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Old 04-18-2016, 04:00 AM
 
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betting on your longevity to see 5% after inflation returns vs betting on the whims of markets and rates to see the same returns is a matter of which risks you want or what mix of risks you want .
personally i don't want to bet to much on either case so for us 70 for ss is a good balance . our 40-60 mix gives us all the risks we want to take on mr market .

that is why delaying ss and spia's can be powerful tools for diversifying yourself and taking some risk off your shoulders and putting some on a 3rd party not totally dependent on what you are .

spia is a bet mostly on dead body's , something you can never diversify in to on your own . those who die pay for those who live .

the best one is social security since it is gov't backed
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Old 04-18-2016, 04:58 PM
 
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interesting view from dr pfau



The New Math of Delaying Social Security Benefits - The Experts - WSJ
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Old 04-18-2016, 07:47 PM
 
Location: NC Piedmont
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Quote:
Originally Posted by mathjak107 View Post
I like the bridge account idea a lot. Depending on how long I am bridging, it could change my perspective on risk tolerance with the rest. I don't mean taking crazy risks to chase big gains; I just mean not being ultra conservative.
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Old 04-19-2016, 03:10 AM
 
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in times like these a bridge account can be comforting .

the big question is how to get yield on a short term bridge account safely .

you could use something like that all inclusive bond fund portfolio i post every so often that covers all segments of the bond market even those not interest rate sensitive , that is a very different mix then a so called total bond fund which is not much more then a treasury /gov't bond weighted fund and is missing many of the higher yielding segments .

i have done nothing so far as far as a bridge structure but i really should
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Old 04-19-2016, 05:13 AM
 
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this a pretty comprehensive fixed income portfolio . some segments are interest rate sensitive ,some are not . some are inflation sensitive some are less .

overall for 8 years i think it maximizes yield with the greatest amount of diversification in bonds

while parts can be more volatile then others overall it should not be anywhere the volatility of equity's .

so if someone did not want equity's in such a short term mix this is pretty diversified .

i am not sure if i would go this route or not at this point , still on the fence . but it still could be decent as a bridge portfolio .




25% iShares Barclays Aggregate Bond ETF (AGG) (Tracks a broad index of high-quality U.S. bonds)

25% iShares iboxx $ Investment Grade Corporate (LQD) (Tracks an index of the most liquid, long-term corporate bonds)

10% Fidelity Floating Rate High Income (FFRHX) (Invests in floating rate bank loans that automatically adjusts to rising short-term interest rates. It offers additional inflation hedge)

10% iShares MBS Fixed Income (MBB) (Tracks a broad index mortgage-backed securities)

7.5% SPDR DB International Govt Inflation-Protected Bond (WIP) (Invests in an index of non-U.S., inflation-linked bonds)

7.5% PowerShares Emerging Markets Sovereign Debt (PCY) (Tracks an index of emerging markets government debt)

7.5% iShares Barclays TIPS Bond (TIP) (Tracks an index of inflation-protected, U.S. Treasury securities)

7.5% iShares Iboxx $ High Yield Corporate Bond (HYG) (Tracks an index of high yield bonds)
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Old 04-19-2016, 07:10 AM
 
Location: NC Piedmont
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What about bridging with a fixed period immediate annuity? I don't expect it would do quite as well, but if it wasn't incredibly different that could be a good way to lower stress. In my case, I will likely be looking at a 6 year bridge and I could see doing a 5 year fixed and then decide whether it made sense to start collecting at 69 or draw on the rest of it when that ended.
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Old 04-19-2016, 07:12 AM
 
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a fixed period annuity really is just a cd issued by an insurer . the rates are just as low because with these those who die do not add to the draws of those who live like with life annuity's with no backsey's . with these you get all your money back with a bit of interest over those years .
only difference is the annuity gives you back interest and principal each year while the cd pays interest each year and no principal .

high yield accounts are likely higher or will be .
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Old 04-19-2016, 07:35 AM
 
Location: NC Piedmont
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But for 5 years on a declining balance I wonder how much difference there would be. For a high yield account, I assume there is at least some risk so there would even be slim possibility of the annuity outperforming it. I guess part of it would be how much one is willing to pay for the piece of mind; it is a good feeling to know a bridge reaches all the way across when you drive on to it.
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Old 04-19-2016, 07:44 AM
 
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5 years is very short in the scheme of things so it would take a prolonged deep drop to really influence things .

right now the plan is we have 2 years cash set a side , this year and next year .

we are delaying ss so except for a small pension my gets all money comes from our portfolio.

my wife has to go from 66 to 70 before she collects and i get 1/2 hers so in 4 years income will start flowing .

i would have to fill 6 years until i file .


next year i will start to channel all dividends and interest in to filling up the following year and whatever short fall we have i would sell equally from the pie .

i am not convinced a bridge portfolio will add much value , if any .
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Old 04-19-2016, 08:34 AM
 
Location: NC Piedmont
3,911 posts, read 2,878,614 times
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So I got curious and plugged it into a calculator. If you start with 300K and take out 5K a month for 5 years with no interest you end up with zero. 1% left about 8K, 2% about 16K and 5% about 45K so each % is worth over 8K (more like 10K for the last one). I am not sure how many points difference there will be between guaranteed and higher yield but pretty darn safe and then there is the "how safe?" issue.
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