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Old 12-01-2015, 08:27 AM   #61
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it is two individual policy's .

our mistake was not taking it younger since you save nothing by waiting , it only gets more expensive .

we pay 6900 a year FOR BOTH. i am 63 an my wife 65 and i get a 1600 .00 tax credit from nys plus whatever we manage to take on our federal .

by waiting i got diagnosed as diabetic and even though i am high normal now on no meds i was surcharged .


but as i pointed out in our ltc discussion , to self insure properly it really means having that insurance money safe , secure and liquid at all times .

risking 1/2 may be gone in a extended downturn is not self insuring in my opinion .

so that being the case just a fraction of the average returns on keeping a large sum like that which would have to be set a side and not invested , fully invested because we have the policy pays for the policy .
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Old 12-01-2015, 08:43 AM   #62
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....but as i pointed out in our ltc discussion , to self insure properly it really means having that insurance money safe , secure and liquid at all times .

risking 1/2 may be gone in a extended downturn is not self insuring in my opinion ....
Perhaps in your opinion, but not in mine. It would be silly to insist that money for expenses that will not be incurred for years be bound up in totally liquid, low-risk investments. Even the insurer doesn't do that.

And when in the history of man have we had an extended period where a portfolio declined 50% and stayed there... never to my knowledge.
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Old 12-01-2015, 08:46 AM   #63
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you never know when you will need that money . my co-worker needed it by age 55 my dad at 65 .

why bother to have life insurance at all if you are younger ? wouldn't that be just as foolish since statistically you have little chance ?

the answer is insurance protects against life's remote flyers if they can be financially devastating since you never know if it is you .

while we have not had a a long extended down turn yet it is no different then asking yourself when was the last time you had a stroke ? never is the answer most likely .

but that is what insurance is for , the remote chances in life . that is also why insurance company's have restrictions on where they can invest that insurance money
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Old 12-01-2015, 08:50 AM   #64
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Not sure why we so often return to beat the LTC dead horse. I think that most all of us have an opinion on one side or the other and are unlikely to be swayed by constantly debating it. Sorry if I'm off base here but I get tired of seeing the same arguments over and over.
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Old 12-01-2015, 09:03 AM   #65
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People who say it's a no-brainer to defer are wrong. It's actually a brainer. Take a look at my spreadsheet. https://www.dropbox.com/s/gebanzrbr3...0calc.xls?dl=0 Plug in your own estimates and figures. If you take SS at 66 FRA and invest/save that and earn 3% above inflation, the break-even age is 87. 17 years to break even. To me that's much too long to be attractive. If you earn nothing above inflation, breakeven is 82, which is 12 years, and to me _still_ too long. There is no clear-cut right answer, it's largely a matter of personal preference in how you'd like the shape of your income curve to be. Of course, if you are selling annuities, your answer is going to be influenced by the commission you'll get.
Rayvt; I've seen your conclusions before which run counter to most conventional wisdom, or if not counter, then much later cross over points. Your spreadsheets look impressive, however I have no idea if there are any mathematical errors in your computations or if you are failing to factor in any important assumptions. But for the moment if one were to accept your premise, have you done any calculations on the results for those who are collecting spousal benefits at FRA while letting their own benefits accumulate between FRA and age 70? Wouldn't that scu your results by reducing the BE point?
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Old 12-01-2015, 09:04 AM   #66
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Not sure why we so often return to beat the LTC dead horse. I think that most all of us have an opinion on one side or the other and are unlikely to be swayed by constantly debating it. Sorry if I'm off base here but I get tired of seeing the same arguments over and over.
Please go to the "pay off the mortgage early", "Mac or PC" and "when to take SS" threads for an entirely new perspective on beating a dead horse.
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Old 12-01-2015, 09:07 AM   #67
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Not sure why we so often return to beat the LTC dead horse. I think that most all of us have an opinion on one side or the other and are unlikely to be swayed by constantly debating it. Sorry if I'm off base here but I get tired of seeing the same arguments over and over.
Agreed, it is one thing to debate whether or not to self insure (I usually don't participate in those debates ). But it is a whole different thing to debate that if one decides to self insure that it should be funded with safe, liquid investments when the LTC payments are unlikely to be made for years and even when they do start are paid over time.

A balanced portfolio is more than adequate in such situations just like it is for retirement living expenses that inflate and are paid out over time.
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Old 12-01-2015, 09:10 AM   #68
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Agreed, but it is one thing to debate whether or not to self insure (I usually don't participate in those debates) and a whole different debate that if one decides to self insure that it should be funded with safe, liquid investments when the LTC payments are unlikely to be made for years and even when they do start are paid over time.

A balanced portfolio is more than adequate in such situations just like it is for retirement living expenses that inflate and are paid out over time.
Totally agree. Especially if your retirement portfolio can support withdrawals larger than you are currently needing.
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Old 12-01-2015, 09:13 AM   #69
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however there is no guarantee that a balanced portfolio or any portfolio for that matter will keep up with the inflation in healthcare .

those who did this in 2000 saw less then a 2% real return over 15 years . certainly not nearly enough to keep up with the 5% - 7% inflation we saw on care .

the guaranteed 5% inflation increase in a policy yearly is tough to guarantee on your own . the insurers have dead body's that make that possible , we do not .
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Old 12-01-2015, 09:14 AM   #70
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Isn't the non-worker spousal benefit based on the other spouse's actual benefit or normal retirement age benefit, whichever is less? Meaning if a spouse's normal retirement age is 66 and they work beyond that, that spouse's normal retirement age benefit is used to determine the spousal benefit.
You are correct. It's at FRA, even if the primary earner waits until 70 to take SS
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Old 12-01-2015, 09:28 AM   #71
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Agreed, it is one thing to debate whether or not to self insure (I usually don't participate in those debates ). But it is a whole different thing to debate that if one decides to self insure that it should be funded with safe, liquid investments when the LTC payments are unlikely to be made for years and even when they do start are paid over time.

A balanced portfolio is more than adequate in such situations just like it is for retirement living expenses that inflate and are paid out over time.
You are absolutely correct!
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Old 12-01-2015, 09:44 AM   #72
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...those who did this in 2000 saw less then a 2% real return over 15 years . ...
Vanguard Wellington grew from $10k on 1/1/2000 to a tad over $30k today... Wellesley, which is more conservative is over $24k today compared to $10k at the beginning of 2000. Those are roughly 7.6% and 7.2% annual rates of return, respectively.

http://www.morningstar.com/funds/XNAS/VWENX/quote.html
http://www.morningstar.com/funds/xnas/vwiax/quote.html

Something that cost $10k in 2000 would cost almost $14k in 2015 inflated at CPI or about 2.2% a year. (http://data.bls.gov/cgi-bin/cpicalc....000&year2=2015)

So the real rate of return for a balanced portfolio was much more than 2% real over the last 15 years, more like 5%.

Where are you getting a less than 2% real return over the last 15 years?
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Old 12-01-2015, 09:56 AM   #73
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i was looking at the s&p which was below 2% .

i show the last 15 years vti was up 5.15% and vbtlx total bond 4.96% with inflation at 2.60%

so a 50/50 mix would be at a 5.50% return less 2.60% for inflation = 2.90% real return.

that may be hard to get going forward with a balanced fund looking at 4% possibly in nominal returns if guesstimates are correct . about 6% from equity's and 3%-4% from bonds .
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Old 12-01-2015, 09:56 AM   #74
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I think of it this way. You are forgoing $117k to get a COLA adjusted annuity of $790/month starting when you are 70 for as long as you or your spouse live. That is a 8.1% payout rate [($790*12)/$117k]

According to immediateannuities.com $117k would buy a fixed joint life annuity for a 70 yo couple of $613/month (6.3% payout rate). So delaying SS is a great deal because not only is $790/month much better than $630/month, the $790/month is also COLAed and the $630/month is fixed.
That's how I think of it too and I just had this conversation with someone the other day who is still working and doesnt' see the need to stop before 70 as they are in real estate and like what they do.

The other thing it that if you look at longevity statistics, a couple where one member lives to 95 is not that out of the question especially if both spouses are already in their 60s and still in good health. So if you factor that in, waiting till 70 so that you get better payouts from 70-95 would be my preference.

To me the only reason not to take it when your 70 is A) you don't plan to live very long due to current health issues B) you need the money now C) You have plenty of money and would rather have a "guarantee" of getting as much back out of the government as possible to leave your heirs should you pass early.
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Old 12-01-2015, 10:01 AM   #75
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i was looking at the s&p which was below 2% .

i show the last 15 years vti was up 5.15% and vbtlx total bond 4.96% with inflation at 2.60%

so a 50/50 mix would be at a 5.50% return less 2.60% for inflation = 2.90% real return.
This example ignores rebalancing.
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Old 12-01-2015, 10:04 AM   #76
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i have not done the math but i think rebalancing when equity's were rising 200-300 % and going in to bonds may have hurt more than helped . last 3 years have seen about 1.40% on a totaL bond fund including interest . last 5 years 2.97%
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Old 12-01-2015, 10:26 AM   #77
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Rayvt; I've seen your conclusions before which run counter to most conventional wisdom, or if not counter, then much later cross over points. Your spreadsheets look impressive, however I have no idea if there are any mathematical errors in your computations or if you are failing to factor in any important assumptions. But for the moment if one were to accept your premise, have you done any calculations on the results for those who are collecting spousal benefits at FRA while letting their own benefits accumulate between FRA and age 70? Wouldn't that scu your results by reducing the BE point?
Of course, the true spreadsheet aficionado plugs in a genealogical tree dating back at least five generations, a full-body scan and multi-phase personality profile of himself of herself, traffic and crime statistics for his or her current location and anticipated location at retirement, and geopolitical projections for Social Security, America and the World over the next 25 years (the Cosmos may be ignored at this point, but not indefinitely). Whereupon, the true spreadsheet aficionado can confidently say, "Oh, whatever, I think I'd better just take it now and spend it as quick as possible" or perhaps, "Yep, I'll still be hitting the ball 265 yards when I'm 95." (Thanks to spellcheck for the spelling of "aficionado," because this is frankly not close to how I would have spelled it.)
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Old 12-01-2015, 10:29 AM   #78
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i have not done the math but i think rebalancing when equity's were rising 200-300 % and going in to bonds may have hurt more than helped . last 3 years have seen about 1.40% on a totaL bond fund including interest . last 5 years 2.97%
Rebalancing imrpoves returns when you go through a volatile period of stocks with lots of ups and downs, like the strong two bear markets since 2000.
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Old 12-01-2015, 10:30 AM   #79
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(Thanks to spellcheck for the spelling of "aficionado," because this is frankly not close to how I would have spelled it.)
That's because it's a Spanish word.
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Old 12-01-2015, 10:33 AM   #80
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Rebalancing imrpoves returns when you go through a volatile period of stocks with lots of ups and downs, like the strong two bear markets since 2000.
not always , it is very time sensitive . i am not so sure it helped this time
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