Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
The same reasons anyone else buys an annuity. Risk free income. In this case, it is not only risk free, it is COLA income, and transfers to your living spouse on your death (assuming you had one and your SS is the larger of the two). If you can find an annuity that allows payments over an 8 year period of $1500/mo,mand allows you to change your mind at anytime, get a refund of 6 months premiums, amd still collect a partial annuity for the premiums paid, but then pays $900/mo COLA for life if you do complete the payments, please show me.
Jgh's numbers are too negative. No one (or extremely highly unlikely) that only gets $1500/mo@62 SS and a savings of approx $420k would be anywhere near paying 30% in taxes. More like an effective of 17%. And assuming the OP is planning only living on just SS and the 3% withdrawal of the remaining assets should he delay, then we are talking about an income of (assuming earning 4% on his $420k during the 7% withdrawals) (2400 x12) + .03 x $288k) = $37,400/yr. on which he would pay no taxes on any SS (so the additional $900/mo COLA is tax free for life) and basically nothing on the 3% which covers most of bis typically 4% RMD. He doesn't make it clear if the 3% is in addition to the RMD, or if he had neglected the RMD and assumed the 3% would cover it. So based on those numbers, and using Firecalc, he would have a 100% chance of never running out of money with an income of $37,400 for life, and a $288k nest egg that grows at approx 1% net per year, assuming only 4% growth. Not extravagant by any means but comfortable with a paid off residence and zero/very low risk.
To live the same way, on $1500/mo SS, he would need to draw $19400/yr from his savings, for life. $37400- (1500x12) = $19400. That is 4.62% of his nest egg, every year, regardless of sequence risk. Firecalc would give a out an 83% chance of not running out of money by age 90. If something catastrophic happens, and he loses a major portion of his nest egg, which has to be more severely monitored for life, his income is greatly reduced to his basic $18k yr instead of his delayed $28,800 per year. Hmmmm, sure doesn't sound like that bird in the hand is very risk adverse, now does it? Like I've been saying hundreds of thousands of people have done this same calculation for many years, and IF you can afford it, the prudent, less risky, higher income for life is always to delay. Break even means NOTHING unless you know you will die at 80 and plan to soend all your money by then. You are trading risk for guaranteed low/no tax income. Simple as that.
in our case our draw falls from 3.50% while delaying to under 2% when ss kicks in at 70. that can be decades of almost 1/2 the dependency on markets and rates .
I waited 2 years from when I first thought about getting it , ended up having some blood tests that were prediabetic range and now got surcharged forever
I bought a variable life policy back before I knew much about which options are best and after I became more educated, I cashed it into an investment fund and got a term policy. In that order, unfortunately. This was after the apnea diagnosis and I had bought the variable life policy before it. The same money that gave me life insurance and built value before did not build value as fast investing the difference from the term premium.
i actually am in the best shape of my life at this point . i am up to running non stop 5 miles every other day and weight lift the days i don't run. throw in two hours of drumming every day which can be grueling by itself and i can't do anymore then i already am .
it does not mean i can't croak tomorrow but so far health wise we both are running pretty good . you have top notch athletes die out of no where , so when it is your time it is your time no matter what your shape .
Very impressive! The odds are in your favor that you'll be around for some time.
Stupid question- is a part time job or contract work a possibility? It seems like having a couple of more years of income & splitting the amount you pull out of savings by half would really make it an easier choice. I would be leery of depleting my assets in that manner.
I've seen the 83 years as a break even point in other reports as well. In this case I'd probably draw now just to maintain the savings but that is completely related to my personal comfort level. I would have split the difference and worked a couple of more years but drawn immediately at retirement- but again that is just based on my personal comfort level.
When compared to the average savings/wealth we should congratulate the OP on not having debt. I'm over 20 years form retirement and am already making decisions based on not wanting to head into retirement with a mortgage hanging over my head- or student loans, or a car loan, or a car loan...
I waited 2 years from when I first thought about getting it , ended up having some blood tests that were prediabetic range and now got surcharged forever
They were able to work up LTC quotes that are in the $2k per person (I had them do us both and me alone) range per year. The discount for a couple was pretty much a wash since she is a smoking heart patient.
They are all 90 day elimination period and 3 year facility limit.
They were able to work up LTC quotes that are in the $2k per person (I had them do us both and me alone) range per year. The discount for a couple was pretty much a wash since she is a smoking heart patient.
They are all 90 day elimination period and 3 year facility limit.
Got ours about 15 years or more ago or so. Glad we got it then.
So we all have this drip line (pension and/or SS or SSDI or SSI) of glucose that keeps us alive. Some of also have piles of sugar we are sitting on. If it is a small pile, we just augment the drip line. If it is a big pile, we have to worry about the ants that might come and get it. We can trade in some of the sugar for ant repellent. If it is a really big pile, we can get enough repellent to saturate the ground on all approaches. if it is just a decent sized pile, we can't do that or maybe we could but we would trade in so much sugar for bug spray that it seems silly because there is so little left to protect. So we have to get a couple of cans and choose carefully where to spray it and how much we spray. I think the LTC ants are scary and I will definitely lay down some repellent on their approach path. But I also need to worry about the liability ants and the new roof ants and the donut hole ants and...
of course the big question is your tax bracket lower in retirement , compared to what ? most folks compare to their later years on the job which is not correct .
your average tax bracket while working starts in the early years and ramps up over decades . it is rare your retirement tax bracket will be lower then your long term average tax bracket which can span decades .
unless you have a job where day 1 you are near your top tax brackets odds are your working average will be lower then your retirement bracket which generally is close to just your final working years.
that is a common mistake folks make when comparing . they just look at the point they started making higher pay but that is only generally a fraction of the story .
the younger and earlier you start the more effective the roth becomes because you have all those ramping up years .
This is going to change for many Gen X and probably Millennials. We rose up earlier in our careers but then the race for the bottom kicked in and many of us flattened our incomes in our 30s or early 40s. Most X, unless superstars, will not have higher income in retirement vs smoothed number during working years.
I do agree if you can afford to wait ..then wait. My point is suffering with less money in your 60's so you MAY have more money if you make your 80's makes no sense. So , yes, if you have a nice nest egg , wait.
Define suffering.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
