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Spend Every Penny...
Old 02-01-2010, 07:49 PM   #1
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Spend Every Penny...

My kids already know not to rely on any kind of cash reward for outliving old Mom and Dad. They are beneficiaries of what's left after DW and I move on, but I have advised them to not rely on any of our loot passing to them. They know to prepare for the future using their own savings. If they happen to get any left overs, it's found money.

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After slaving away in the workplace for countless years and working to beef up that nest egg, you've decided not to leave behind a single dollar of your hard-earned cash. Good for you. Maybe you have just enough saved to get you through retirement, or perhaps you've determined that none of those ungrateful so-and-so's in your family deserves a single red cent. Regardless of the reason, you've chosen to follow the increasingly popular Spend-Every-Penny Retirement Plan.
the-spend-every-penny-retirement-plan: Personal Finance News from Yahoo! Finance
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Old 02-01-2010, 08:09 PM   #2
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"If you aren't hung up on the idea of "leaving a legacy," there's no need to invest in life insurance plans or trusts."

Unless you have the challange of accounting for the life needs of a disabled child (as I/DW must do), as an example.

Sometimes it's not all about what you want to do, but need to do, for others...
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Old 02-02-2010, 07:41 AM   #3
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Im going to make them box to get whats left. Says so in the will.
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Old 02-02-2010, 07:49 AM   #4
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I will leave my daughter something.

But even if I did not want to do that, I still couldn't figure out how to spend every penny because that would require dying on schedule, the day my money runs out.

I have almost always been on time for everything in my life, but dying at a predetermined time isn't in my life plan.
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Old 02-02-2010, 08:32 AM   #5
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I guess the best way to work it is with fixed annuities? Dump almost all of your nest egg into a few annuities and get income for life (yours or the life of the insurance company)...
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Old 02-02-2010, 08:52 AM   #6
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I guess the best way to work it is with fixed annuities? Dump almost all of your nest egg into a few annuities and get income for life (yours or the life of the insurance company)...
That won't work, unless you lie on the application and in that case, you can't blame the insurance company for your total loss of assets.

I had to "certify" that when I purchased my first SPIA a few years ago that the current annuity, plus all other annuities held (all types) did not represent more than 50% of my/our then joint retirement investment assets...
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Old 02-02-2010, 08:59 AM   #7
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Perhaps the way to do this is to divide the nestegg. Have enough in the immediate annuity along with SS and (if applicable) any pension to provide a baseline standard of living.

Then divide the remaining nestegg by your life expectancy and spend away.


If you happen to live longer than your life expectancy do a reverse mortgage on the house.

- Party on Garth
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Old 02-02-2010, 09:08 AM   #8
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Originally Posted by rescueme View Post
That won't work, unless you lie on the application and in that case, you can't blame the insurance company for your total loss of assets.

I had to "certify" that when I purchased my first SPIA a few years ago that the current annuity, plus all other annuities held (all types) did not represent more than 50% of my/our then joint retirement investment assets...
Huh. I did not know that. Interesting.
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Old 02-02-2010, 09:09 AM   #9
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I agree with the not wanting to 'schedule' my time to die.
I plan to have enough to live comfortably without running out of money no matter how long, or short a time I may have to live.
I see no need to spend money I wouldn't normally spend just so I can say "Hey look, I spent it all".
However, I also agree that generations to follow should not plan on getting gifts because they outlive me. Our money, for the most part, is going to charities.
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Old 02-02-2010, 09:16 AM   #10
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My current thoughts are to retire at 50 (8 years from now) and use my 401k and other investments to live a very nice life from 50 to 70. I say 70, because I can defer Social Security to that time so as to maximize my benefit. If I am still alive at 70, then I will have to adjust my lifestyle down to live my remaining years on the Social Security benefit (estimated to be $3K per month).

Some assumptions driving this thinking are my familiy history says most males do not make it to 70. I also think that I will have the 20 years from 50 to 70, to do just about anything I wish so I will be content to live a very simple and frugal life past 70.
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Old 02-02-2010, 09:18 AM   #11
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I say 72, because I can defer Social Security to that time so as to maximize my benefit.
I believe you mean age 70 (as I am doing, even though I'm SS age)?

Edit: Ah! I see your situation...

http://www.socialsecurity.gov/OP_Hom...tle02/0228.htm
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Old 02-02-2010, 09:21 AM   #12
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I say 72, because I can defer Social Security to that time so as to maximize my benefit.
A couple of comments...

As I understand it SS maxes out at 70. There would be no additional benefit to waiting until 72 to collect.

As you know SS is under the knife and won't be what it is now. depending on how they do it there may be rule changes and benefit caps that undermine your plan.
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Old 02-02-2010, 09:21 AM   #13
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Originally Posted by rescueme View Post
I believe you mean age 70 (as I am doing, even though I'm SS age)?

Edit: Ah! I see your situation...

Social Security Act 228
Sorry, yes meant 70.
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Old 02-02-2010, 03:37 PM   #14
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I read a book several years ago called "Die Broke" by Mark Levine & Stephen M. Pollan. I enjoyed it and it made me do some thinking about money and life. One of the things that they said was that the last check written should be to the undertaker, and it should bounce! While I don't hold firmly to that approach, I do kind of use it as a point of reference.
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"If you aren't hung up on the idea of "leaving a legacy,"......."
Since I have no dependents, I have no reason to plan to leave an 'estate' to pass on to to any would-be heirs. Currently, if I would die right now, all of my earthly possessions (including $$$) would go to my Mom as she is my primary beneficiary (my siblings are currently secondary co-beneficiaries). After my Mom passes away (hopefully that will be many years down the line!!!), I'll have new documents drawn up changing things around, and leaving the totality of my estate to the charity or charities of my choosing.
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"...........Sometimes it's not all about what you want to do, but need to do, for others..."
My siblings have played little to no part in my life in nearly 40 years, so I feel no obligation to play a part in their lives by leaving them anything. On the other hand, there are a few charitable organizations that I hold in high esteem, and will therefore leave them whatever I can to further their efforts! One of which is a local organization that works with the physically and mentally handicapped challenged. I personally know several of the staff and even more of the 'clients'.....they're all marvelous folks!

With that all stated, I worked and saved all of my adult life, so I could retire (early), and so I would be able to go wherever I want, and do whatever I want, and have whatever I want! And that is what I'm doing...and it costs money...but that is why I worked! When I reach the end of my journey, I may not have much earthly wealth left, but I'll have had a wealth of wonderful experiences and memories all along the way!!!
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Old 02-02-2010, 03:51 PM   #15
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I guess the best way to work it is with fixed annuities? Dump almost all of your nest egg into a few annuities and get income for life (yours or the life of the insurance company)...
Well maybe part of it, but putting it all into an annuity, or a series of annuities, give the LI company too much control. I want to control my investments as long as I am capable to do so.
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Old 02-02-2010, 05:19 PM   #16
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No kids here, and no plan to leave much money to anybody else either. I plan to convert 1/3 to 1/2 of our nest egg into a COLA'd income stream (SPIA ladder) large enough to cover our basic expenses. The other 1/2 to 2/3 of our nest egg will be invested in income producing assets (dividend-paying stocks, bonds, RE) and the income will finance our discretionary spending while the principal will eventually be used to help pay for a decent nursing home. Whatever is left will go charity.
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Old 02-02-2010, 05:30 PM   #17
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Since I have no dependents, I have no reason to plan to leave an 'estate' to pass on to to any would-be heirs.
That's easier to say than to actually implement. How exactly does one spend it all and also insure that you never are in need of money.

please share your plan.
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Old 02-02-2010, 05:35 PM   #18
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Doesn't the gummint take care of you when you run out?
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Old 02-02-2010, 05:41 PM   #19
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I have no immediate family members that I would consider leaving anything to, in fact just the opposite. This feeling is based on direct observation of their behavior when my Mom passed.
My trust will provide for dh2b if I push daisies first, else it goes to the local town for volunteer fire department and to start up a library building fund.
The local volunteer firemen need better safety and rescue equipment.
The lack of educational resources for a small town that is completely overlooked by the county and state budget makers is pathetic.
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Old 02-02-2010, 06:07 PM   #20
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I read a book several years ago called "Die Broke" by Mark Levine & Stephen M. Pollan.
I heard about it, but didn't read it.

Did they give any pointers on how to accomplish this considering that you can't schedule your passing away quite as well as you can, say, an online payment?
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