Mr._johngalt
Thinks s/he gets paid by the post
- Joined
- Dec 3, 2002
- Messages
- 4,801
Cut-Throat said:You are the master of puns!
Yes I am, and you have been punished enough.
JG
Cut-Throat said:You are the master of puns!
Rock said:You guys are making my brain hurt...there are too many variables here: ROR, Longevity, Inflation, Taxes, SWR, personal goals, etc. I think this problem is way too complex to "talk out" a reliable solution.
Surely there is some powerful software available that can accurately model this problem?
HaHa said:Is this perhaps a rather heroic assmumption?
Ha
brewer12345 said:Heh, speak for yourself, Ha. Some of us venture out beyond TIPS once in a while.
donheff said:This has been my reaction to the annuity arguments as well. If you think in terms of investments (building a bigger pile for whatever reason - leave it to heirs, pay for assisted living in your 90s, etc.) annuities and delayed SS are not a good deal. If you think in terms of getting a larger safe income stream (e.g. with a 4% SWR you are barely able to cover your lifestyle) annuities and delayed SS can get you higher spendable income at the expense of a smaller estate.
mathjak107 said:boy of you look at the earlier discussions we had an annuties i have been saying this for sooooooo long. finally you guys are getting the point that annuties arent a bad thing.
it all depends on why you want them.
now lets think about taking ss later at 70 and utilizing an immeadiate annuity too.
sgeeeee said:Now I realize that even that's not true. I don't want to optimize my benefits, I want to optimize my satisfaction. Tell me how much the 70 year old version of me will enjoy my 70 year old benefits as compared to the 62 year old version of me and I can begin to answer this question.
MasterBlaster said:http://www.ssa.gov/retire2/delayret.htm
Notice that for those born later that the rate of increase in delaying SS after full retirement age is larger (per year) than for those born earlier.
If I remember correctly the benefit at 70 should be independent of which year you were born. Perhaps Martha (or someone else) knows more about this.
2B said:Immediate annuities can be wonderful things. The problem with every one I've seen is that they are poor investments. After being a poor investment, they are frequently not used/purchased correctly.
Every other annuity I've run across should be outlawed. I have never seen any reason why anyone would be better off buying them.
Social security is one annuity almost all of us have already bought. I beleive that for what I've put in (including employer contributions) it is also a poor investment and I would have been better off keeping my money. Unfortunately, that was not one of my choices. Since I've got it, the goal is to maximize the return.
FIRE'd@51 said:MB,
I have had a chance to look at the links you posted more carefully. I agree that the ratio of age 70 benefit to the age 62 benefit increases for those born later. The highest ratio would occur for those born in 1960 or later (full retirement age 67).
If we take a full benefit at age 67 = 100
The benefit at age 70 = 100 + 3 x 8 = 124 (from your second link)
The benefit at age 62 = 70 (from your first link)
The ratio = 124/70 = 1.77
This ia a 77% increase, not 82%
That is something almost everybody felt in the booming 90s. I always assumed the sentiment was probably right since I could, of course, expect to earn about 10%/yr if I invested my own funds. 8) But the reality is, we can expect quite a bit less after inflation. So I decided to run a *reasonable* earnings scenario against DW's SS statement (I was a Fed without SS so I can't use my own). DW has paid 30 years of SS at the maximum rate and is 54. I projected her first year of SS earnings backwards for 10 years to approximate where she would be with 40 years in right now (this actually overstates her contribution since SS didn't tax as much income going back those ten years). I calculated the "contribution" as 14% of SS earnings and calculated the ROR as 4% real/yr - a rate that seems fair to me based on everything I have heard around here. Under that scenario she would have $432,937 to invest in an annuity today. I guesstimated an annuity with survivor benefit for a 66 YO to pay 5%/yr. That would be $21,647 or $1804/mth. Her SS statement says she would get $2152/mth at 66 ($2852 at 70).2B said:Social security is one annuity almost all of us have already bought. I beleive that for what I've put in (including employer contributions) it is also a poor investment and I would have been better off keeping my money. Unfortunately, that was not one of my choices. Since I've got it, the goal is to maximize the return.
FinanceDude said:Well.............I could not disagree more............. I think immediate annuities are a crap shoot. Even with period certain, the IRR is less than 3%. $1000 a month now may not look so hot 10 years from now, when your medi-gap and LTC insurance have doubled...............
Albeit RARE instances, it is always better to have CONTROL............
And don't get me started about Social Security...........I'll be lucky to get any...............
Cut-Throat said:This is exactly why you should delay your benefits to age 70. Because you get to spend more at age 62-70. If you don't have to be saddled with an SWR of 4% at age 62, because you know down the road that your benefit checks will cover you, you can optimize your satisfaction.
2B said:Money is money CT. The key is that if the SS is safely growing at better than your SWR (or whatever) you are better off spending you own money and letting SS grow. If you die young, your heirs lose. If you deplete your capital, SS won't be enough to cover assisted living or nursing care.
People on the edge don't have a choice. Most people on this forum do.
2B said:... the idea of an immediate annuity is good concept but they don't make sense based on the poor IRR of all of the available products.
2B said:Did you read my post? I said the idea of an immediate annuity is good concept but they don't make sense based on the poor IRR of all of the available products.
Cut-Throat said:And money is only money if you're alive! I don't think anyone on this forum would deplete their capital by taking SS at age 70. - Heirs? - We don't need no stinkin heirs!
As a side note - the thought of going in to assisted living or nursing care is far more scary to me than not being able to afford it!
Cut-Throat said:This seems to be the big issue for me. I don't care how much I get to pile up. I care about how much of it I get to spend.
2B said:Have you flip flopped??
I thought you were a 70 yr old SS man?
Cut-Throat said:I am. What makes you think I flopped? - Just because somone might delay SS to age 70, that would only cost around $150K-$200K. Most of us here have well over a Million? That would hardly deplete their portfoio. In fact it would protect the last $500K from totally depleting.
2B said:I would personally rather discuss assisted living with my good friend Mr. Ruger or even Mr. Remington before going.
Cut-Throat said:That's far too messy! - I think I would buy a bottle of $200 Cabernet. Maybe 2 bottles. Go out to the Lexus in the Garage with some good Jazz CDs. - That way you can still have an open casket and the Mortician is not challenged beyond his abilities.
JohnEyles said:We seem to keep going in circles about this ... Can we agree on a few
things ?
If you live to your life expectancy, the ROR is pretty poor, maybe 3% or a
little more (my analysis says that for my current Vanguard quote, a 54yo
male, I get a WR of about 4.5% with 3% inflation adjustment, which
computes to a ROR of 3.6% if I live to my life expectancy of 78yo).