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Individuals that have saved successfully for retirement evidently cannot kick the habit. Even after they have reached retirement age they continue to save, on average, 31% of income, new research shows.
In many cases this continued saving comes from income streams guaranteed for life, such as a traditional pension, certain annuities, or Social Security. So further saving may have little to do with financial security—and much to do with a routine that has served them well over the years. If you are looking for the top secret of affluent retirees, it may be just that simple.
It’s tempting to assume that affluent retirees keep saving simply because they have the means to live as they wish and still have income left over. But that probably sells them short. They had to save or work hard for their pension to get there. It’s the habit that made it happen—and once established it’s tough to kick.
As I posted earlier our SS strategy was based on a fixed lifetime income that would enable us to continue to save and invest in a good way. We understand life events can get in the way but we have tried to plan for that. One of the advantages of LTCi is that it offers you to be in a nursing home and continue to save and invest. What for? Who cares it is the process that some are focused on.
Except that with current interest rates, factoring a PV rate into it would only yield a very low percentage every year (2%?), far below the 8%/yr that it grows while waiting until 70.
At least that's my take on it.
If you assume 2%, then you may be correct. But we have averaged way over that during for last 8 years, even when the market tanked. I think I used 5-5.5% when I did the analysis because we are almost always fully invested, although the investments change.
after break even is when ss develops an roi and because it is an inflation adjusted roi it can be quite a nice return .
if only 1 person in a couple makes it until 90 which today is about a coin toss the roi in real return is 5% .
that rivals a real return on a balanced portfolio from what amounts to a gov't bond . it would take the best outcomes with a balanced fund to see a 5% real return today starting out with rates this low and stocks so high .
the ss carry's no inflation or most important sequence risk so less powder has to be kept in reserve for poor outcomes and poor sequencing allowing higher spending .
If you assume 2%, then you may be correct. But we have averaged way over that during for last 8 years, even when the market tanked. I think I used 5-5.5% when I did the analysis because we are almost always fully invested, although the investments change.
The problem is that anyone with a decent concept of investing has done well over the last 8 years. There have been no real bears at all, just small corrections, and only 2 at around the 10% plus range. To actually plan on investments doing as well over the last 8 years would be delusional. Investors were saying the same thing in 2000. How many of us lost 50-60% on Technology sure things? Remember Qualcomm dropping from 200+ to 20?
yes and Qualcom right now is 56.32. So those of us who bought after the tech bubble did well. And as far as return "after break even" Stating at 66 as I have, break even puts me almost to 90 years old. I think I'll be fine enjoying the extra cash now and if I end up on the short end after age 90, I think I'll be able to handle it.
extra cash ? if you can't lay out the "extra cash " as you call it as part of the draw day 1 of retirement and just replace it later than you may really not have the option to delay .
it makes no sense to wait decades for the " extra cash " all you really should be doing is letting the bigger check down the road replace what was laid out up front as demand on your own portfolio falls off .
Well, I'm not retired - just started SS at fra. I put my SS check and a portion of my regular income in a balanced fund. What I mean by extra cash is that I will be able to enjoy some things in my life at ages 66 to 90 that I probably wouldn't have had I waited till 70. My IRA is not large and I wouldn't want to withdraw from it at this time.
Dave
extra cash ? if you can't lay out the "extra cash " as you call it as part of the draw day 1 of retirement and just replace it later than you may really not have the option to delay .
it makes no sense to wait decades for the " extra cash " all you really should be doing is letting the bigger check down the road replace what was laid out up front as demand on your own portfolio falls off .
So when you say "just replace it later" do mean replace the income stream or replace the money from the funds you used.?
For example in order for us to delay taking SS for a few years to allow it to grow we would have to take maybe 200-250K from a bigger pot. Now when we DO decide to take SS we won't need to take anything from the "pot" anymore-(except minimum distributions) and we weren't thinking of replenishing the 250K we took- are you saying we should?? (I hope I explained that clearly).
yes , you replace the extra money you drew out . you are basically fronting your self the age 62 payment from ss money right up front that you are not collecting.
so basically you calculate like you are getting that check at 62 but fronting it to yourself .
so as an example if you planned around 4% of your portfolio you would draw the whole thing from your portfolio while delaying . then once ss kicks in you can take the 62 amount you planned around and put the rest of the 69% bigger check towards refilling savings .
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