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Old 10-10-2017, 03:07 AM
 
71,602 posts, read 71,751,865 times
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Quote:
Originally Posted by TuborgP View Post
I would say that those in my situation really need to personalize their portfolio and identify possible uses for and hold as such. Regardless of LTCi etc, I have learned to still identify the recommended amount which is now 275k by Fidelity for health care cost. So that much is identified and checked off. I have a targeted amount in after tax funds which is a growth component from additional savings and RMD deposit. I was told previously that my amounts there were unrealistic for most and shouldn't be discussed.
The other money is targeted for poop happening with our pensions or SS and to provide a Self developed COLA based on those returns equaling a COLA. As I noted before a multiple of X times fixed income can be used to provide a COLA. 3X is a good amount.

This enables me to wrap my head around the portfolio and encourage it to grow over the next decade to be reviewed at age 80 if not sooner by circumstance. Did that getting to now or almost age 70. By taking SS months earlier than 70 the time table moved up.

I don't need to tell you that aimlessly investing without goals can lead to less than optimum results.
keep in mind the 275k guesstimate from fidelity is without using a supplement . just medicare and a drug plan is figured in that 275k . they did not calculate the effect of other insurances that mitigate things like supplements , advantage plans and LTC insurance since it varies to much from person to person
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Old 10-10-2017, 04:51 AM
 
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Quote:
Originally Posted by mathjak107 View Post
long as you maintain at least a 2% real return average over the first 15 years 4% will hold fine . that is easy enough to monitor along the way . you know if 5 years in you are below that a red flag should go up and certainly by 10 years a pay cut is in order .
as
so it has not a lot to do with just market returns . it is a combo of sequence risk , market returns annually , rates and inflation .


i did say if a retirement is underfunded a longevity annuity can help but if you don't delay ss first you are hurting yourself as there is no better longevity annuity ..

just having a higher equity position can surpass that longevity annuity as well . no guarantee but odds are almost 100% that over decades the higher equity position will have a better outcome . kitces already crunched those numbers for us.

even buying longer term bonds vs the longevity annuity decades before you use it like the annuity turned out to be very close . figuring a more average life expectancy as opposed to 100 made the difference between just buying bonds on the day you plunked the money down for the longevity annuity very very close in outcome .


kitce's found the longevity annuity did better because of mortality credits if you made it to age 100 , but not enough to make or break someones retirement .

don't forget there is a big cost to tying up money in a longevity annuity that won't be collected on for decades .

sure the payment is increased over time but when crunched if you made it to age 100 and most will not you saw a 5-6% before inflation return . equities over decades have generally been in the 9-10% range for comparison . in fact my fidelity insight growth model i have since 1987 is averaging almost 11% .

so while the longevity annuities can help , they really are not doing anything you can't likely do better on your own , unless you are that gun shy of markets .

if that is the case then the best deal for a couple would likely be an immediate annuity for one of them , a bit of their own investing and life insurance for the 2nd spouse instead of having that annuity as a joint annuity . that joint annuity will not only pay out more if a single but the tax free life insurance for the spouse is totally tax free . that is a big game changer and when pfau ran 10,000 different outcomes the comprehensive plan beat just investing on your own 67% of the time frames to date and allowed a higher draw rate than investing on your own 100% of the time because of little sequence risk allowing less to have to be held in reserve for poor sequencing .

that is a big difference since there are no taxes , no rmds at a time you will be filing single .

as it is drawing 4% inflation adjusted with a 60/40 mix has left you with more than you started with 90% of every rolling 20 year period since 1926 . it has left you with more than 2x what you started with 67% of the time and more than 3x what you started with 50% of the time .

that in itself is pretty darn durable as far as lasting , but that is because it is based on the most horrific outcomes to date . anything better just increases the odds and if raises are not taken along they way the real danger is dying with to much money left on the table that could have been enjoyed .
ooops meant to say rolling 30 year period not 20 year .
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Old 10-10-2017, 09:36 AM
 
29,782 posts, read 34,871,258 times
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Quote:
Originally Posted by mathjak107 View Post
keep in mind the 275k guesstimate from fidelity is without using a supplement . just medicare and a drug plan is figured in that 275k . they did not calculate the effect of other insurances that mitigate things like supplements , advantage plans and LTC insurance since it varies to much from person to person
Sure, but over coverage wonít hurt and if not spent more for the heirs.
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Old 10-10-2017, 10:31 AM
 
542 posts, read 251,323 times
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WOW, I go away for a few days and now trying to catch up. Too many posts to try to respond in sequence so a few comments off the top of my head after reading through.

First, I'm a "she". And not looking for advice, but just curious as to what others in my situation are doing. I've been drawing RMD's for the past couple of years and my husband began this year. It did come as a surprise that we would be forced to withdraw and pay taxes on money that we did not need to live on, rather than being allowed to leave that money to grow for possible future needs.

Someone, I think it was Mathjak, commented on his opinion that RMD's should be considered part of the overall amount of the total portfolio. Our portfolio has not suffered as a result of the RMD's that I've taken as the amount that is in Roth IRA's remains untouched and we have continued to invest in taxable funds. I've taken my RMD from my best-performing mutual fund and we continue to show total overall growth each year. I realize that this could change if the stock market tanks.

As we do have income from two pensions and two SS accounts, and medical coverage through the VA and TriCare for life, I guess that we are not the typical retired couple but we are not that unusual in this area where there are retired military and state workers.

Coloring any decisions that we make is that we are at the age where "things happen". It seems that all around me people that I know who have been leading active lives are being struck down by fatal or life-altering illnesses. Can't live in fear of what might come but can't hide my head in the sand either.
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Old 10-10-2017, 03:21 PM
 
71,602 posts, read 71,751,865 times
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i said the rmd's HAVE to be part of that portfolio before and after rmd's if you are drawing a pensionized income from it that was based on the full amount .

if you are not drawing a pensionized income from that portfolio ,expecting it to last as long as you do and just taking extra money out than do as you like, this does not apply .

the point is someone with 500k drawing a 20k income from the portfolio which is a 4% draw rate , who has to take a 15k rmd does not suddenly get to spend 35k which is a 7% draw rate. they just need to switch the hat as far as tax status on the account and nothing changes budget wise .
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Old 10-10-2017, 05:32 PM
 
Location: VT; previously MD & NJ
2,203 posts, read 1,347,729 times
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Quote:
Originally Posted by biscuitmom View Post
We plan to pass our RMDs to our sons/heirs as nontaxable (for them) gifts.
Nice idea
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Old 10-10-2017, 07:53 PM
 
3,132 posts, read 1,724,698 times
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Quote:
Originally Posted by mathjak107 View Post
i said the rmd's HAVE to be part of that portfolio before and after rmd's if you are drawing a pensionized income from it that was based on the full amount .

if you are not drawing a pensionized income from that portfolio ,expecting it to last as long as you do and just taking extra money out than do as you like, this does not apply .

the point is someone with 500k drawing a 20k income from the portfolio which is a 4% draw rate , who has to take a 15k rmd does not suddenly get to spend 35k which is a 7% draw rate. they just need to switch the hat as far as tax status on the account and nothing changes budget wise .
Was this not a post about a very particular situation with very particular details? So why are you talking about conditions that do not apply? The OP made quite clear about their finances and basically looking for ideas from others who may be in the same situation. There are retirees all over the financial spectrum.
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Old 10-11-2017, 03:16 AM
 
71,602 posts, read 71,751,865 times
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not everything in all our threads is going to be unique to one situation .especially because so many others are on the verge of taking rmd's and have a very bad misconception that it is extra money they can just spend because they do not understand their own situation and what these rmd's may represent . .

so it is always best to explain when something applies vs when it doesn't as well .

if the post has even one person realize that the rmd's they are taking is part of their income generation pool and not the free cash flow they thought then it was well worth the posting . it just may not apply to the op or some here .

we would lose half the value of a potential education in things if we only restrict it to the half that applies to someone when it comes to things like this and not the half that doesn't .
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Old 10-11-2017, 07:03 AM
 
3,132 posts, read 1,724,698 times
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Quote:
Originally Posted by mathjak107 View Post
not everything in all our threads is going to be unique to one situation .especially because so many others are on the verge of taking rmd's and have a very bad misconception that it is extra money they can just spend because they do not understand their own situation and what these rmd's may represent . .

so it is always best to explain when something applies vs when it doesn't as well .

if the post has even one person realize that the rmd's they are taking is part of their income generation pool and not the free cash flow they thought then it was well worth the posting . it just may not apply to the op or some here .

we would lose half the value of a potential education in things if we only restrict it to the half that applies to someone when it comes to things like this and not the half that doesn't .
Understand your motivation to educate. But you may want to consider posters know what they are talking about and respect their financial intelligence. Your responses would excellent to some other kind of query, not this and it is not helpful considering how much space you are taking up. I for one would have liked to see other responses that directly addressed the OPís post who took the effort to clearly explain her situation. Twice.
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Old 10-11-2017, 11:19 AM
 
Location: Columbia SC
8,974 posts, read 7,745,489 times
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I answered the OP early on but I will clarify. I do not need my RMD's for living expenses. I reinvest them in the same Mutual Funds they came from the difference being the new ones are not IRA's.

I have Fund A, declared IRA and collect RMD from. I have Fund A, non IRA where I invest some of my RMD money.

I have Fund B, declared IRA and collect RMD from. I have Fund B, non IRA where I invest some of my RMD money.

I have Fund C, non IRA where I invest some of my RMD money.

As you can see, I still like Fund A and Fund B. A&B are with Fidelity. C in Vanguard Wellington.
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