What's The Number (vacation, friend, adult, housing)
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The biggest risk is that you are going to live a long time. That only happens to the lucky few, but someone is going to have to pay for it.
If your statistical life expectancy is age 85, there is probably a 1 in 4 chance you will live to 93 and a 1 in 10 chance you will live past 100. That is the reason for the big numbers. By buying deferred annuities you can manage this risk. Please see my article in the Financial Analysts Journal at https://larrysiegeldotorg.files.word...on-promise.pdf. (Moderator please do not delete this link; it is a scholarly article that I wrote myself, with no commercial benefit to me if C-D readers read it.)
I think your post makes a strong case for some kind of insurance or safety net. We don't all need that much just a semi random few of us do. I think if you make it past 85 and savings are depleted, SS should kick it up a few notches. And I say this knowing that I will likely not be a candidate for such benefits.
I think your post makes a strong case for some kind of insurance or safety net. We don't all need that much just a semi random few of us do. I think if you make it past 85 and savings are depleted, SS should kick it up a few notches. And I say this knowing that I will likely not be a candidate for such benefits.
This is why I'm deferring collecting Social Security until age 70. I don't see why somebody who opts to collect at age 62 should get a kicker at age 85 for making a poor life's decision. We all have to play by the same rules.
This is why I'm deferring collecting Social Security until age 70. I don't see why somebody who opts to collect at age 62 should get a kicker at age 85 for making a poor life's decision. We all have to play by the same rules.
Once someone runs out of money, we are going to pick up the tab one way or another.
Once someone runs out of money, we are going to pick up the tab one way or another.
Sure, but it's pretty bare-bones as it should be. The last thing we want to do is provide more disincentive for saving and budgeting. I don't see why the rest of us should have to foot the bill for somebody's bad decisions. I have a very high savings rate because I want a comfortable retirement. If somebody opts to spend their pay check, retire at 62, and quickly blow through their 401(k), why should that be my problem?
My goals: $2.5 million, paid-off $700k house, and $24k/year pension (need company to continue to vest or 10 years---fingers crossed).
My big uses of cash: property taxes - $14k/yr, HOA - $2k/yr, golf membership - $12k/yr.....figure I need $120k/year to easily cover my annual expenditures---there's some cushion here....but it will need to pay significant amount of taxes on RMD's on our 401(k)'s.
I think your post makes a strong case for some kind of insurance or safety net. We don't all need that much just a semi random few of us do. I think if you make it past 85 and savings are depleted, SS should kick it up a few notches. And I say this knowing that I will likely not be a candidate for such benefits.
That is a possible public policy suggestion, but since it won't happen, you'll have to arrange for your very-old-age income in the private insurance market.
My goals: $2.5 million, paid-off $700k house, and $24k/year pension (need company to continue to vest or 10 years---fingers crossed).
My big uses of cash: property taxes - $14k/yr, HOA - $2k/yr, golf membership - $12k/yr.....figure I need $120k/year to easily cover my annual expenditures---there's some cushion here....but it will need to pay significant amount of taxes on RMD's on our 401(k)'s.
You expect 24K monthly income flow combined with after-tax RMD's on $2.5 million to support a lifestyle that includes 28K in property tax, HOA and golf fees?
What is the cushion?
My goals: $2.5 million, paid-off $700k house, and $24k/year pension (need company to continue to vest or 10 years---fingers crossed).
My big uses of cash: property taxes - $14k/yr, HOA - $2k/yr, golf membership - $12k/yr.....figure I need $120k/year to easily cover my annual expenditures---there's some cushion here....but it will need to pay significant amount of taxes on RMD's on our 401(k)'s.
Quote:
Originally Posted by biscuitmom
You expect 24K monthly income flow combined with after-tax RMD's on $2.5 million to support a lifestyle that includes 28K in property tax, HOA and golf fees?
What is the cushion?
Good question. What will you spend the other 85k on. Holy poop Batman! What planet do I need to be on to have a cushion of 2.5 million in savings? The 24k is a nice bit but at that amount of assets of over 3 mil I could live high on the hog having champaign and caviar for breakfast.
Sure, but it's pretty bare-bones as it should be. The last thing we want to do is provide more disincentive for saving and budgeting. I don't see why the rest of us should have to foot the bill for somebody's bad decisions. I have a very high savings rate because I want a comfortable retirement. If somebody opts to spend their pay check, retire at 62, and quickly blow through their 401(k), why should that be my problem?
I sort of agree, but I am trying to address the reality that most people are not incented to save like you and I have. It's easy for us to say "well if you had only made it it a priority" but facing facts, we are oddballs. Trying to get everyone to save will not work; I think that has been pretty well proven. So I think we need a different answer.
You expect 24K monthly income flow combined with after-tax RMD's on $2.5 million to support a lifestyle that includes 28K in property tax, HOA and golf fees?
What is the cushion?
I think he is saying that the income flow from the $2.5 million, PLUS the $2000 a month pension, PLUS Social Security, adds to much more than his expenses. I am in a similar position but without the pension. Let's start with the $2.5 million, divide by 21.5 (the Sexauer-Siegel number), you get $116,000 annual income, growing with inflation for 20 years then staying flat. Add to that $62,000 in Social Security (with payout beginning at age 70; I'm married and have paid in the maximum), for a total pre-tax income of $178,000. It's not quite champagne and caviar but it's just fine.
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