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Old 06-11-2015, 10:59 AM   #41
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We also have no heirs or nearby relatives. The problem with planning to die broke is you just don't know how expensive the last year of care might be for the survivor. The first spouse to pass will have a spouse (hopefully in sound mind) to take care of things, but the second spouse may need lots of help. I would not want to drain the accounts down close to nothing when I'm 90, in case I live to 100 and need lots of help. At the very least, we'll have a nice home paid for and the idea is to sell that when the time comes and hopefully it will pay for a few years of care for one, plus whatever is left in the portfolio.
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Old 06-11-2015, 02:38 PM   #42
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Originally Posted by Midpack View Post
I wholeheartedly agree with your idea on delaying SPIA's until age 70 or so.

But I also notice that online quotes seem to stop at age 80, there are no quotes for age 85, 90 etc. So I've wondered for quite a while if there's an upper age limit at which an annuity provider will even sell an annuity (IOW, there's an age window to buy) OR does the cost start to increase at some age relative for a given payout. I'm asking...
Christopher Lee just died. Age 93. Darned few people live to 93.

SPIA's that I've looked at seem to take 10-15 years until you've gotten back all the money you paid in. How many people would buy an annuity that will almost certainly they'll never get to the break-even point of?

And why would insurance companies bother with quotes for a product that has no customers wanting to buy it?

Buy an annuity at 80, get to the crossover 5 years after your death? Can't be many people wanting that.
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Old 06-11-2015, 03:06 PM   #43
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Assuming this assumption is accurate, what happens when you have no heirs and have no intention to leaving it to anyone.
I went through this exercise a few years before we retired, using a calculator similar to Firecalc that my employer provided. My wife wanted to know what it said--would we be leaving any money to the kids?

I showed her the output. We'd be somewhere between living our last few years in a refrigerator box, or leaving $8M for the kids to split.

Problem is, you can't cut it that fine so as to run out of money with your last breath. Look at the detailed output from Firecalc. I ran it with $1M portfolio and standard 4% SWR.
6 of 115 runs you ran out of money before 30 years.
33 of 115 runs you had more than $5M at the 30 year mark.

95 of 115 runs, you ended with more than the $1M you started with.

It's quite a bang-bang toggle at the threshold at 30 years.
Only 5 of the 115 runs had between $0 and $500K. Those would be what I'd call "not leaving any money behind."

$10 difference in your withdrawal amount can have a $1M differerence at the final outcome -- there is just no way to plan it so that you leave no money when you die. Either you go broke first, or you die with more (usually much more) than you started wth.
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Old 06-11-2015, 03:23 PM   #44
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Originally Posted by rayvt View Post
Christopher Lee just died. Age 93. Darned few people live to 93.

SPIA's that I've looked at seem to take 10-15 years until you've gotten back all the money you paid in. How many people would buy an annuity that will almost certainly they'll never get to the break-even point of?

And why would insurance companies bother with quotes for a product that has no customers wanting to buy it?

Buy an annuity at 80, get to the crossover 5 years after your death? Can't be many people wanting that.
Darned few?

https://personal.vanguard.com/us/ins...etirement-tool

For a couple, each 60 years old, there is a 27% chance that one of them will make it to 93. Is that 'darned few'?

I agree that the ins cos may not be selling them at age 80, the market and their pool may be too small. But 70 makes a lot of sense to me, at least to consider.

Most people considering these products are not looking at 'break even', they are looking at it for what it is - insurance. Do you 'expect' to get in a serious accident on the way to the store? No, and it very likely will not happen. But you buckle your seat belt anyhow, just in case.

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Old 06-11-2015, 03:26 PM   #45
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Originally Posted by rayvt View Post
I went through this exercise a few years before we retired, using a calculator similar to Firecalc that my employer provided. My wife wanted to know what it said--would we be leaving any money to the kids?

I showed her the output. We'd be somewhere between living our last few years in a refrigerator box, or leaving $8M for the kids to split.

Problem is, you can't cut it that fine so as to run out of money with your last breath. Look at the detailed output from Firecalc. I ran it with $1M portfolio and standard 4% SWR.
6 of 115 runs you ran out of money before 30 years.
33 of 115 runs you had more than $5M at the 30 year mark.

95 of 115 runs, you ended with more than the $1M you started with. ...
And that is exactly why someone might consider annuities at age 70 - it smooths out those variations.

-ERD50
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Old 06-11-2015, 03:43 PM   #46
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(investable_assets + 401k + IRA)/(70 - AGE) = withdrawal rate

At 70 with no money get SS and live rest of life off of it.

If you were a high earner you are looking at 3k plus a months of SS at time when you spending goes down. Good enough IMO. Enjoy healthy years . If you have spouse high earner you are looking at 7k a month.

You do not need to worry about any MEANS tests since you will be broke by the time you get SS.

If any means testing ever passes I would right away institute plan how to spend money or give it to my kids by the time I am 70. Who are those morons that come up with those ideas ?
That is kind of my plan. Except also have a small amount to annutize around 70.
Might as well spend during the healthy years.

So many seniors are currently living on SS alone.
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Old 06-11-2015, 05:46 PM   #47
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That is kind of my plan. Except also have a small amount to annutize around 70.
Might as well spend during the healthy years.

So many seniors are currently living on SS alone.
If you and your spouse were high earners and you take SS at 70 you are looking at about 70k to 75k a year. (Even if you stopped working at around 50-55)

That is plenty to live on.
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Old 06-11-2015, 05:56 PM   #48
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There seem to be a lot of retired people in this forum who report using a 3.5-4% SWR, and their assets are growing. There could be a number if reasons for this or combinations of reasons: (1) people with growing assets like to brag about it (and who wouldn't?), while people with declining assets aren't so eager to write about it; (2) people here are better investors than most; (3) the markets have been rising the last couple of years; and (4) the 3.5-4% SWR is safe for worst case scenarios, which happen only rarely. I kind of think that #4 is a big reason. I plan to use a higher withdrawal rate, and keep a cash cushion of term deposits so that I don't have to sell off holdings in a down market.
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Old 06-11-2015, 06:01 PM   #49
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There seem to be a lot of retired people in this forum who report using a 3.5-4% SWR, and their assets are growing. There could be a number if reasons for this or combinations of reasons: (1) people with growing assets like to brag about it (and who wouldn't?), while people with declining assets aren't so eager to write about it; (2) people here are better investors than most; (3) the markets have been rising the last couple of years; and (4) the 3.5-4% SWR is safe for worst case scenarios, which happen only rarely. I kind of think that #4 is a big reason. I plan to use a higher withdrawal rate, and keep a cash cushion of term deposits so that I don't have to sell off holdings in a down market.
I think once you cross 65 there is more value in bragging about perfect health then about portfolio growth.... As long as you have at least 60k to live on.
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Old 06-11-2015, 06:13 PM   #50
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There seem to be a lot of retired people in this forum who report using a 3.5-4% SWR, and their assets are growing. There could be a number if reasons for this or combinations of reasons: (1) people with growing assets like to brag about it (and who wouldn't?), while people with declining assets aren't so eager to write about it; (2) people here are better investors than most; (3) the markets have been rising the last couple of years; and (4) the 3.5-4% SWR is safe for worst case scenarios, which happen only rarely. I kind of think that #4 is a big reason. I plan to use a higher withdrawal rate, and keep a cash cushion of term deposits so that I don't have to sell off holdings in a down market.
I agree with this in general. Many of those things can/could be true but I think number 4 is very possible. I also plan on a relatively high SWR but am willing to adjust for down return years.

I hate to say it but I am not sold on waiting until 70 for SS. This subject has been beat to death for sure and there are a ton of threads on it.....
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Old 06-11-2015, 06:23 PM   #51
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There seem to be a lot of retired people in this forum who report using a 3.5-4% SWR, and their assets are growing. There could be a number if reasons for this or combinations of reasons: (1) people with growing assets like to brag about it (and who wouldn't?), while people with declining assets aren't so eager to write about it; (2) people here are better investors than most; (3) the markets have been rising the last couple of years; and (4) the 3.5-4% SWR is safe for worst case scenarios, which happen only rarely. I kind of think that #4 is a big reason. I plan to use a higher withdrawal rate, and keep a cash cushion of term deposits so that I don't have to sell off holdings in a down market.
#3 for me. Maybe all 4. #2 least likely for me, but as long as I keep from doing anything stupid I'm probably ahead of the game.
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Old 06-11-2015, 06:37 PM   #52
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All you have to do is set any semblance of a proper AA and then leave it alone. That alone gives you #2 and makes you a "better investor than most"
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Old 06-11-2015, 08:09 PM   #53
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If you and your spouse were high earners and you take SS at 70 you are looking at about 70k to 75k a year. (Even if you stopped working at around 50-55)

That is plenty to live on.
Unless you ER at 40-45 with 15 yrs of work history only!

A challenge with this approach is when the first one passes away and the impact of reduced income on the surviving spouse.
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Old 06-11-2015, 08:27 PM   #54
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My plan "C" (SHTF scenario) involves taxable asset spend down between 60-70, some PF annuitization (SPIA) at 70 to make up for a small deficiency between income needs and amount of SS income delayed until 70, then annuitizing an even smaller amount in approx. 2033 (if necessary) to make up for any possible SS reductions. 3% of leftover PF will more than cover emergencies and inflation increases.
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