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Old 02-18-2016, 10:09 AM
 
Location: Columbia SC
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Math

$250K in an immediate single life annuity yields $1,563 per month. Yes it is forever. I get that but it ends when I die.

$250K in a 10 year period certain yields $2,309 per month. I get that it ends 10 years and the $250K is gone.

That is $746 per month more and over the 10 years $89,520 more.

My present leaning is that at age 73 I will not live long enough to realize the advantages of the forever payments. If I am wrong then in 10 years, I buy another period certain product. That gets me to 93.

Again, thanks for the discussion.

Others, feel free to chime in.
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Old 02-23-2016, 08:46 AM
 
Location: Columbia SC
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An update:

After evaluating things and the fact I do not like locking my money up as an annuity would require, I am leaning toward having my IRA holder (Fidelity) just send me check (out of the IRA) every month.

Sort of a self funding annuity.......LOL
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Old 02-23-2016, 09:14 AM
 
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Except that if you are out of money on your own game over.. On your own you don't know if you will endur the best of times , average times or the worst of the worst so it has hard to judge just how much you spend on your own.

Being to conservative can leave to much money not enjoyed and spending to much and not leaving enough powder dry can leave you broke.

So no, investing on your own which is variable is never like an annuity which is guaranteed whether good or bad . .
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Old 02-23-2016, 10:47 AM
 
Location: Central Massachusetts
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Quote:
Originally Posted by johngolf View Post
An update:

After evaluating things and the fact I do not like locking my money up as an annuity would require, I am leaning toward having my IRA holder (Fidelity) just send me check (out of the IRA) every month.

Sort of a self funding annuity.......LOL


I am with you on that johngolf. Your situation is one in which you don't need the annuity. You can do similar with doing RMD off the IRA as you get older the RMD amount will vary and mainly towards smaller amounts. As long as you live or until you reach a number threshold you should be okay.
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Old 02-23-2016, 11:00 AM
 
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the problem using the rmd schedule is the older you get the bigger the draw rate . that is just the opposite of what i would want in life . at 90 i have little use for such big draws , on the other hand in my 60's i could use all the income i can get my hands on .

it is also based on each years balance . take a big hit that year and the schedule may not allow you enough to meet your bills .

there are some withdrawal methods that do utilize the charts with complex modifications .

now you could use that chart in conjunction with an annuity setting the income floor or if you have other sources of income like pension's . but by itself i don't find of much use for most of us doing our daily living off the rmd chart . that is really just for moving the money out of the ira , not necessarily spending it .
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Old 02-23-2016, 11:08 AM
 
Location: Central Massachusetts
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Quote:
Originally Posted by mathjak107 View Post
the problem using the rmd schedule is the older you get the bigger the draw rate . that is just the opposite of what i would want in life . at 90 i have little use for such big draws , on the other hand in my 60's i could use all the income i can get my hands on .

it is also based on each years balance . take a big hit that year and the schedule may not allow you enough to meet your bills .

there are some withdrawal methods that do utilize the charts with complex modifications


You are assuming that the IRA is in equities. If he is in treasuries that might not be the case. Also as I understand the RMD rule it is to take out such an amount that there is a reasonable assumption there will be enough to reach a high median range that is in age 90. With John he has no spouse to leave so his lifetime will be used. (Sorry John for that part) I believe that given john's situation an annuity would be too much of a draw on what the account has.
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Old 02-23-2016, 11:18 AM
 
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your assumption is correct but the chart is structured so it forces out greater withdrawal's percentage wise as you age .

i don't know about you but that is the opposite of what i would want . i don't want small draws when i am young and healthy and huge draws later on when i am 90.

there are far better variable methods of withdrawing out there that are more in line with how we live our lives .

the charts are also based on 27.50 years which is fine for most of us but unless you save extra money for long term care or major expenses the chart will deplete your money .

once you go off the schedule and decide what to spend on your own , well then you are not really using the chart to decide withdrawals , you are just taking what you are required and deciding on your own the years budget .
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Old 02-23-2016, 11:23 AM
 
Location: Central Massachusetts
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Quote:
Originally Posted by mathjak107 View Post
your assumption is correct but the chart is structured so it forces out greater withdrawal's percentage wise as you age .

i don't know about you but that is the opposite of what i would want . i don't want small draws when i am young and healthy and huge draws later on when i am 90.

there are far better variable methods of withdrawing out there that are more in line with how we live our lives .


mj


you know I agree with a lot of your thoughts. Of course not all but a lot. in this case john is 73. the IRA is not his only source of income. unless he is planning on leaving it to heirs he should use it to enjoy life. Not try to stretch it beyond a reasonable age. I think he should take trips to places on his list like the Great Wall of China, Saigon Vietnam, St Petersburg Russia. Even take a trip on the Orient Express.
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Old 02-23-2016, 11:25 AM
 
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i agree , he should spend it and enjoy as much of it now as he can before he gets any older . following the rmd chart will not give him that ability . his withdrawals are smaller now and increase as he ages when it may do him no good . .

the chart is not the same percentage draw as you age , it goes higher and higher the older you get . that is money i would want early on to spend not when i may never get to use it .

personally i use a variable method that uses each year based on its own balance . i get to spend more when i am up and the good thing is when i am down the worst cut in draw is only 5% .

that does not mean we spend that much but rather it acts as our ceiling . but it is dynamic and can never really run out of money while we get rewarded up front when markets are good .

Last edited by mathjak107; 02-23-2016 at 11:34 AM..
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Old 02-23-2016, 12:36 PM
 
Location: Central Massachusetts
4,800 posts, read 4,842,106 times
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Quote:
Originally Posted by mathjak107 View Post
i agree , he should spend it and enjoy as much of it now as he can before he gets any older . following the rmd chart will not give him that ability . his withdrawals are smaller now and increase as he ages when it may do him no good . .

the chart is not the same percentage draw as you age , it goes higher and higher the older you get . that is money i would want early on to spend not when i may never get to use it .

personally i use a variable method that uses each year based on its own balance . i get to spend more when i am up and the good thing is when i am down the worst cut in draw is only 5% .

that does not mean we spend that much but rather it acts as our ceiling . but it is dynamic and can never really run out of money while we get rewarded up front when markets are good .


I agree in principle on this but speaking of principle aren't we talking about only 250k? that certainly don't seem to be the kind of pot to not use up before you go. I have to leave but I will be interested in that.
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