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Post by yogibearbull on Jul 31, 2021 13:28:42 GMT
For me, the sense of time has not changed - when I am having fun, it seems to go by fast and when I have to do things I do not enjoy (like sleep) it seems to go by slow. On the topic of doing new things, when I seek information from Asset Managers they give access to / provide different info depending on whether I am an RIA or just an individual investor. Sometimes, this designation also effects whether a particular class of an OEF is available or not. Mostly for the first reason, I am thinking of getting an RIA certification. How much does it cost initially and annually? I will do some internet search about this but thought I would also post in case somebody here has experience in this matter or knows of hand a source for this info. I have a family member in securities business who laughed at the idea. For RIA, Series 65 exam is required and fee is $187. Then you to register with a state(s) at an average fee of $215. Then you have to renew it annually. You have to take continuing education credits to maintain RIA. Unlike other broker licenses, sponsorship from a firm is NOT required. If you are a RIA affiliated with a firm (own or another), most fund firms and brokerages may waive fees as courtesy. This seems LOT of headache to just access some fund info and fund classes.
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Post by shipwreckedandalone on Jul 31, 2021 13:42:57 GMT
"Let's look at more realistic numbers. If you start at age 62 you get $1700 and at age 66 $2244(8% more annually = 32% higher). Assume 8% annual return and investing monthly. COLA is unknown, so let's assume zero."
You cannot assume zero COLA. The average SS COLA increase since 1975 has been 3.70%. Avg long term CPI was 3.0%. Person with earning history of $102,000 would draw $1707 at 62 and $2276 at age 66.
BUT....for each year going forward for the remaining years of their lives both would compound at 3-3.7% yearly. $2276 is a higher base from which to compound. Could make a difference based on how many years you plan to live. $1707 * .03 = $51 $2276 * .03 = $68 $17 per month difference year one
$1758 * .03 = $52 $2344 * .03 = $70 $35 per month difference by year two
$1810 * .03 = $54 $2414 * .03 = $72 $53 per month difference by year 3 or $636/ year
point being....be aware of the possibility that if an investor believes we will enter inflation the compounding could be much higher than 3%. The SS COLA estimates for 2021 range from 5.3% to 6.1%.
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Post by paulr888 on Jul 31, 2021 14:15:54 GMT
For me, the sense of time has not changed - when I am having fun, it seems to go by fast and when I have to do things I do not enjoy (like sleep) it seems to go by slow. On the topic of doing new things, when I seek information from Asset Managers they give access to / provide different info depending on whether I am an RIA or just an individual investor. Sometimes, this designation also effects whether a particular class of an OEF is available or not. Mostly for the first reason, I am thinking of getting an RIA certification. How much does it cost initially and annually? I will do some internet search about this but thought I would also post in case somebody here has experience in this matter or knows of hand a source for this info. I have a family member in securities business who laughed at the idea. For RIA, Series 65 exam is required and fee is $187. Then you to register with a state(s) at an average fee of $215. Then you have to renew it annually. You have to take continuing education credits to maintain RIA. Unlike other broker licenses, sponsorship from a firm is NOT required. If you are a RIA affiliated with a firm (own or another), most fund firms and brokerages may waive fees as courtesy. This seems LOT of headache to just access some fund info and fund classes. I chuckled too. Aside from my impression that would be a lot of work, I thought our brain trust had better judgment.
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Post by FD1000 on Jul 31, 2021 19:09:22 GMT
"Let's look at more realistic numbers. If you start at age 62 you get $1700 and at age 66 $2244(8% more annually = 32% higher). Assume 8% annual return and investing monthly. COLA is unknown, so let's assume zero." You cannot assume zero COLA. The average SS COLA increase since 1975 has been 3.70%. Avg long term CPI was 3.0%. Person with earning history of $102,000 would draw $1707 at 62 and $2276 at age 66. BUT....for each year going forward for the remaining years of their lives both would compound at 3-3.7% yearly. $2276 is a higher base from which to compound. Could make a difference based on how many years you plan to live. $1707 * .03 = $51 $2276 * .03 = $68 $17 per month difference year one $1758 * .03 = $52 $2344 * .03 = $70 $35 per month difference by year two $1810 * .03 = $54 $2414 * .03 = $72 $53 per month difference by year 3 or $636/ year point being....be aware of the possibility that if an investor believes we will enter inflation the compounding could be much higher than 3%. The SS COLA estimates for 2021 range from 5.3% to 6.1%. My prior numbers were wrong. I looked at the wrong column. New calculation: I assumed 1) 2.5% yearly COLA and added it to the yearly performance 2) Joe takes SS at age 62 at $1500 monthly 3) Sam waits 4 years and takes SS at age 66 at $2130 monthly...8% annually more per SS (32%) + 2.5% inflation (10%) = 42% (Forget about compounding) 4) Paul waits 8 years after Joe and takes SS at age 70 at $2760 monthly...8% annually more per SS (64%) + 2.5% inflation (20%) = 84% (Forget about compounding) 5) Annual performance is 11.5%. 8% market performance + 2.5% COLA added My numbers show that Joe wins. Attachments:
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Post by liftlock on Aug 1, 2021 20:38:50 GMT
Chang ... This is a very important decision and I would not depend solely on the collective wisdom of the brain trust here even though we are so darn smart. There are wealth advisors who keep up with all the changes to strategy and I would lean on one of the ones who do. The smartest guy I know on this topic is Rick Plum with Lucia Securities in San Diego, CA. But do chose a CFP. I agree that claiming Social Security is an important decision, however, I would not depend solely on any human being for claiming advise. The claiming options can be complicated, especially for married couples. It's too easy for someone in the social security office or a well credentialed wealth advisor, even a CFP, to overlook a viable claiming option. I suggest using one or more of the paid Social Security Benefit calculators which use automated decision rules to identify optimal claiming strategies. They are cheap insurance for a making a well considered long term claiming decision. maximizemysocialsecurity.comwww.socialsecuritychoices.comwww.socialsecuritysolutions.com When I showed my well credentialed CFP the claiming strategy recommended by one of these services, my CFP responded that they never thought of that.
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Post by shipwreckedandalone on Aug 1, 2021 20:54:57 GMT
Thanks FD. Of course it does, because you are using 8% stock market gains which matches the 8% SS growth each year if the recipient elects to wait. The problem is 8% SS growth is guaranteed and the 8% stock market growth comes with high degree of risk particularly after a 715% 12 year S&P 500 bull market run. Your model does not work when compounded at anything less than 6.4% stock market growth with no withdrawals. Also, income taxes and capital gains taxes from the portfolio would need to be subtracted from the gain for first 4 years in the "start at age 62" model for those with combined gross income over $34,000. Most Americans (in my family) need SS for subsistence whereby saving it in order to compound would not be accepted by them. I am just not sure anyone with fiduciary responsibilities would recommend something like this.
Liftlock offers a good suggestion in this thread.
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Post by Chahta on Aug 1, 2021 21:33:47 GMT
The problem with those “calculators” is they, along with everyone else, have no idea when you will die. The longer you claim the more you will get. The shorter the time the less you will get. For me it was a calculated risk to wait the 4 years to 66 because I only had my SS benefit to count on and the last 4 years my benefit grew a lot due to income growth at work. The possibility of income growth has not been discussed here.
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Post by paulr888 on Aug 1, 2021 22:43:15 GMT
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Post by chang on Aug 2, 2021 2:46:37 GMT
Excellent. I watched the first one (Mack); will watch the second one later. However, she stresses the dollar-difference between SS payments at age 62 vs age 70 (76% higher) several times, but she never mentions the gains to be had by taking SS at age 62 and investing it. Also, she only hints once at the "health" factor in the equation, which I mentioned in the OP. Hopefully during those eight years between 62 to 70 I will be healthy and vigorous, and will travel, do all kinds of fun things, and spend money. That ability will decline into my 70s and 80s. After 90, I don't see myself buying jet skis or riding elephants. In that respect, her discussion could be considered unbalanced. But she's smart as hell and makes many good points - a good watch.
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Post by paulr888 on Aug 2, 2021 10:23:41 GMT
Good points Chang. I would guess the % of people taking SS early and investing it is a small %. I don't know. I certainly did not do that. I used it to pay my bills, high golf club membership expenses and high medical insurance premiums before eligible for Medicare. Regarding your less active lifestyle as you get older, income is still income. If you have long term care expenses, caregiving at home or in facility, they very expensive. And if no long term care insurance this would be a way to help co-fund those expenses. And even if you do, this would lower the drain on your retirement money.
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Post by racqueteer on Aug 2, 2021 11:19:02 GMT
Excellent. I watched the first one (Mack); will watch the second one later. However, she stresses the dollar-difference between SS payments at age 62 vs age 70 (76% higher) several times, but she never mentions the gains to be had by taking SS at age 62 and investing it. Also, she only hints once at the "health" factor in the equation, which I mentioned in the OP. Hopefully during those eight years between 62 to 70 I will be healthy and vigorous, and will travel, do all kinds of fun things, and spend money. That ability will decline into my 70s and 80s. After 90, I don't see myself buying jet skis or riding elephants. In that respect, her discussion could be considered unbalanced. But she's smart as hell and makes many good points - a good watch. The finance guys in the back offices have pretty much assured that the choice is, on balance, a wash; no? My feeling is that if you need the money to do the type of things Chang is mentioning, PRIOR to 70, perhaps THAT needs to be considered as well. My wife and I did a lot of traveling between 62 and 70, and very little post-70 after my TBI. Had we waited to 70 to collect, I think we'd be somewhat unhappy now. I also never took the time to evaluate the possible effect of inflation on the 'real' values involved. For me, the choice was easy and the right one, as it turned out.
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Post by FD1000 on Aug 2, 2021 13:27:20 GMT
Excellent. I watched the first one (Mack); will watch the second one later. However, she stresses the dollar-difference between SS payments at age 62 vs age 70 (76% higher) several times, but she never mentions the gains to be had by taking SS at age 62 and investing it. Also, she only hints once at the "health" factor in the equation, which I mentioned in the OP. Hopefully during those eight years between 62 to 70 I will be healthy and vigorous, and will travel, do all kinds of fun things, and spend money. That ability will decline into my 70s and 80s. After 90, I don't see myself buying jet skis or riding elephants. In that respect, her discussion could be considered unbalanced. But she's smart as hell and makes many good points - a good watch. Same here. I listen to the first one, that was enough for me to have the same conclusion....unbalanced. But she isn't the only one, most analyses hardly go into the idea of investing the benefits. But, I did learn something new, if you retire at age 62 instead of 66, you get 75% instead of 100% assuming 66 is full retirement, see ( link). This is better than I thought were you lose 8% annually which is 32%. That gives age 62 another benefit. From age 66 to 70 you get additional 32%, see ( link).
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Post by javajoe on Aug 2, 2021 13:47:03 GMT
From my perspective, most SS calculators, articles, commentary, and analysis spend way too much time focused on monthly income amounts/variations and not nearly enough time talking about someone's actual health factors and life expectancy. Aaccording to the U.S. Census Bureau the average age of widowhood is 59 years old.
-JavaJoe
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Post by bb2 on Sept 3, 2021 18:11:35 GMT
I guess getting into the nitty gritty of income tax brackets isn't worth the effort. No mention of it here in 3 pages of comments. The numbers are too tight.
I've tried and it's really not worth it; at least for this guy who never looks at a credit card statement.
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Post by saratoga on Sept 26, 2021 12:30:36 GMT
I received SS at 70 at near maximum. This is investment-risk free, inflation-risk free, (nearly) scam-risk free, tax advantaged money that alleviates longevity risk. It is my backstop in case things do not work out in my financial life. I am very happy with my decision. These considerations are particularly important for the usual case where survivor benefit plays a significant role.
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Post by steelpony10 on Sept 26, 2021 13:30:34 GMT
I received SS at 70 at near maximum. This is investment-risk free, inflation-risk free, (nearly) scam-risk free, tax advantaged money that alleviates longevity risk. It is my backstop in case many things go wrong in my financial life. I thought it was a very good deal and I am very happy with my decision. We did pretty much the same type of analysis using the loopholes available then. The result was closing within about $100 of the monthly family max. We estimated a yearly average raise of 2% then which covered a great deal of our estimated personal inflation rate. Stumbling into a low inflation rate environment at the start combined with our investment strategy helped increase our portfolio value over the last twelve years with Mr. Markets cooperation as an unknown bonus.
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Post by Mustang on Oct 6, 2021 17:49:42 GMT
I retired the first time at 46 with a pension. I retired the second time at 60 with a paid off house and a 401K. I didn't do any analysis. I took social security at 62. If I hadn't I would have had to draw from my 401K. Six years later when my wife took social security at 62 I retired from my part-time job. Withdrawing and spending are two different things. Just because someone takes social security at 62 doesn't mean they have to spend it. Taking it and investing it means that 8 years of social security plus returns are available at 70, not just for the retiree but also any heirs. In my case taking social security at 62 meant that I left my 401K untouched for 8 years. If I had waited and died at 70 that money would not be there. Currently my wife's social security is being invested. Now that I'm taking RMDs they are being reinvested.
I'm sure someone somewhere has done the analysis comparing taking social security at 62 and investing it to taking social security at 70. I didn't need to. They say a bird in the hand is better than two in the bush. In this case the bird in the hand (accumulated social security) can be used later by my wife or inherited by our kids. That to me beats any slight dollar advantage waiting might have.
Over the last 10 years my 401K made 11.3%. So maybe there wasn't a slight advantage to waiting.
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Post by bb2 on Sept 12, 2022 20:41:21 GMT
Renewed coverage of this topic in Barron's this past week, including how certain the benefit will be in the future, considering the budget. It's felt that anyone within 10 yrs of retirement when the change is made, would avoid the change.
As far as when to start your check, waiting is better - reasons all covered in this thread. A buddy recently had a stroke and started his right after, so obviously individual considerations apply. I'm waiting till 70 to add about a third again to the check.
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Post by ECE Prof on Sept 12, 2022 21:37:37 GMT
" I'm waiting till 70 to add about a third again to the check. "
An alternative idea is to collect the SS early and invest in the market, if you have other income to cover your expenses. The return of the stock market may be better than what the FEDs pay for delaying. I don't know the math because I never studied this.
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Post by bb2 on Sept 12, 2022 23:01:29 GMT
Yea, I get all that. Maybe I'm getting tired of living off risk. I just like the idea of the annuity and the bigger check vs. the unknowns of the market and longevity. I can get to 82 1/2 years I think, breakeven age. Maybe 100.
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Post by chang on Sept 13, 2022 7:00:20 GMT
As far as when to start your check, waiting is better - reasons all covered in this thread. A buddy recently had a stroke and started his right after, so obviously individual considerations apply. I'm waiting till 70 to add about a third again to the check. Actually, the takeaway I got from this (and previous) discussion was to take SS as soon as possible - age 62, I assume. Why, in a nutshell? 1. If I need it, then I need it. 2. If I don’t need it, then I can invest it. 3. I don’t know how long I’ll live. Take it when it’s offered. 4. I am likely to remain active and spend money (on travel and entertainment) between ages 60-80. So the money can be put to good use. After 80, I probably won’t have much of a jet-setting lifestyle. So the money is more useful earlier. 5. Who knows how long SS will survive? Take it when you can.
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Post by racqueteer on Sept 13, 2022 11:24:08 GMT
As far as when to start your check, waiting is better - reasons all covered in this thread. A buddy recently had a stroke and started his right after, so obviously individual considerations apply. I'm waiting till 70 to add about a third again to the check. Actually, the takeaway I got from this (and previous) discussion was to take SS as soon as possible - age 62, I assume. Why, in a nutshell? 1. If I need it, then I need it. 2. If I don’t need it, then I can invest it. 3. I don’t know how long I’ll live. Take it when it’s offered. 4. I am likely to remain active and spend money (on travel and entertainment) between ages 60-80. So the money can be put to good use. After 80, I probably won’t have much of a jet-setting lifestyle. So the money is more useful earlier. 5. Who knows how long SS will survive? Take it when you can. 6. There's a 14% chance you get nothing at all by waiting.
7. Related to 2 above, if you didn't need it until age 71 and invested it instead, then break even is even later; which makes everything above even worse.
8. Inflation has additional time to eat away at the value of the benefit.
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Post by win1177 on Sept 13, 2022 13:57:09 GMT
Interesting discussion, and I’m still torn by the decision. I retired at the beginning of 2022, 63 years old, with a wife who just turned 63 in August. We’re 9 months apart in age, I will turn 64 in November 2022. Had originally planned to wait until age 70 for myself, but now starting to reconsider. I have several health conditions (well controlled AODM, HTN, stable Coronary artery disease) and my family history isn’t “great” for longevity. Wife has longevity on her side. But I’m in great shape, AODM is very well controlled, walk/ jog 6-8 miles/ day, and weight is now at Ideal BW range (6’3”, 182 lbs.). Blood sugar numbers are now “non-diabetic”.
We also do NOT “need” the money, it would be invested (or spent on fun stuff). SO, I’m leaning on “splitting the difference”, taking my SS at full retirement age (66 and 8 months) and having the wife start drawing hers shortly after her retirement (hopefully soon, we don’t “need” her to work). Will invest both checks. Just feel there are so many “what ifs” that this may be the best way to go.
Win
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Post by Mustang on Sept 13, 2022 14:23:19 GMT
My younger brother, a truck driver, had to consider when to take social security. He decided to take it at full retirement age (66 and change). Why? Medicare at 65 and taking it at 66 allows him to continuing working part-time. He has a great employer who paid him his full wages while he was down two months recovering from colon cancer surgery last year. There is a big shortage of truck drivers now and this arrangement helps both of them. That, and he discovered how boring retirement can be during his recovery.
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Post by Chahta on Sept 13, 2022 14:51:32 GMT
I took SS at 66 and worked for 1 year at 26 hours per week. That was enjoyable. Then retired at 67. I don't have a problem being bored. win1177 , waiting in your case to take SS is meaningless. You have no income problems or problems paying taxes. In my case I got into V-tach at 65 and was "cured" by ablation. Still take a beta-blocker. It was a wakeup call to say heck with working. After a while money becomes meaningless. All this investment talk and obsession with making money is small. Concentrate on the fun stuff. Please post about the fun stuff you do. That is a motivator. Have you been out walking in your tree farm?
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Post by win1177 on Sept 13, 2022 15:32:30 GMT
Yes, I have been walking some at our tree farm, but NEED to get up there much more frequently. It’s been brutally hot here in SC this summer, and So I try to limit trips there in July and August. Now that it is early fall, planning to rectify that! The leaves will start changing soon, one of the prettiest times to be there. Hunting season starts in one month, my favorite time of year.
My wife and I had a real tragedy hit her family (and ours) recently. My Brother in Law (her only sibling) passed away at age 61 in late July while on vacation with his wife and four children to Canada. He had JUST retired, was financially very well off, and otherwise totally healthy except for atrial fibrillation. He had a cardiac ablation in early June, top notch program (Yale), but suffered an extremely rare complication. An apparent hole in his left atrium formed a fistula (channel) to his esophagus after the ablation. Infection set in, blood clots then formed in left atrium (top left chamber of heart), and seeded to his brain, causing multiple devastating strokes. Just goes to show we each ONLY have today, NOTHING is guaranteed in life!
Needless to say, my wife is devastated! As is his bride of 35 years and his four adult children. I’m also really bummed/ saddened by his passing, I first met Craig when he was a senior in HS 45 years ago, and I started dating his sister (and now my wife) when we were both Freshman in our state University. Craig and I have essentially grown up together! His service is this Saturday, and I am realizing how much this has changed things for both his family, as well as myself.
It has caused me to rethink many things in life, including finances, plans in retirement, etc., etc. Express your feelings/ emotions to your loved ones today and every day, this has really reminded me of that!
Win
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Post by Chahta on Sept 13, 2022 16:44:49 GMT
In everything it’s either time or money. You have money so make the time. Money doesn’t buy happiness but it sure as heck frees you up to get happy. I’m in TN but I don’t let humidity and heat keep from doing what I want. I play golf no matter the weather, unless it is raining too much.
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Post by liftlock on Sept 13, 2022 18:30:23 GMT
Actually, the takeaway I got from this (and previous) discussion was to take SS as soon as possible - age 62, I assume. Why, in a nutshell? 1. If I need it, then I need it. 2. If I don’t need it, then I can invest it. 3. I don’t know how long I’ll live. Take it when it’s offered. 4. I am likely to remain active and spend money (on travel and entertainment) between ages 60-80. So the money can be put to good use. After 80, I probably won’t have much of a jet-setting lifestyle. So the money is more useful earlier. 5. Who knows how long SS will survive? Take it when you can. 6. There's a 14% chance you get nothing at all by waiting.
7. Related to 2 above, if you didn't need it until age 71 and invested it instead, then break even is even later; which makes everything above even worse.
8. Inflation has additional time to eat away at the value of the benefit.
6. The 14% change of getting nothing at all is likely offset by a similar probability that one will live beyond their life expectancy. The possibility of running out of money or not having enough to live on before one dies may be a greater risk for some.
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Post by FD1000 on Sept 13, 2022 20:41:15 GMT
My wife and I are taking SS at age 65 because: 1) My calculation show very little difference between age 62 to 70. 2) 65 is a good compromise number 3) I use SS to pay Medicare and taxes. 4) If you are retired and getting SS at age 62 to 65, it will likely raise your ACA(health care) monthly payment. Without it, you may pay almost nothing if you know what to do.
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Post by bb2 on Sept 14, 2022 0:01:52 GMT
Yes, chang, when I said reasons to wait till 70 were all covered in this thread, I should have also said reasons to take it early were here too!
And yea, my wife could pillow me tonight or I could live to 100. I walk 3.5 miles/day with an elevation gain of 80 floors at 3.5 mph speed. Decent chance I've got 82 if I hide the pillows. 18 yrs to go.
I could put it this way - I've been living off money for 19 years and the idea of having a check coming in, stress free, like some people I know, police captains, pilots, etc., is appealing. And maximizing that check outweighs any consideration such as investing the checks from 66 to 70. It's not like I need the extra cash to invest. I already have cash.
Like many personal finance decisions, individual circumstances like risk tolerance, lifestyle health, and how much money you have all play.
I know people who, with 10+ million in the bank would buy treasuries and call it a day. Others buy apartment buildings, stocks, etc.
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