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Depends, the only one id consider is the immeadiate annuity....all others are fee laden and usually to much red tape.. you talk in terms of withdrawl rate not interest with immeadiate annuities. if you like the rate thats the entire deal,no other expenses.
the withdrawl rate depends on age, any options such as inflation protection or carrying over to a spouse..check out immeadiateannuties.com for an idea of rates....
For the annuities we're talking about in this thread (that would more closely mimic a pension) age is the biggest factor. Giving someone a million bucks for them to give you a lifetime salary obviously they take a huge risk difference on losing the bet if you are 48 years old versus 73 years old.
exactly,,,age determines how much you get..... i think if i was doing it i would extend it to my spouse too...
there didnt seem to be that much difference and you got 2 horses in the same race .... i think i would do it between 65-70... that would let me spend more when im younger with the security of having a larger income refilling my nest egg later on.
that goes hand in hand with my repaying social security back in exchange for a lifetime of higher payments around then too..
why do that?
so i can spend way more then my safe withdrawl rate would typically allow me from age 60 while we are younger and healthier so we can do all the things we ever dreamed of doing .... we can rest easy knowing that down the road we will be getting substantially larger payments to refill things no matter how long one of us lives.
thinking outside the box lets you realize that all these little things are not about dying with the biggest pile of money but for us we want the biggest pile of money we can muster each year to live on while we are still healthy without fear that down the road we over spent and can run out of money . hense all the different lifetime of payments we want to kick in to replenish later on. ..... there are no do-overs,,, this is the last down for some of us.... its do it now or never
I've got about 18 months worth of income in the bank, but since my expenses are a lot lower than my income, it would last through 3-4 years of my normal expenses.
To ascertain personal wealth, I've always though a fair method was to count the value of all your assets if you had to liquidate them within a specific time frame (say 6 months). In the case of a pension, you could probably call up a company like JG Wentworth to find out if you could sell it, and to get an idea of its market value.
Well, that depends, how long is the 65 year old going to live, are there survivor benefits on the pension and does he want to leave money to kids, etc.? Also, the $250K in the IRA isn't going to last very long.
Unless they live off of the pension. If you are fortunate enough to have a pension and only 250K in the bank you need to either work or be able to live off of the pension. You need that money for overage cost health/inflation etc. To many people with pensions think that and SS if eligible is suppose to carry them through. Won't happen especially since curbing COLA's is one of the easier pension reforms.
Yes, one should definitely take the health of the pension into account along with some of the things golfgal mentioned regarding age etc. a non-COLA pension taken very early can eventually end up worth a hell of a lot less if inflation comes storming back like some people think.
Very, very true. You need to build income accelerators in as much as possible. We retired on two pensions and lived on that. That left us with three SS payments to kick in and eventually required investment draw downs.
59-pensions
62-wife SS
66-Husband SS spousal
70-Husband Ss
70 1/2 Required sheltered drawdowns.
After that it is other funds for overage however we should have so much overkill with great SS payouts.
Pensions are a great building block but you need the others also as you point out.
we will have if i retire at 58 and marilyn 61
a small pension from nyc that marilyn gets from her first husband.. thats about 20k a year.
we still get rental income from the family business we are selling off so thats around 15-17k...
a paid house
at 62 ss kicks in
at 67-70 we will pay back ss for almost double the payments and do roth conversions with the tax credit of the payback.
also buy an immeadiate annuity for about 25% of our nest egg....
that should keep us going with out spending down to much of our portfolio.
then we will start to plan some estate planning using life insurance and roth strategies to pass that on tax free to our kids
Last edited by mathjak107; 08-13-2010 at 07:37 AM..
But... what if your 401k/retirement account balances are substantially greater than your bank account? Suppose one has $150k in retirement savings but only $10k to $15k in a bank savings account. Then SHTF, such as you losing your job or some emergency and you have to dig in deep into those savings - and then by the time you get a new job, your bank savings are depleted in half.
I ask because retirement savings are "forced savings" to be held in store until one... retires.
Retirement savings are not forced savings. You do it by choice.
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