Quote:
Originally Posted by Koolau
And another thing (as JG) used to say, heh, heh.
It occurs to me that the "perfect" retirement plan would be to start with an annuity, "absolutely" indexed for inflation, to cover basic expenses and a (for example) S&P 500 index to provide some extras and an estate. I realize the annuity doesn't exist, but the OP plan doesn't actually exist, either - at least not in a packaged form. Personally, I'd prefer the annuity approach if it could ever be offered. The annuity addresses some of the issues of the OP's plan (e.g., paying too much for the "left overs" or running short at some point.)
This is all blue sky and off the cuff on my part. "Just saying..." as Jesse would say in Breaking Bad.  |
I've thought the same thing. In practice, almost all of us already have a "pretty good" indexed annuity in SS. Just wait to start collecting until the benefits equal your basic expenses. I've done this calculation for the two of us and it works out pretty well.
There are (or at least were) SPIAs on the market that were CPI indexed. They could be added if SS weren't quite enough.
Then, I can assign a chunk of our assets to cover the time period between now and when we start SS. This chunk is in fixed investments, TIPS if the time period is fairly long.
I could carve out aother chunk if I thought the gap between CPI and my personal inflation rate will be "too big". There's no ideal place to put this, but it seems that US fixed assets probably aren't the best idea.
The rest is "fun money". In theory we could blow it all on an around-the-world cruise while we're healthy and still have the basics covered for the rest of our lives. Even if we don't blow it all at once, it's still okay to spend most of it early in retirement while we're still healthy. It's also okay to invest it nearly anywhere. Low risk/reward if we want to be pretty sure how much we'll have available for fun. High risk/reward if we're okay with the "fun" financing being pretty variable.
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