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What's wrong here?
Old 01-01-2019, 03:26 PM   #1
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What's wrong here?

Am following rayinpenn's post:
The fire movementís champions hidden realities..
... and don't want to hijack a very interesting thread, but it raised a question with me, so am posting it here.

This is to address being retired without the accepted "nest egg". Simple numbers:

Invested... $250,000 in I bonds, paying 5% equals $12500/yr.
Social Security $27,000.
Total income $39,500.

Total expenses $38,000.

No State or Federal Taxes.

OP reserves the right to reply.
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Old 01-01-2019, 03:32 PM   #2
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I Bonds would appear to be much older bonds paying 5%.
Where would one get those rates today?
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Old 01-01-2019, 03:47 PM   #3
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I Bonds would appear to be much older bonds paying 5%.
Where would one get those rates today?
That's what I was thinking. Nothing even close to that has been available for years. If I could buy ibonds that paid 5% interest to me and increased their principal amount by inflation annually, I'd back up the truck!

Perhaps OP meant the 5% was the sum of distributed interest + annual principal inflation increase?
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Old 01-01-2019, 03:47 PM   #4
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Will the actual inflation in health care (and other stuff) exceed the increases in SS and interest in Bond holdings?

Basically, are you inflation protected?
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Old 01-01-2019, 04:04 PM   #5
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Suppose a high earner retired and joined up with another high earner. The SS checks alone could be above $55,000 a year.
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Old 01-01-2019, 04:08 PM   #6
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Will the actual inflation in health care (and other stuff) exceed the increases in SS and interest in Bond holdings?

Basically, are you inflation protected?
Only time will tell!

We all have our own individual rate of inflation (or deflation) we need to mull over when planning for longer time frames.
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Old 01-01-2019, 04:10 PM   #7
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Suppose a high earner retired and joined up with another high earner. The SS checks alone could be above $55,000 a year.
And what if they joined a commune and became a group of ten? $270k/yr!
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Old 01-01-2019, 04:39 PM   #8
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In truth, the numbers were rounded, and not real. The bonds would equal the current value, as they were purchased in the early 2000's. The question was an attempt to simplify, without getting into the nitty gritty. In fact, nothing has changed for us with respect to dollars of net worth since taking social security @ 62 in the year 1999, when our cost of living was less. In essence this took care of the inflation factor.

The "what's wrong here" question has to do with the complexity of planning calculations, and the safety factor.

-home value as an asset
-inflation estimates
-market loss estimates
-annuity
-LTC insurance
-other property values
-cost of living retirement area
-Medicaid benefits
-lower level of age related activities
-reduction of current major expenses... school, autos
-reduction of age related expenses... food, clothing, travel
-overplanning for health
-overplanning for cash reserve

It's wonderful that so many members are safe with the million dollar plus assets, and peace of mind is to be cherished. Just a still small voice to consider when enough overrules happiness.

Just food for thought.

edit: BTW... the $27K SS was for self including 1/2 for DW.
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Old 01-01-2019, 05:05 PM   #9
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Quote:
Originally Posted by imoldernu View Post
This is to address being retired without the accepted "nest egg". Simple numbers:

Total income $39,500.
Total expenses $38,000.
I assume you are covered for long-term care?
I assume you are on Medicare?
Do you have a spouse? If so, will the survivor be okay when you are down to one SS check?
And I assume your fingers are crossed regarding inflation?
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Old 01-01-2019, 05:13 PM   #10
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OP is 81. Already established his personal COL and knows income has to last for 20 years max. (.Maybe less) Has established that income works for them. Sounds as if home is LTC. While there is nothing wrong with it at all, the real problem for me is I couldn’t/wouldn’t live on $38k/yr by myself, much less with a spouse. Regardless if I definitely could. (My SS @68 in 7 years would be that much or more) Hasn’t been my SOL level for a very long time, and don’t particularly want to downgrade now.
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