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Old 01-11-2016, 07:12 PM   #121
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I think that you are right BCLOVER. I also think that the OP's question is rather simple. Do we try too hard to guarantee 100% when the odds of living to say 100 or 95 is very low. I know that there are many who will live into their 90's, but as I see my mother age, my grandparents all dead (and miserable for the one that did live into her 90's) I don't know that I want to live that long anyway. But I'm still a big chicken and doing OMY anyway.

Yes that is my thought, many interesting responses!


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Old 01-11-2016, 07:35 PM   #122
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Yes that is my thought, many interesting responses!


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Yes indeed I especially liked the annuity hurdle post. I did notice one response seemed angry, almost as if you touched a nerve of someone still working (and probably doesn't want to be). OMY syndrome is real.

Your point is valid. As I take it all in I am reminded of an old cliche, "man plans and God laughs". We all do the best we can and most of us will err with a tidy sum of money to pass along to our heirs or charities.
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Old 01-11-2016, 08:37 PM   #123
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Plan like you'll live forever.
Live like every day is your last.
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Old 01-11-2016, 08:39 PM   #124
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My financial planning is different than my life planning.

I'm realistic - and have made arrangements for all sorts of scenarios: I die first leaving DH to go on, He dies first, and I have to get by without him, we die together before the kids are of age. I looked at longevity (on his side of things) and earlier death due to cancer (my side of things)... not to mention cognitive decline or physical decline requiring support (memory unit, home health aide, nursing home.)

I tried to come up with a plan for all of this.

But I also tried to come up with a plan that maximizes happiness in the NOW. I retired at age 52... to maximize that happiness in the NOW. We're frontloading our budget a bit to travel NOW, vs when we're frail. I'm not spending out of my means - but I am spending on things that make me happy NOW.

Sure my kids might inherit some when I kick it - but if my financial plan works out (vs reality life expectations) I won't run out of money till after I'm 90 and DH is 100. And our back up is our home equity... which is significant. If I'm 90 I don't need/want a two story house - so selling won't be a problem.

Moneygrubber - you seem to be suggesting that accounting for longevity in the financial plan is a bad thing. I think there are plenty of people who find the balance between planning for longevity but still grabbing happiness now.
+1 My feelings exactly!
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Old 01-11-2016, 08:52 PM   #125
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My financial planning is different than my life planning.

I'm realistic - and have made arrangements for all sorts of scenarios: I die first leaving DH to go on, He dies first, and I have to get by without him, we die together before the kids are of age. I looked at longevity (on his side of things) and earlier death due to cancer (my side of things)... not to mention cognitive decline or physical decline requiring support (memory unit, home health aide, nursing home.)

I tried to come up with a plan for all of this.

But I also tried to come up with a plan that maximizes happiness in the NOW. I retired at age 52... to maximize that happiness in the NOW. We're frontloading our budget a bit to travel NOW, vs when we're frail. I'm not spending out of my means - but I am spending on things that make me happy NOW.

Sure my kids might inherit some when I kick it - but if my financial plan works out (vs reality life expectations) I won't run out of money till after I'm 90 and DH is 100. And our back up is our home equity... which is significant. If I'm 90 I don't need/want a two story house - so selling won't be a problem.

Moneygrubber - you seem to be suggesting that accounting for longevity in the financial plan is a bad thing. I think there are plenty of people who find the balance between planning for longevity but still grabbing happiness now.
I didn't get that at all (the last part).

Let me just make an observation from a newbie standpoint. I found this site two years ago when after my husband died I wanted to get a better understanding of a number of investment things and I knew I would be leaving the workforce before traditional retirement age. hated the bogleheads site for a few reasons and someone told me about firecalc. anyhoo one thing I noticed is that 90% of the information about retirement is doomsday and fear.
One of the first questions I asked here was anyone actually "happy" retired lol

Rarely did I come across article (before) here where people said they saved money to actually enjoy life. It is/was always "save" because when you turn 90 you'll be destitute and eating cat food or healthcare is going to be so expensive you won't be able to afford it

Maybe we could get Americans to save more for their retirement if we made it more appealing.
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Old 01-11-2016, 09:01 PM   #126
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Maybe we could get Americans to save more for their retirement if we made it more appealing.
Isn't the very idea of retiring (i.e. not having to work) pretty appealing in itself? The idea of avoiding cat food is also appealing (to me). If a person lacks the imagination to figure out why money will be useful if they get all their working hours to use as they please, I don't know if anything I could tell them would help. They may be best off staying in the traces and paying SS to keep that system afloat for others.
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Old 01-11-2016, 09:15 PM   #127
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anyhoo one thing I noticed is that 90% of the information about retirement is doomsday and fear.

One of the first questions I asked here was anyone actually "happy" retired lol

Rarely did I come across article (before) here where people said they saved money to actually enjoy life.

As someone who has been watching this site for about 3.5 years and posting for about 2, I don't see this as an accurate representation AT ALL. We discuss travel...what people do everyday in retirement (actually fun to read)...movies, books, food...very little doomsday and fear there. I've been following your posts here as well as another forum where I've identified you. One needn't spend hundreds of dollars on dinner and Wicked to enjoy themselves, though they are free to do so if they choose. My impression of the people who stick around here is one of general satisfaction and content with their lives, absent much of the financial stress many people live with on a daily basis.


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Old 01-11-2016, 09:36 PM   #128
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If buying a SPIA to establish a floor was anywhere near a neutral expense, more people would do so. There's a high probability you will pay a substantial premium for the payout your SPIA will provide, especially at present interest rate/yields. That premium, and forever limiting your options after buying a SPIA (a big chunk of $ is gone), is the reason buying an annuity doesn't make sense to many, though it may for others.

Even those (self included) who never plan to buy an annuity, might if their nest egg falls too far too soon. I'd consider an annuity only when/if my nest egg starts to approach my annuitization hurdle at any given age. Linked here several times http://www.schulmerichandassoc.com/M...cumulation.pdf

Most here didn't retire at that threshold...

People who retire at/near or below their annuitization hurdle may indeed be best served by a SPIA. Otar is another discipline like Pfau.

Not to mention the added risk of inflation when buying an annuity that lacks an inflation adjustment clause. Most lack one.
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Old 01-11-2016, 11:25 PM   #129
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Phew, I read everything and got to the end (so far) of this thread. Can't figure out what it is about though. All I know is that my financial plan is that I live a long time and my day to day activities plan is to do it now, because I don't know how much longer I will have to actively enjoy life. So worst case I live long, best case I die soon. Wait... that can't be right can it? Anyway, so not knowing the future what else can one do? In short my plan is always to not die today! If my plan doesn't work out, well I probably won't know it didn't.
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Old 01-12-2016, 01:52 AM   #130
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Not to mention the added risk of inflation when buying an annuity that lacks an inflation adjustment clause. Most lack one.

That's certainly a concern. However another way to address that would be to ladder a few smaller SPIAs at, say, 3 to 5 year intervals. Such would allow use of the simplest and most basic of annuity products while one tailors the sizes/intervals of the subsequent purchases to accommodate changing inflation rates (and with the added benefit of spreading default risk across multiple insurers.) I don't know that we'll ever go the SPIA route but if we do, I lean toward doing something of this nature.
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Old 01-12-2016, 02:15 AM   #131
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Not to mention the added risk of inflation when buying an annuity that lacks an inflation adjustment clause. Most lack one.
My father had a small pension from the electric utility company, he worked for them for 30 years. It was not inflation adjusted. He had contributed 5% of his gross income towards it. In my mind he bought an annuity without an inflation adjustment clause on a 30 year installment plan.
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Old 01-12-2016, 06:54 AM   #132
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Firstly all should know I have the utmost respect for all those that visit this forum. I have learned a great deal and have a fascination with money and investing, hence my "handle". I have reached my retirement goals using many if the techniques discussed on this board by very intelligent and capable folks. I was simply reflecting on the high standard we , including me, place on portfolio success. My experience has seen those in their 90's with significant portfolios in nursing homes watching their funds drain away in a bed next to someone on medicaid receiving the same level of care. We expect to live into our 90's with a life that we can enjoy our hard earned savings, it is my hope we all achieve this goal. Cheers!


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Old 01-12-2016, 07:01 AM   #133
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Yes indeed I especially liked the annuity hurdle post. I did notice one response seemed angry, almost as if you touched a nerve of someone still working (and probably doesn't want to be). OMY syndrome is real.
Another incorrect assumption, assuming you were talking about my post. I just thought it was a stupid premise, and still do.

Another analogy I've heard used is seat belts. I use seat belts when I drive, not because I plan to have an accident, but rather just in case I do.

I'm set as best I can for age 95 (actually older), not because I know I will live that long, but because it's reasonably possible I might. 5-10% chance is not one I want to bet against. These are not lottery odds.

An annuity is not a fool proof solution. Inflation is a risk. You've also made a long term bet that the insurer will stay in business for the duration.

OMY syndrome is real, but if work is so awful that you can bear to stand it to better insure against a reasonable chance of making it to old age, maybe you ought to try to address that issue.

Besides, the OP admitted this is a troll thread in post #45.

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Old 01-12-2016, 07:03 AM   #134
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Isn't the very idea of retiring (i.e. not having to work) pretty appealing in itself? The idea of avoiding cat food is also appealing (to me). If a person lacks the imagination to figure out why money will be useful if they get all their working hours to use as they please, I don't know if anything I could tell them would help. They may be best off staying in the traces and paying SS to keep that system afloat for others.
ok so then I'm one who "lacks" imagination. lol I know I've always accomplished my goals when there was a tangible fun "carrot" dangled in my face, so to say.

If you told me to save money for a rainy day, which my parents always used, that meant very little to me. If you told me to save money so in 2 years I can spend the summer in Paris, my results were better.
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Old 01-12-2016, 07:04 AM   #135
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As someone who has been watching this site for about 3.5 years and posting for about 2, I don't see this as an accurate representation AT ALL. We discuss travel...what people do everyday in retirement (actually fun to read)...movies, books, food...very little doomsday and fear there. I've been following your posts here as well as another forum where I've identified you. One needn't spend hundreds of dollars on dinner and Wicked to enjoy themselves, though they are free to do so if they choose. My impression of the people who stick around here is one of general satisfaction and content with their lives, absent much of the financial stress many people live with on a daily basis.


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I said, that this site was one of the exceptions.
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Old 01-12-2016, 08:04 AM   #136
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I said, that this site was one of the exceptions.
Yes, you did, and I agree completely.

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Isn't the very idea of retiring (i.e. not having to work) pretty appealing in itself? The idea of avoiding cat food is also appealing (to me).
Retirement has been such an amazing experience. I love knowing that for the rest of my life I can afford to eat well, live well, and also not live in a refrigerator box under a bridge.

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I'm set as best I can for age 95 (actually older), not because I know I will live that long, but because it's reasonably possible I might. 5-10% chance is not one I want to bet against.
That's what I am doing, too. I expect to live to around 85, and I will feel like I won life's lottery if I live to 90. Still, I have planned to about age 95 just in case.

If/when I live to 85, I'm going to re-evaluate my plans and needs at that time, and assume that I will live past 95. I might cut back a little bit in anticipation of living to, say, 105. Or, if SPIA's still exist and are both available to me and a reasonably good deal, I might buy one at 85.
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Old 01-12-2016, 08:18 AM   #137
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Good question, be pragmatic i guess, i have helped settle several estates with millions left behind due to these unreasonable longevity expectations.
I'll come at this from a different direction. So, you've seen several estates where millions were left? My questions: so what?

If things work out according to historical averages, I (and many on this board) will die with substantial estates. Why is that bad?

I've spent my whole life LBMM and enjoying every minute of it so why would I suddenly race to spend every penny now? If I wanted to spend more I would have done that all along and maybe worked a little longer. I have no need for a McMansion and a yacht.

If the people with those estates led happy lives then their worst case ending is that their grandchildren may get college paid for, or their kids get some money for a down-payment on a better house, or a favorite charity is blessed or their alma mater gets funds for a new capital improvement...

I guess I'm not understanding why having the means to protect against below-average returns is a negative.

Nice job stirring the pot by the way. You were very successful.
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Old 01-12-2016, 08:32 AM   #138
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So everyone plans for a 30 40 or 50 year retirement, how many of your family members, friends, associates never made it to 50, 60, or 70, get real, life is short, we know how many years have past, we dont know how many lie ahead....
I don't get the thesis that because something may happen that damages/ruins your plans that you shouldn't plan as suits you.
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Old 01-12-2016, 08:35 AM   #139
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I am not telling people to not plan, sorry for the double negative.. But if you planned on a 95% success rate for crossing the street you would never leave the sidewalk. We take all kinds of risks every day that are much higher than running out of money in retirement, maybe i am the only one that sees the absurdity of it.


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Old 01-12-2016, 08:48 AM   #140
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Everyone has a distribution of acceptable risk/reward ratios in different aspects of life. I'm a skier and I'm more than happy to accept some pretty serious injury risks with where and how I ski because of the huge adrenaline payoff. Others would call what I do absurd as you do with the 100% planning. On the other end of the spectrum for me: in retirement I have no interest in "living it up" now and taking my chances that I'm stuck with an SSI-only life later.

We all decide where we want to take our risks and where we don't. We make those decisions all the time and there are dozens each day/month/year that for one are sensible and for another nonsensical.
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