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Old 02-01-2016, 12:32 PM
 
Location: NC Piedmont
3,911 posts, read 2,882,516 times
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Quote:
Originally Posted by GeoffD View Post
There is another approach:

Defer collecting Social Security until age 70. That money is inflation-protected. Own low cost of ownership housing outright. Live modestly but comfortably off of your Social Security check. Anything you've salted away for your retirement is your emergency fund cash cushion. Your mandatory IRA/401(k) distributions are bonus money.

Too many people look at that "free" Social Security money at age 62 and start collecting. If you can't work, then sure, take the check because you'll starve otherwise.
I think the latest figures say the average age at which people leave their last job is around 63 and that most planned to work longer. So I don't think that many people start collecting because they think it is free money and I don't think that deferring until 70 is an option that can be freely chosen. For some of us who are in reasonably good health and work jobs that are not physically demanding it is more of a choice (until it isn't, if something unforeseen happens).
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Old 02-01-2016, 04:27 PM
 
4,069 posts, read 1,561,064 times
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If you are a 65 y/o fella, this $1,000,000 AARP annuity, which does NOT adjust for inflation, will pay you a little over $5k per month for life. If you a gal, it's a little under $5k a month (you gals live longer, therefore a lower monthly payment). If you want a plan that is adjusted for inflation, you will get less. This particular annuity has a 10 year minimum payout.

Neither option is risk free. If you take the fixed payout option and inflation goes way up, you lose. If you pick the inflation adjusted number, and inflation is minimal, you lose. And of course if you die at age 76 you lose either way.

My personal advise as an MBA/CPA who also taught Economics and Finance at the University level is to just let the good times roll. No one gets out alive. Your actual mileage may vary.

AARP Lifetime Income Annuity with 10-Year Guarantee from New York Life - NYLAARP
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Old 02-01-2016, 04:44 PM
 
71,736 posts, read 71,853,273 times
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the aarp plans are to expensive . you can get almost 6k from vanguard on an immediate annuity or even from immediate annuity.com . vanguard is the cheapest .
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Old 02-02-2016, 07:44 AM
 
29,789 posts, read 34,889,516 times
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When, I graduated and began my work career I didn't plan on how to live on the minimum but rather how to increase and grow earnings/wealth! Why would that change for retirement? Why do some suddenly lower the bar? Do they really lower, or us it more a reality check? Go for it folks and similar to when you began your work career shoot for the skies and if you fall short you will probably still gave a great view of the retirement world.
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Old 02-02-2016, 11:36 AM
 
4,069 posts, read 1,561,064 times
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Quote:
Originally Posted by mathjak107 View Post
the aarp plans are to expensive . you can get almost 6k from vanguard on an immediate annuity or even from immediate annuity.com . vanguard is the cheapest .

Thanks for the info, but I wasn't suggesting anyone buy from AARP. The only good thing about annuities is that they pay really high commissions!
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Old 02-02-2016, 12:50 PM
 
71,736 posts, read 71,853,273 times
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actually plain immediate annuity's do not . the commissions are so low that salesman do not sell them . you have to seek them out on your own . they are like buying a cd . the rate is the whole story
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Old 02-02-2016, 01:20 PM
 
1,984 posts, read 1,309,934 times
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Quote:
Originally Posted by shamrock847 View Post
The "save $1M for retirement" advice is targeted at the fairly large segment of "mass affluent" folks who made say between $80k and $150k during their prime earning years and want to maintain a similar lifestyle in retirement. These people aren't rich but make enough to take a pretty big hit on taxes, college tuition, etc.


If you made more than that and want to continue your lifestyle you probably need to save more than $1M for retirement, plus a paid off home, social security and any pensions, but have also had the opportunity to do so.


If you were a middle income person / couple for most of your working life you don't need to save as much to maintain your lifestyle, especially if you have even a small pension and a paid off home. Even a modest $1000/mo pension is often worth the same or more than having a half a million dollars ($500k) saved!


The people who DO need to worry about saving huge sums for retirement are those under 40, especially higher earning folks who want to keep a similar lifestyle in retirement. Unlike older generations, this group almost never has pensions (unless they work for the government), and likely will not receive social security benefits at current level. So they are pretty much on their own when it comes to retirement savings.
This sums it up right here
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Old 02-03-2016, 09:18 AM
 
Location: Copenhagen, Denmark
10,529 posts, read 8,775,701 times
Reputation: 12218
Quote:
Originally Posted by mathjak107 View Post
the calculations here are not really correct because in the real world we have the all and powerful sequence of returns risk working for or against us .

the problem is average returns like saying 2% a year or 5% average returns don't work when spending down . because when spending down the sequence of gains and losses that make up that average return take over and become the ruling factor .

you can have the exact same average return and have how long the money lasts vary by as much as 15 years compared to looking at a reverse amortization calculators results with an average return put in .

a straight line calculator assumes you never spend down in a down year since it is figuring the same positive return year after year . you have three variables changing every year that make up your average real returns . you have market returns that year , interest rates that year and inflation that year all varying in the real world .

that can create up to 15 years difference in how long the money lasts with the exact same average return .
If you are saying that the rate of return should have a random component and the returns are volatile, I certainly agree. Thanks.
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