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Old 07-16-2019, 09:07 AM
 
1,736 posts, read 620,486 times
Reputation: 1827

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Quote:
Originally Posted by mathjak107 View Post
your math is so flawed ... i already showed you why

you need to compare results at time of drawing that 1k ... not buying an annuity today for 70k and first drawing 1k out 25 years from now , vs drawing 1k from the portfolio today by putting 250k in .... .that is not a comparison.

putting 70k in each and looking a head in 25 years at what you have is the comparison you need to look at .

I corrected the math. I am not talking about putting in anything (as nobody knows with certainty what you need to put into stock market to get anything out of it... as the year 1929 or 2008 had demonstrated), but am talking about the fact that you need to have $300k if you want to generate $12k per year by withdrawing 4%.



It is not a "flawed math". It is that you are comfortable predicting future from all possible versions of the past, and I am not. There are always new possible versions of the future market behavior, and some of them I don't want to know about.
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Old 07-16-2019, 09:37 AM
 
13,964 posts, read 7,434,967 times
Reputation: 25487
Quote:
Originally Posted by elnrgby View Post
It is not a "flawed math". It is that you are comfortable predicting future from all possible versions of the past, and I am not. There are always new possible versions of the future market behavior, and some of them I don't want to know about.

It's more that it cherry picks from the past discarding anything "really bad". Try introducing Weimar Republic economic performance into it.
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Old 07-16-2019, 09:41 AM
 
Location: RVA
2,172 posts, read 1,270,292 times
Reputation: 4492
Naturally, only you can decide what you are comfortable with. None of the risks are aimed at you personally, but are risks that anyone looking at such a vehicle should consider. Naturally, you have made it clear that you have diversified your risks, personally, and are comfortable with your decisions. (4 different annuities w/different companies, real estate, etc) so you’ve made your choices clear. But in general, the risks of buying a 25year deferred annuity vs traditional investments are : Lack of certainty that the insurance company will be around in 25 years, inflation, lost opportunity for the premiums paid, loss of estate value, loss of use due to early demise, impossible to predict the cost of an equal annuity 25 years in the future ( think HC costs) and of course, people making fun of you on investment or retirement forums ;-)

In my own case, I knew I would be working until at least 60, and bet on staying with my company (utility) rising within the organization and collecting a nice pension, so an annuity was not even on my radar. I also have always planned on delaying filing for SS, which is a superior annuity, for little relative cost.
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Old 07-16-2019, 09:51 AM
 
1,072 posts, read 519,936 times
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Quote:
Originally Posted by Perryinva View Post
When cabound1 referred to cheaper purchasing an annuity at 45, I assumed they meant an immediate annuity, not deferred to age 70! I know no one, except the posters here, that would ever consider purchasing an annuity 25 years before you can use it. The risks of that are staggering, IMHO.
I think that was elnrby. Iím not an annuities fan. But it was Saturday night, so who knows...:-)

I canít use annuities for myself, but imo they make sense for older risk intolerant retirees. I have a friend whose wife just died. Heís 80 and has had pension checks his whole retired life. I found him an investment guy who put the wifeís 401k into an annuity. Made perfect sense for him.
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Old 07-16-2019, 09:56 AM
 
Location: RVA
2,172 posts, read 1,270,292 times
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Sorry, I looked back and it was elnrby in a quote you posted. I apologize for the confusion.
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Old 07-16-2019, 10:33 AM
 
1,736 posts, read 620,486 times
Reputation: 1827
Quote:
Originally Posted by Perryinva View Post
Naturally, only you can decide what you are comfortable with. None of the risks are aimed at you personally, but are risks that anyone looking at such a vehicle should consider. Naturally, you have made it clear that you have diversified your risks, personally, and are comfortable with your decisions. (4 different annuities w/different companies, real estate, etc) so youíve made your choices clear. But in general, the risks of buying a 25year deferred annuity vs traditional investments are : Lack of certainty that the insurance company will be around in 25 years, inflation, lost opportunity for the premiums paid, loss of estate value, loss of use due to early demise, impossible to predict the cost of an equal annuity 25 years in the future ( think HC costs) and of course, people making fun of you on investment or retirement forums ;-)

In my own case, I knew I would be working until at least 60, and bet on staying with my company (utility) rising within the organization and collecting a nice pension, so an annuity was not even on my radar. I also have always planned on delaying filing for SS, which is a superior annuity, for little relative cost.



The insurance companies from which I have annuities have been around far longer than I have been around, and will fail only if the world fails. One of them (New York Life) in 2008-2009 sent out the newsletter cheerfully proclaiming "We are built for times like these!". I think it might have even had a smiley face on it :-). Inflation (or lack of it) we discussed. Lost opportunity for the premiums paid? Should I have worried about $70k and spent time worrying how to invest it, when I should have been focusing on doing my job which paid five times that premium per year? I had different priorities when I was 45 :-). Loss of estate value? I don't have kids - the more "estate value" I can use for myself, the better for me. Loss of use due to early demise - I don't expect to worry about that after my demise. Cost of equal immediate annuity in 25 years - costs of annuities have been steadily going up. People who have a need to make fun of the others on public forums are beneath pathetic.



I will of course delay SS til 70 too, and in the meantime can work as much as I want (or not at all) because I am fully covered by immediate annuities already, have been for 10 years, since age 49. Since I have been covered with annuities, I have been able to save 100% of my post-tax income, and use it for different purposes. Immediate annuities starting at 45 have enabled me to take or leave work at 49 - I still work on/off (I am self-employed, and always have contract work available), but that is not because I need it financially. Delayed annuities are a compensation for the expected inflation. The condos which I use for change of scenery are also a backup for a catastrophe. Mutual funds (of which I also have some, believe it or not :-) are for who knows what; I don't rely on them for anything.



My approach is based on having a good career but being stressed out by it, and wanting to be able to get out any time I wanted. But not to get out in order to spend life managing money :-). Insurance companies do that for me, which is the meaning of the word insurance basically...
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Old 07-16-2019, 10:49 AM
 
71,759 posts, read 71,853,273 times
Reputation: 49307
other than a yearly rebalance i doubt many retirees are spending their lives managing their money . you make it sound like such a difficult thing .
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Old 07-16-2019, 01:15 PM
 
14,264 posts, read 24,013,182 times
Reputation: 20097
Quote:
Originally Posted by mathjak107 View Post
other than a yearly rebalance i doubt many retirees are spending their lives managing their money . you make it sound like such a difficult thing .
Yes, maybe three hours a quarter, if that.
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Old 07-16-2019, 01:22 PM
 
71,759 posts, read 71,853,273 times
Reputation: 49307
i have always been interested in investing but portfolio mgmt take us 30 seconds a week if that
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Old 07-16-2019, 05:28 PM
 
29,789 posts, read 34,889,516 times
Reputation: 11715
Quote:
Originally Posted by LivingDeadGirl View Post
No way? Who comes up with this stuff? I laugh at most of the retirement articles. They have no basis in reality.
I love reading retirement articles. I do so realizing that for better or worse the reality being focused on may or may not be mine.
When I read the Money Magazine article about MathJak I realized we were on entirely different paths to what is now a similar reality.
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