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Old 04-12-2016, 09:19 AM
 
71,767 posts, read 71,875,234 times
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here is the math behind kitce's study . whether you agree or not with anticipated market returns or not you can run with the TIPS instead for a ball park .
michael kitces is one of today's most listened to researchers

https://www.kitces.com/blog/how-dela...money-can-buy/
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Old 04-12-2016, 09:50 AM
 
Location: RVA
2,172 posts, read 1,270,292 times
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Quote:
Originally Posted by loves2read View Post
The point is not what MOST people are doing but what works for YOU--
Income needs, risk tolerance, health, relationship status, personal attitude, location, tax profile---all of those and more are factors which influence any person's decision.......is waiting until 70 based on advice of our financial advisor. BUT in some ways I wish he would take the SS--he is past FRA--and not draw from savings even though I keep being told we have adequate resources...
I am just totally not used to using savings to live on---have always read and felt that drawing from principal is a death knell for financial wellbeing...so there is a strong psychological factor to being retired that affects my state of mind...I find that my enjoyment is colored by the financial rearrangement more than I thought possible.
And there is the crux of the whole decision. If you have a million saved...what exactly were you saving it for? So that you could worry and manage that money until you die? Or did you save it so that you would have choices? Your husband could file any time now. But as long as y'all feel like here is still plenty of savings left by living off it for a better benefit later, then you are not only NOT losing anything, you ARE using it for what you presumably saved it for. Even if it costs you $25k a year for 8 years, to replace a full max SS, your 1 million drops to a measly $800k. But you also need $21k a hear less income generated from that savings. And no one is generating $21k a year from $200k! SO now you are less likely to even need to touch the $800k for many years, vs tapping it every year with the lower SS.

Of course, if all you have saved is $250k, then its a lot more risky..


To the vast manority of people here, including me, a million saved, or $800k is a HUGE amount. We would and do worry about it all the time. Will I Lose half of it in a crash ??? That is why we play it safe as we get older. If we don't need it to live on, then we don't have to make it perform like we needed during the accumulation phase, just hold steady with inflation.

Last edited by Perryinva; 04-12-2016 at 10:23 AM..
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Old 04-12-2016, 10:30 AM
 
Location: RVA
2,172 posts, read 1,270,292 times
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Quote:
Originally Posted by my post View Post
.......
If I wait until 70 to collect but still retire from a full time job at age 62 I would have to come up with an additional $1300 a month out of my savings and investments to come up with the cash to fund my needs. By age 70 I would have pulled out about $124,800 in EXTRA cash to fund my lifstyle.
But that $124,800 is basically monthly installments that you can stop anytime and file. Choices!

And using the 4% rule as a basis, that $125k would only generate you $5000 a year, fully taxed, vs the $700/mo or $8400/yr, taxed at only 85% of that MAX, for some, totally tax free, plus about $4600 less on RMDs, which may have propelled you in to paying tax range, ie, the Tax Torpedo.....not a bad return at all, IMHO.
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Old 04-12-2016, 11:09 AM
 
674 posts, read 841,218 times
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To the vast manority of people here, including me, a million saved, or $800k is a HUGE amount. We would and do worry about it all the time. Will I Lose half of it in a crash ??? That is why we play it safe as we get older. If we don't need it to live on, then we don't have to make it perform like we needed during the accumulation phase, just hold steady with inflation.[/quote]

Perry, Agree that it's a huge amount. You say "hold steady with inflation" Curious just how you are doing that without risk? The financial advisors & articles state 40% risk at retirement for those without pensions. A crash does scare me and many others, but CDs, Money Markets and bank accounts certainly aren't the place to house all your money. Thanks
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Old 04-12-2016, 11:19 AM
 
71,767 posts, read 71,875,234 times
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it all depends who you are investing your money for .

if it is legacy money for the kids and all your expenses are pretty much covered by a pension then that is still long term money and can be invested like you are in your twenty's .

if it is money to generate an income for yourself then you may want to take no more risk then you have to .

if it is 4% inflation adjusted you need at least 35% equity's but if it is less go fixed income mostly .

some folks want a balance of income and legacy money and go 40-60% equity's . i am in that camp
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Old 04-12-2016, 11:24 AM
 
Location: RVA
2,172 posts, read 1,270,292 times
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It is certainly far easier, to average in the long run with less risk, just keep up with inflation, than to beat it by the 2-4% you hope for during the accumulation phase of your life, wouldn't you agree? I had to be uncomfortably aggressive since 2008 , which luckily paid off handsomely to get where I am. (A very variable return that basically was equal to about 15% a year for 7 years.) I'm not fooling myself now, and certainly not in retirement, that I or the market can keep that up. Too much like work! But basic plan is half to 60% in blue chip dividend earning equities, and the half the remainder in bonds, the rest semi or average aggressive. The Roth would be more conservative since thats the first pot to tap.

If the calculators and experts are right, I will not have to touch my tIRA or Roth for anything except emergency or optional items, not to live on at all. Leaves more time to ride through the recoveries.
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Old 04-12-2016, 11:28 AM
 
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i think most of our wives would be most unhappy about a crap load of investments dropped in their lap to provide the bulk of their income. i know mine was when her first husband passed away
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Old 04-12-2016, 11:35 AM
 
Location: RVA
2,172 posts, read 1,270,292 times
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And then there's that too^^^^

Plus, whomever the survivor is, the year after the others death, you are now paying taxes as a a single, so much more in taxes. Again though, if you plan to ONLY live off SS the tax implications are not as significant. But then with that lifetime income it is much harder to have enough saved to even delay if you wanted.
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Old 04-12-2016, 01:09 PM
 
Location: NC Piedmont
3,911 posts, read 2,883,191 times
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Sometimes it goes the other way. I am married to a CPA. A W-4 is the only tax form I have filled out in the last 25 years. I talk to a FA about the funds. I understand these big picture issues like when to file for SS and how much I should be able to draw. My FA knows I am risk averse and dials it back slightly from what he generally recommends for someone in my situation, but only slightly. I have done well since 2008 but didn't have the stellar results that some coworkers did. OTOH, last summer was less painful to me than them.
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Old 04-12-2016, 01:44 PM
 
Location: Pennsylvania
12,551 posts, read 4,247,853 times
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Quote:
Originally Posted by my post View Post
If I would retire at age 62 and collect $1300 a month in Social Security I would not have to pull that money out of savings and investments. By age 70 I would have collected $124,800 in benefits.

If I wait until 70 to collect but still retire from a full time job at age 62 I would have to come up with an additional $1300 a month out of my savings and investments to come up with the cash to fund my needs. By age 70 I would have pulled out about $124,800 in EXTRA cash to fund my lifestyle.

If I live to age 85, I will earn $700 more a month in SS benefits waiting until 70 to collect for 15 years. That is $126,000. So it is a wash.
Except that it's not a wash.
Under option 1, you have 8 more years to enjoy your life, than you do under option 2 and retiring at 70


That makes it an easy call.


Time is our most valuable resource.
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