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well lets take 70k , throw it in the s&p 500 for 25 years instead of buying that annuity so early .....that would be 1993 to 2018
that includes the savings and loan collapse , the 2000 recession , the great recession , and the lost decade for stocks ... in short , a crappy time for equities yet they still got over 9% .
70k would have been 676,900 by age 70 as one dollar grew to 9.67
676,900 in a 50/50 model at 70 would generate almost 30k a year starting at age 70 since there are 25 years left .....with a 90% chance of ending with more than you started
even if we decided to spend the 185k for the annuity , we would have 492,000 left generating over 21k a year with 90% odds of ending with more than you started plus the 12k from the annuity ....
world of difference in outcome
Well, let's take $70k and give it to Bernie Madoff to manage. In his model, this yields $1M in ten years, whereas in reality it yields minus $70k :-). No thanks.
In other words, with the exception of two people I know who spend 24/7 in front of the computer and do their own trading (and have indeed done incredibly well with stocks), you and those few Madoff victims are the only people who ever told me they had that kind of yields.
But you said in the other post that you structured your retirement income in such a way that you do not have to pay anything for health insurance due to the ACA? Are you referring to your health insurance payments in the earlier years?
My primary home condo is in Boston, and MA has had state-mandated health insurance for about a decade before the ACA existed. Since I have been self-employed for most of my career, I have paid my own health insurance for many decades, so that expense is actually normal to me anyway. Before MA health insurance mandate (which I think started in 2006), I had a catastrophic insurance through a professional society with a huge ($25k) annual deductible, but the cost of it was only something like $450 a year. Then, between the ages 46 and now, 59 (ie, since it became mandatory to buy MA insurance), I've been paying between $2,500 and $4,800 per year, which is not horrible (I think MA has the lowest health insurance premiums in the nation. The same Bronze plan that I have costs about $5,200 per year this year for the oldest recipients, ie, 64 year olds). Paying five grand per year (which I would be paying anyway as a self employed person - only it is not taxable if I work) is certainly not enough to dissuade me from giving myself a few earlier years of freedom :-).
I was 42 when I retired, 10years before ACA. I had been a contractor on and off so understood the cost of individual insurance, which was quite low for a healthy 42 year old. I think I paid about $200/mo for insurance then (2004). Obviously, I had no idea how much that cost was going to escalate.
When the 2008 mess happened, I, like many people, took a hard look at where I was at. I decided to stay the course with equities and eliminate unnecessary expenses. I bought a home right around then and was unable to qualify for a mortgage since I had no non-investment income. To make a long story short, by the time the ACA was about to become a reality, I was already in a position where I had very low expenses, thus little income need.
Well, let's take $70k and give it to Bernie Madoff to manage. In his model, this yields $1M in ten years, whereas in reality it yields minus $70k :-). No thanks.
In other words, with the exception of two people I know who spend 24/7 in front of the computer and do their own trading (and have indeed done incredibly well with stocks), you and those few Madoff victims are the only people who ever told me they had that kind of yields.
stop with this nonsense .... if you fear investing great , but what your answers are , comparing the s&p 500 to madoff are ridiculous . from a financial standpoint the argument you are making for buying an annuity 25 years early are weak , you are fear mongering and the numbers you are throwing out are weak in comparison ---the end--the facts and math speak for themselves .
I was 42 when I retired, 10years before ACA. I had been a contractor on and off so understood the cost of individual insurance, which was quite low for a healthy 42 year old. I think I paid about $200/mo for insurance then (2004). Obviously, I had no idea how much that cost was going to escalate.
When the 2008 mess happened, I, like many people, took a hard look at where I was at. I decided to stay the course with equities and eliminate unnecessary expenses. I bought a home right around then and was unable to qualify for a mortgage since I had no non-investment income. To make a long story short, by the time the ACA was about to become a reality, I was already in a position where I had very low expenses, thus little income need.
Ah, I see. Well, I am in a different situation with that, partly because I still take a work contract here and there every year, and because I am not an investor (annuity yields are taxable), but MA healthcare premiums are not horrible (again, 64 year olds can get a full-price (ie, not ACA subsidized) plan for $430 a month) and are not something that would hold me back from retiring early.
stop with this nonsense .... if you fear investing great , but what your answers are , comparing the s&p 500 to madoff are ridiculous . from a financial standpoint the argument you are making for buying an annuity 25 years early are weak , you are fear mongering and the numbers you are throwing out are weak in comparison ---the end--the facts and math speak for themselves .
But the fact that nobody I know achieved that kind of yields (unless devoting their entire life to money management) happens to speak stronger to me. I do not know why your math does not translate into every US citizen who invests $100k having $3M thirty years later, but the fact is that it doesn't. I am in a profession where people can (and do) easily save $100k per year in their mid-30s, and I would know more than zero people who had that kind of market yields if your math described an average, common result of investing in stocks.
who cares who you know ...that logic makes zero sense ...those are the numbers -period .... you had to do nothing at all but let it ride in pretty much any diversified stock fund to see those numbers.
you can do it yourself ..... you can see the same numbers from the models i use too on their site ...pick any return calculator you like ... they are all going to show the same results .
if they don't then it is their own behavior not markets ....
the reason most don't is they are dollar cost averaging in , not lump sum ... if you lump sum then those results are what you would get unless you did something to alter those results yourself by not staying invested ...there is no magic going on ...if you stay in , those are your results less any taxes of course ..
what you are doing is just what is called believing your own bull , which is based on nothing except what you think. then you are coming up with ludicrous reasons for believing this stuff . like comparing the 500 largest companies in the country in market capitalization to bernie madoff .....
Last edited by mathjak107; 07-14-2019 at 02:29 PM..
But the fact that nobody I know achieved that kind of yields (unless devoting their entire life to money management) happens to speak stronger to me. I do not know why your math does not translate into every US citizen who invests $100k having $3M thirty years later, but the fact is that it doesn't. I am in a profession where people can (and do) easily save $100k per year in their mid-30s, and I would know more than zero people who had that kind of market yields if your math described an average, common result of investing in stocks.
How many people had $100K to invest in 1989? Many of us who consider ourselves to be "senior" investors had $0 in 1989, and began slowly in the 1990s, missing most of the bull market. Yeah, we say >20% annual returns consecutively in the late 1990s, but those returns were on a then-paltry capital.
Those who are in a position to save $100K/year today, will reach their $3M in less than 30 years from now... but what will those $3M then be worth? That's a consideration that's often omitted in these calculations.
And most importantly, there's ample evidence that most investors can't leave their money alone. They trade, exchange, gamble... arriving at less cumulative return than the market itself.
The 1980s and 1990s were a halcyon epoch of great returns. Those who were already siding on a tidy sum in the late 1970s, and who had the perspicacity to remain fully invested in the market, were rewarded handsomely. On the other hand, those who started 20 years later, got spooked in the Great Recession and sold at the nadir of 2009, got slaughtered.
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