point in time. Not for everybody, but it is for us.

[lonnie]

Delaying social security for as long as possible is one way to obtain some "longevity insurance". Still, living longer than expected seems like a good problem to have in any case!

[obgyn65]

It cannot be a bad thing to be in this situation.

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Originally Posted by kumquat Is that a bad thing?