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Old 12-10-2016, 10:18 AM
 
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it would make more sense to just buy a longevity annuity early on , that kicked in at 80 .

you can use your own money planning only to age 80 which can give you a far bigger draw . you can buy a differed longevity annuity for little money that pays big dollars if you buy it early enough . have it kick in at 80 and then go on their dime if you live that long . if not you had more money to live on then you typically would up to that point and because these annuity's are relatively cheap you did not commit much money to one and forfeit it .
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Old 12-10-2016, 10:26 AM
 
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Quote:
Originally Posted by NewbieHere View Post
I wonder if annuity is better for later when one really loses one ability to invest. Say after age 80.
Theirs is twenty years starting at age 62.
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Old 12-10-2016, 10:31 AM
 
Location: SoCal
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Originally Posted by TuborgP View Post
Theirs is twenty years starting at age 62.
What happens after they turn 82? No more money? That's crazy.
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Old 12-10-2016, 10:47 AM
Status: "Gaining Stability." (set 9 days ago)
 
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I do not understand what you guys are talking about.
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Old 12-10-2016, 10:49 AM
 
Location: Idaho
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Quote:
Originally Posted by mathjak107 View Post
that is lifetime i would think at that rate . i have seen them as high as a 6.50% payout for a 65 year old single

https://www.immediateannuities.com/i...es-step-1.html
I plugged in my info for a life immediate annuity quote for the current value in my 'previous pension' plan and compare it with the 'enhanced' annuity amounts provided by my pension plan and here is what I found

This site: 6.14%
My pension plan: 7.57%

I also have the option to get annuity with 50% survivor benefit. With my spouse (who is 5 years older) as the survivor, the payout reduces to 7.08%. If I choose my daughter, the payout reduces to ~5.6%.

We will need to show some reasonable monthly income if we want to get a mortgage (we plan to buy another house first before selling the current home) so I will go with the annuity option instead of receiving a lump sum. It's a small amount but every bit of income (in addition to my husband's SS) will help. We could cash out some investments to buy a house but there are several drawbacks: we will have to pay income tax on capital gain and we may have to sell when the market is down.
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Old 12-10-2016, 10:55 AM
 
29,774 posts, read 34,856,103 times
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Originally Posted by NewbieHere View Post
What happens after they turn 82? No more money? That's crazy.
They have a trust of their own. He administers his deceased parents trust. They inherit her mothers property where they will eventually live and they have LTC. He commands a big salary and is going back to work in a few months.
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Old 12-10-2016, 12:19 PM
 
Location: Omaha, Nebraska
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Originally Posted by goodlife36 View Post
I do not understand what you guys are talking about.
Here you go: Single Premium Immediate Annuity: Why They’re Useful and When to Buy Them

But back to your question. The extremely rough rule of thumb is that you can withdraw 3-4% of your 401k's total value (adjusted for inflation) safely over a 30 year retirement interval. So you'd need around $350,000 to safely generate $1,000 of monthly income. But as the others have already said, inflation rate and market fluctuations have a significant impact on your safe withdrawal rate.
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Old 12-10-2016, 02:01 PM
 
Location: The Carolinas
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Put away every penny you can. Make it pinch. That's all you can do. Up to and even beyond what your employer matches.
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Old 12-10-2016, 02:09 PM
 
Location: Mount Airy, Maryland
10,459 posts, read 5,922,719 times
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Quote:
Originally Posted by goodlife36 View Post
I do not understand what you guys are talking about.
An annuity is a deal where you save for a lifetime, then take a portion of your savings, give it to a company who then pays you out a monthly check, either for life or for 20 years in the example above. It doesn't really answer your question but it got started with the example of how $200,000 will generate $1,000 a month. But of course there are fees and as asked what do yu do after 20 years and the checks stop coming.

Now let's try to figure out your situation. The safe rule of thumb is you can take out 4% from your 401 at retirement and be fairly safe, at least for most people. . That withdraw can be adjusted for inflation, so if inflation is 3% you can afford to give yourself a 3% raise or $30 a month more. The figure to gemerate $1,000/month looks like $300,000. Now how do you get to $300,000 in 22 years? Well it all depends on your returns. I am using 6% which is a fairly safe return with 60% stock funds and 40% bonds. What I am coming up with is $560/month for 22 years at 6% growth will give you $300,989.

These are very rough figure and of course we have no idea how te stock market will return. But as a novice at this please don't make the rookie mistake of picking safer investments. If you are in a lot of cash for safety your return will be not even close to 6% so your monthly contribution to get to $300,000 will need to be 4 or 5 times higher than the $560 figure.

Last edited by DaveinMtAiry; 12-10-2016 at 02:22 PM..
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Old 12-10-2016, 02:21 PM
 
Location: Central Massachusetts
4,800 posts, read 4,844,519 times
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Quote:
Originally Posted by goodlife36 View Post
How much do I need to put away each month to draw $1000 per month during retirement? It will be saved over 22 years. Thank you.


If we are just talking 401k straight funds. If you get about $300k to $400k you should be able to pull $1k per month in income with a 3% growth rate and it should last you 30 to 40 years. What is going to be the question is will that be all you need in 22 years. I don't know if that point was made to you but I suspect not. If you are living frugally you should try to put aside $500k to $700k and if I guessed right that should be able to provide you an income stream that would be equivalent to that $1k per month now. If you are a couple you will want to have at least twice that for income unless you have access to a pension to compensate.
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