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Old 05-25-2015, 05:29 PM   #21
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So much precision planning. My work experience with plans we meticulously built, tracked, and followed to their conclusion is that after a reasonable amount of care in constructing the plan, additional effort to make the plan more exact never paid off. Beyond a reasonable good estimate, almost any amount of further effort to refine the estimate yielded much more specific plans, but never any better agreement between the plan and reality. In fact, when we put the effort that would have been devoted to detailed planning into the project instead, our initial plans were much more likely to be accurate, possibly because we didn't squander so much time on pointless planning.

I've checked my plan with FIRECalc and some online calculators, added a dollop of reserves for my personal peace of mind, and as long as I'm comfortable with the results, I'm calling that my plan. I could probably sharpen some pencils and raise the spending, but I'd rather go with a good safe plan I'm SURE will not run out of money and leave a little bit of fancy lifestyle that I don't actually care for anyway on the table. Perhaps, I could have eaten more caviar in early retirement years, but since I am already happy with my lifestyle it's a small sacrifice for confidence in having enough money if I live a long long time. I might.

Perhaps I would feel differently if my plan was only yielding a bland diet and no fun, but once I've got it about even with my working lifestyle, that seems good enough. I didn't miss the extravagances when I was working (or perhaps I would have tried them) so I don't expect to miss them when I'm retired. If the kids and grandkids (or favorite charity, if that's your thing) get a bigger pile I'm not too upset. For me it's not a competition to use it all, nor to use as much as possible, it's enough just to have enough. It's a bigger plus not to have to worry about not having enough, than it is to spend extra, once my comfortable carefree lifestyle that I've become accustomed to is adequately paid for.
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Old 05-25-2015, 07:26 PM   #22
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For me it's not a competition to use it all, nor to use as much as possible, it's enough just to have enough. It's a bigger plus not to have to worry about not having enough, than it is to spend extra, once my comfortable carefree lifestyle that I've become accustomed to is adequately paid for.
Bingo.
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Old 05-26-2015, 06:20 AM   #23
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If you are asking how long you'll live giving your specific profile, no-one really knows. Statistics cannot help anyone with that.

In addition, the more specific you pre-select your peer group the higher the chances you'll be an outlier in that peer group.

Only thing you can do is take the engineering approach: get a rough guideline, design for a reasonable "bad case", build in a margin of safety, hope for the best (and possibly get insurance).

Not to mention an advancing state of the art in medicine. Actuaries are having a harder and harder time getting their tables to mach reality.
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Old 05-26-2015, 08:50 AM   #24
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1) The RP-2014 report talks about regressing on certain things that pension plans know about - "collar", size of benefit, salary, and years since initial payment. It turned out that collar was the most predictive. That's why I included it here.
That's good to know. I'm surprised that collar is more predictive than those other factors.

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But, I wanted more than life expectancy - I was looking for these 10% probabilities that we tend to use. (And, the sites that I've found didn't seem to document their work very well.)
Typically regression is setup to predict the mean value but there are variants that will also tell you the 10% threshold (or other percentile).
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Old 05-26-2015, 09:51 AM   #25
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Purely unscientific but the likelihood of everyone on this thread who are planning to reach 100 to actually reach 100 is laughable: either that or this is one amazing outlier group of people.

Still think the best predictor is good old mom and dad end points. And while there is nothing wrong with planning to 100 or 105 it will be (for most people, including couples) a purely mathematical exercise and result in substantial underspending.

I suppose the best way to approach this is along the lines of W2R talked about: every 5 or 10 years reevaluate end point and plan accordingly.
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Old 05-26-2015, 09:55 AM   #26
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When we retired in 1989, our planning was less intense, statistically speaking.
It was simply a matter of looking at our assets, expectations for continuing income... SS, investment interest, sale of home (downsizing) etc. ... and expected major expenses.
It wasn't a matter of planning for a specific lifespan, but... how far would the money go? Dozens of large green spreadsheets later, the 1989 plan said, "good 'til age 76.

At age 53, in reasonable health, the back-up plan was to go back to work, some time in the next 10 years... or... do part time work to supplement the needs. We reviewed the plan once a year, with three alternate budgets... Nominal, austere, and best case.

As it turned out, even with "best case", the annual check ins, showed that we continued to be ahead of plan, to the point that now, our age 76 initial plan has turned into age 92+ at the current "comfort" level.

No specific point to this, except to think that the age of retirement, and the expectations are a matter for individual decision. We never considered our decision to be a "do or die" proposition. Not a matter of pride, or sense of success or failure. Just another part of life that could easily change.
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Old 05-26-2015, 09:59 AM   #27
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Only thing you can do is take the engineering approach: get a rough guideline, design for a reasonable "bad case", build in a margin of safety, hope for the best (and possibly get insurance).
+1
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Old 05-26-2015, 10:05 AM   #28
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Purely unscientific but the likelihood of everyone on this thread who are planning to reach 100 to actually reach 100 is laughable: either that or this is one amazing outlier group of people.
actually it's quite scientific


of course if we find a cure for cancer or Alzheimer's that would help, a lot
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Old 05-26-2015, 10:18 AM   #29
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Purely unscientific but the likelihood of everyone on this thread who are planning to reach 100 to actually reach 100 is laughable: either that or this is one amazing outlier group of people. ....
Do you really think that is what people are thinking (or am I misunderstanding you)?

There is a HUGE difference between "planning to live to 100" and "planning in case I live to 100".

I probably said this before, do you wear a seat belt because you plan to have a crash on that trip, or do you wear a seat belt in case you have a crash on that trip?

I think that is what people are saying. Is that laughable? What do you plan for?

-ERD50
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Old 05-26-2015, 10:38 AM   #30
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What do you plan for?

-ERD50
Personally, I would use the joint life expectancy table - it shows that one of two 62 year olds husband and wife make it to 89 on average.


That's the conundrum of the account balance or DC approach - it's extremely difficult to plan without annuity income.
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Old 05-26-2015, 10:39 AM   #31
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Do you really think that is what people are thinking (or am I misunderstanding you)?

There is a HUGE difference between "planning to live to 100" and "planning in case I live to 100".

I probably said this before, do you wear a seat belt because you plan to have a crash on that trip, or do you wear a seat belt in case you have a crash on that trip?

I think that is what people are saying. Is that laughable? What do you plan for?

-ERD50
The point I was trying to make is that if you are 60 today (let's say) and your parents died in mid-80's (let say) then to plan your current spending on a glide path to 100 or 105 is incredibly optimistic to the point of being nearly ridiculous.

It is most likely a "black swan" event for most. Sure you can plan for it, but why?
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Old 05-26-2015, 10:48 AM   #32
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Do you really think that is what people are thinking (or am I misunderstanding you)?

There is a HUGE difference between "planning to live to 100" and "planning in case I live to 100".

I probably said this before, do you wear a seat belt because you plan to have a crash on that trip, or do you wear a seat belt in case you have a crash on that trip?

I think that is what people are saying. Is that laughable? What do you plan for?

-ERD50
+1000. Or to put it another way, if you plan for living only to 85 or some similar number, have you given any thought as to what will happen to you if you are one of the outliers that live longer? Especially if you are one of those who would prefer to leave with nothing in the bank?
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Old 05-26-2015, 10:48 AM   #33
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I don't think it's a black swan event for one of two people in their 60s to make it to 100.
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Old 05-26-2015, 10:49 AM   #34
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+1000. Or to put it another way, if you plan for living only to 85 or some similar number, have you given any thought as to what will happen to you if you are one of the outliers that live longer? Especially if you are one of those who would prefer to leave with nothing in the bank?
I'm not sure that most FAs do - they seem to be hard wired on these 25 year (or some other fixed number) payout plans. That can lead to life down by the river when you can least afford it.


Fact is you don't die at your life expectancy - a little piece of you dies each day until there is nothing left - take a look at the Lx in the mortality tables - that's what they do
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Old 05-26-2015, 10:58 AM   #35
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The point I was trying to make is that if you are 60 today (let's say) and your parents died in mid-80's (let say) then to plan your current spending on a glide path to 100 or 105 is incredibly optimistic to the point of being nearly ridiculous.

It is most likely a "black swan" event for most. Sure you can plan for it, but why?
My mother's parents lived only to 58 and 63. She is 78, and her doctor says that barring accident or unforeseen illness, there's no reason she couldn't live to 90 or beyond.

Why plan for it? Because it would be truly miserable to be in my 90s or 100s without enough money to live in a safe place, eat properly, keep heat and A/C to a comfortable level, and pay someone to do things I can no longer do.
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Old 05-26-2015, 10:58 AM   #36
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I don't think it's a black swan event for one of two people in their 60s to make it to 100.
I repeat if your parents died in their mid-80's... if they both lived to mid-90's then different conclusion.

To plan longevity to 100 without regard to your own "facts" will most likely lead to a very, very conservative approach, which seems to be the default of most of the posters. Personally I am looking to 95, which is an eternity away at age 58, and will adjust/make course corrections as time goes by.
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Old 05-26-2015, 11:04 AM   #37
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I repeat if your parents died in their mid-80's... if they both lived to mid-90's then different conclusion.

To plan longevity to 100 without regard to your own "facts" will most likely lead to a very, very conservative approach, which seems to be the default of most of the posters. Personally I am looking to 95, which is an eternity away at age 58, and will adjust/make course corrections as time goes by.
Not necessarily. It could just be a different approach, such as using annuities. Taking SS later is similar to an annuity. It could also mean keeping a higher % of equities in anticipation of having a longer horizon.

I am being conservative with planning in case I live into my 100s. I don't think I'm being very, very conservative at all.
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Old 05-26-2015, 11:05 AM   #38
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I repeat if your parents died in their mid-80's... if they both lived to mid-90's then different conclusion.
I'm not sure the actual age at death matters so much as the cause. My grandmother died at 22 and my grandfather died at 72. My mom is still alive at 86.

Similarly my FIL recently passed away at 90. His parents died in their 50s.

We've cured the acute causes of death and now just have the chronic causes.

Do you deal with mortality data professionally?
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Old 05-26-2015, 11:16 AM   #39
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LARS, I don't think that planning to 95, with a mindset to adjust as needed, is much different from what many of us are doing. For example, I have a big house in a nice area, which I enjoy very much. My house isn't part of my financial plan, but if my finances run down (most likely because of longevity), I can sell it and still live comfortably in a less expensive place. That's part of my "plan" in case I live into my 100s. If I only make it to 70 or 80, I'll have enjoyed a good life here without shorting myself due to overly conservative planning.
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Old 05-26-2015, 11:21 AM   #40
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The point I was trying to make is that if you are 60 today (let's say) and your parents died in mid-80's (let say) then to plan your current spending on a glide path to 100 or 105 is incredibly optimistic to the point of being nearly ridiculous.
When you say "incredibly optimistic" do you have an actual numerical estimate for this conditional probability?

Given the tables in the OP (10% for white collar male workers reach age 99), it doesn't seem that unreasonable. It's not going to be the typical case, but I don't think it's rare enough to exclude from planning (especially when considering joint survivability).
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