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Retirement income advice
Old 07-08-2011, 12:22 AM   #1
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Retirement income advice

Pension Plans for the Rest of Us - WSJ.com

Goes beyond calculators it says. Will have to try out those web tools and see but the hypothetical couple has $7500 a month in expenses?
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Old 07-08-2011, 12:35 AM   #2
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Interesting article, thanks.

Quote:
Originally Posted by explanade View Post
Pension Plans for the Rest of Us - WSJ.com

Goes beyond calculators it says. Will have to try out those web tools and see but the hypothetical couple has $7500 a month in expenses?
And only $1.7 million in the nest egg, and yet can spend $112K/year according to one service. I guess that reflects their pension of $30K. I didn't see a specific SS amount that would add to this.

From one of the analysts quoted by the article,
Quote:
"it's a lot harder to figure out how to prudently spend a lump sum than it is to save it,"
Personally, I thought that although neither was easy, the LBYM to save it was a whole lot harder than figuring out how to invest and withdraw prudently from my investments. But then, what do I know? I would be spending a lot less.
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Old 07-08-2011, 06:33 AM   #3
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Quote:
Originally Posted by explanade View Post
...but the hypothetical couple has $7500 a month in expenses?
Maybe we're not typical, but that figure is in the ballpark for us (I'm retired a bit over 4 years, DW will soon join me).

Remember that for folks like us, it also includes taxes on TIRA withdrawals and our SPIA. For us, with little in post-tax accounts, it doesn’t take much to drive up "total expenses" based upon factors such as a couple vs. single measurement of expenses (two can live as cheaply as three ), taxable withdrawls, and lifestyle choices. Include post-retirement but pre-Medicare, the health care costs alone can drive up monthly expenses easily.

We lived most of our accumulation/married life as a poor/fiscally conservative couple. At this time of life, we're letting the purse strings go (we earned it ). Remember, money is for the living - not the dead, and anyway - we're doing our part to stimulate the economy.

The quoted retirement expenses don't seem unreasonable, IMHO.
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Old 07-08-2011, 07:37 AM   #4
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The article's lead sentence is the most important:
"The financial-services industry wants to be your personal pension manager. You should kick the tires carefully before signing up."
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Old 07-08-2011, 07:52 AM   #5
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This is a fairly useless article for anyone that's seriously considered their own retirement finances. We all know there are multiple calculators and multiple people wanting us to pay them for advice that is no better (and frequently worse) than what we can determine on our own. There wasn't anything even remotely original.
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Old 07-08-2011, 08:41 AM   #6
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Well the Fidelity and Schwab services are "free" though you would expect their advice may steer people towards their investment products.

I guess the other two will actually cut you checks and the management fees for one is like $249 a year?

Probability is that more people will try out one of these services than use the resources at ER. Of course, people aiming for early retirement is a minority to begin with.
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Old 07-08-2011, 09:30 AM   #7
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What I think is always interesting....are the words....'it says a couple can spend...." or "it calculates X for spending"...etc.
As if we don't have a brain and can't figure out what we can spend and take our withdrawals accordingly.
After all.... who knows better the amount needed for spending each year that the one(s) doing the spending? And who can better make the adjustments ...as SS kicks in or other things kick in?
Of course they are coming up with these "services". They know people are nervous. Another way to get your money...with no real guarantees. (excluding annuities and then you have to pray the company does not go under)
I recognize most are not comfortable managing their money...and/or perhaps I am too skeptical.
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Old 07-08-2011, 09:37 AM   #8
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What did I miss? With a pension of $2500/month and $2000/month social security each, they already have $6500/month income. If their goal is $7500/month then it hardly matters what the adviser tells them to do with their $1.7 million portfolio. They need to draw only $1000/month, or less than 1%, which is SWR for almost any portfolio.
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Old 07-08-2011, 09:49 AM   #9
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After one full week of retirement , I expect this to be true.
Quote:
For many retirees, given uncertainties about life expectancy, market returns and inflation, "it's a lot harder to figure out how to prudently spend a lump sum than it is to save it," says Katharine Wolf, senior analyst at Cerulli Associates, a Boston research firm.
But hopefully I'll get more comfortable in time (sequence of returns notwithstanding). And I don't ever expect to 'give' the responsibility for our retirement income to 'the financial services' industry - they will always be the secondary partner in our relationship.

I thought the article was decent and aimed at non DIYers, there are many. Wonder if they asked Vanguard?
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