mickeyd
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Here are a few quotes from an article that I ran across today. It addresses a number of interesting topics that have been addressed here. I do not see any brand new ideas about retirement (are there any?) in this piece but some good points to ponder.
http://www.foxnews.com/story/0,2933,235562,00.html
“When it comes to retirement, most of the ‘conventional wisdom’ is wrong,” according to Dr. Van Harlow, managing director of The Fidelity Research Institute.
For instance, take previous studies of the “safe” withdrawal rate, i.e. the amount you can withdraw from your nest egg each year and have a high probability that you will not run out of money. The conclusion: 3-4 percent in Year No. 1, increased each year after that by 3 percent, so your spending power keeps up with inflation.
But the impact of a reduced benefit is compounded over time, so our “early” retiree rapidly begins to lose ground.* For instance, you know those annual cost-of-living (COLA) increases Social Security doles out? While the percentage is the same for everyone, the amount of dollars is not — it’s based on the size of your benefit.
In our example, a 3 percent COLA means our early retiree’s Social Security income would increase by $476.64 ($15,888 x 3 percent) in Year No. 2. If she waited until age 66 to start her benefit, a 3 percent COLA translates into $653.04 ($21,768 x 3 percent) more income the next year. The same percentage applied to benefits started up at age 70 results in an increase of $883.08 ($29,436 x 3 percent) the following year.
On the other hand, if the markets go into a swoon and your portfolio is taking a big hit, then it makes sense to start Social Security as soon as you can because every dollar in benefits you receive is a dollar less you have to withdraw from your nest egg. The nightmare scenario for a retiree involves having to take money out of their portfolio when it’s declined in value. As anyone who retired in 2000-2002 can tell you, you run the risk of withdrawing so much principal that your portfolio may never recover, even when the markets do.
http://www.foxnews.com/story/0,2933,235562,00.html