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Thanks for the replies folks. As I guessed, the main comment would be
regarding my proposal to sink 25% of my nest-egg in an immediate annuity.
I guess I don't see why SPIAs are such a bad deal. Here's my
reasoning ... I did a butt-simple spreadsheet where I simply put my
$250K (the amount I'm planning to fund the SPIA) into a hypothetical
account, grow it by X% each year, and subtract out the amount the
SPIA will pay each year (the initial amount grown at 3% per year).
I do a "goal seek" to make X so that the hypothetical acc't is depleted
at year 37 (recall I'm planning to live to 90yo, 37 yrs from now).
The value of X is 6.2% !! That seems like a pretty darned good rate
for a fixed-income investment to me; can you buy a long-term bond
which guarantees 6.2% ? (Not trying to pick a fight here - I am
admittedly a newbie to investing - but this is how it seems to me).
Now the rub is, of course, that if I want the account depleted at the
end of my predicted lifespan, about 25yrs from now, X is only about
4% - not such a good rate of return. BUT (and this is an argument
I haven't read before), if I die in 25yrs I'm gonna be doing just fine
with the 75% of my nest-egg which isn't in the SPIA, and I don't
really CARE that the SPIA didn't earn such a great rate - it's pretty
academic at that point. Put another way, seems like I want to aim
for the "worst" case scenario, where I live to 90yo, and for that the
ROR is darn good ! Of course there's the issue of the estate I leave,
but the non-SPIA money, not to mention my house, should take
care of that.
Regarding the other issue of when I take my SS, seems like I can
model that just by plugging various start dates and amounts into
FIRECalc, and see which gives the most optimistic result.
Thanks again, John
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