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Post by chang on Feb 12, 2023 8:32:07 GMT
Here is a post I made on another forum: Thanks retiredat48 . Like all annuities, you have to decide whether to pay now for the guaranteed* income stream (*unless the insurer/payer defaults), or keep the money and invest it yourself. I made that decision a few years ago when I retired: I took the lump-sum pension instead of the annuity. In that particular case, serious doubts about the competency of the pension administrator influenced the decision: I wanted nothing to do with them. But I still preferred to have my money in my IRA subject to my decisions. Of course, the longevity concept is a little different, and plausibly an intelligent diversifier to a DIY portfolio like mine. Nevertheless, I am trying to keep things as simple as possible, with the minimum number of strings and third parties involved. I'll keep it in mind, but I'm not enamored with the idea.
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Post by Deleted on Feb 12, 2023 22:40:37 GMT
Can you expand on what you mean by "longevity insurance"? Here is a post I made on another forum: --------------------------------------------------- Gee, when I retired at age 48, I planned to age 88, because I was potentially running out of money, then. Our fallback was to call the kids and tell them to come and get us! So, which is it, 30 years or to age 100? Don't fret...there is a way to do both! The solution: INSURE THE BACKSIDE RISK VIA LOW COST LONGEVITY INSURANCE. That is, you can buy annuities for very low cost that kick in if you live past, let's say, age 85. They pay income for life. So if you live to be 105, no concern. The Wall Street journal had an article, 9 April, on how to do this...called How to Create a Pension (With a few catches). For instance, a 65 year old man buying a regular annuity can get a payout for life of $6950 per $100,000 annuity. However, if you buy now, the same amount policy, that begins at age 85 payouts, you get $63,900 per year. Hey, now we're talking. So if you are concerned your wife will live to be 105, get a longevity annuity for her...or both of you. Yes, you give up some principal, but then you may only have to plan for your portfolio to last 20 years, (instead of 30)at which point the annuity payments kick in. Currently, you can tailor-make these to fit your needs, with 45 years out being the longest start time. And remember States have annuities insured to varied limits, usually $100,000 or slightly more, so a default by the company is not disaster to you. Good luck, all. R48 I would never buy an annuity, but you are a font of knowledge. Very interesting "longevity annuity" info. My wife has instructions to put me on an ice floe, and push me out into the Arctic, if I live a day past 85 - Eskimo euthanasia!
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Post by retiredat48 on Feb 14, 2023 3:36:38 GMT
Here is a post I made on another forum: --------------------------------------------------- Gee, when I retired at age 48, I planned to age 88, because I was potentially running out of money, then. Our fallback was to call the kids and tell them to come and get us! So, which is it, 30 years or to age 100? Don't fret...there is a way to do both! The solution: INSURE THE BACKSIDE RISK VIA LOW COST LONGEVITY INSURANCE. That is, you can buy annuities for very low cost that kick in if you live past, let's say, age 85. They pay income for life. So if you live to be 105, no concern. The Wall Street journal had an article, 9 April, on how to do this...called How to Create a Pension (With a few catches). For instance, a 65 year old man buying a regular annuity can get a payout for life of $6950 per $100,000 annuity. However, if you buy now, the same amount policy, that begins at age 85 payouts, you get $63,900 per year. Hey, now we're talking. So if you are concerned your wife will live to be 105, get a longevity annuity for her...or both of you. Yes, you give up some principal, but then you may only have to plan for your portfolio to last 20 years, (instead of 30)at which point the annuity payments kick in. Currently, you can tailor-make these to fit your needs, with 45 years out being the longest start time. And remember States have annuities insured to varied limits, usually $100,000 or slightly more, so a default by the company is not disaster to you. Good luck, all. R48 I would never buy an annuity, but you are a font of knowledge. Very interesting "longevity annuity" info. My wife has instructions to put me on an ice floe, and push me out into the Arctic, if I live a day past 85 - Eskimo euthanasia! I just had funeral services for a 103 year old mother-in-law!! She would have benefitted from longevity insurance.R48
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Post by Deleted on Feb 14, 2023 5:16:16 GMT
I hope that you didn't think I was being sarcastic. I was being sincere. Maybe a bit hyperbolic about the ice floe.
Sorry for your loss, it is never easy.
I can see where an annuity or longevity insurance might be a good choice in some cases.
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Post by johntaylor on Feb 20, 2023 15:07:51 GMT
Many in my family lived to ≥ 100.
My aunt was almost 105, and a believer in stock ownership to supplement her teacher pension.
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Post by retiredat48 on Feb 20, 2023 16:02:14 GMT
Many in my family lived to ≥ 100. My aunt was almost 105, and a believer in stock ownership to supplement her teacher pension. You're missing out on positive family traits. Buy a longevity annuity and you take advantage of living long!! R48
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Post by bb2 on Feb 21, 2023 17:04:31 GMT
Three quote machines. For me the monthly payouts at age 85, 20 yrs from now, were, $4700, $4600 and $4200 www.immediateannuities.com/information/annuity-rates-step-1.htmlwww.schwab.com/annuities/fixed-income-annuity-calculatorwww.aarp.org/membership/benefits/finance/annuity-marketplace-blueprint-income/$100,000 deferred annuity beginning in 20 yrs single life only, (if I'm dead, no payouts to beneficiaries, no COLA) $4700/month - Highest of 3 quotes I got. This has the buying power of $2,000 of today's dollars, assuming a 3% inflation rate. If I invested instead: $100,000 invested at 4% for 20 years = $219,000 If I withdraw $4700/mo from this nest egg of $219,000, still invested at 4%, it will last 4 yrs and 3 months
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Post by retiredat48 on Feb 21, 2023 17:30:40 GMT
What is your life expectancy if you are age 85? More than 4.2 years?
R48
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Post by bb2 on Feb 21, 2023 17:53:15 GMT
Life expectancy tables mean nothing. Just look around you at all the fat waddling people. Or, like a buddy, you can be 55, fit, rich and intelligent and wake up peeing blood and have a 25% chance of living 2 years. I think an annuity is more about how an individual thinks about risk. Sure, one must be reasonable about longevity estimates but tables include the entire population and if your health, activity level, genetics, diet, life-style choices, etc, are all good, you'll need to add years to the number in the table. I'm not saying anything interesting here.
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Post by bb2 on Feb 21, 2023 18:14:15 GMT
BTW, have you checked SSA.gov recently? Recent COLA is now in the numbers of the "Plan for Retirement" section of the My Social Security Home page. (Even more reason to wait till 70. )
That annuity deal I outlined above isn't half bad. I didn't get quotes on policies that include an inflation adjusted benefit.
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Post by retiredat48 on Feb 21, 2023 20:17:28 GMT
Life expectancy tables mean nothing. Just look around you at all the fat waddling people. Or, like a buddy, you can be 55, fit, rich and intelligent and wake up peeing blood and have a 25% chance of living 2 years. I think an annuity is more about how an individual thinks about risk. Sure, one must be reasonable about longevity estimates but tables include the entire population and if your health, activity level, genetics, diet, life-style choices, etc, are all good, you'll need to add years to the number in the table. I'm not saying anything interesting here. So, that's my point. If you think you will live more than 4 years after hitting age 85, then the annuity bought earlier will pay off much more. You will be ahead. And, you will have insured against living to 103 as my MIL just did. BTW Those fat people who die early enable you to get more at age 85 or above. R48
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Post by bobfl on Apr 23, 2023 2:43:54 GMT
When to take Social Security
70
Will help fill the monthly gap when we enter skilled nursing. The senior home cost about $13,000 per month each. We also have long-term health care insurance, which will also help.
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Post by bobfl on Apr 23, 2023 12:11:05 GMT
I checked out some “break even age” calculators, and it seems to be that the monetary advantage in delaying is minimal and requires a long wait — which entails the risk of not surviving, and also begs the question (as in my OP) how much scuba diving and mountain climbing you plan to do after age 90. All the comments here reaffirm my inclination to just start taking SS at 62 and not try to over analyze it. That will also allow me to think less about withdrawing from my existing investments. Chang -- I don't mean to dissuade you from your decision, just to recount a bit of personal knowledge on how perspectives might evolve. I know two Philadelphia guys -- two close friends who took early retirement from teaching and SS at 62. Each, in his own way was confident and even boastful it was the smart path. One would inevitably chortle over the free time, the vacations and the nifty stuff he was buying from the gov's largesse. They are now in their 70s, and after years of inflation, are sour they could have gotten so much more each month had they only waited a little bit -- and are regularly bitter their COLAs are so meagre. Now we see each other much less, and when we do, I never touch on the topic. Am tired of the 20-minute harangues. I know they both think they are smarter than I am, and in some respects I suppose they are. It must be their bitter pill to pinch pennies around me now. FWIW. Brilliant story. Among my in-laws, etc., I am not allowed to "talk money". But I picked up something recently when my wife said that her sister was upset because her husband hollered at her about their "budget". When he retired he was the smart CPA. He took SS at age 62 because he thought SS would end. She asked my wife how we were doing on our budget. My wife told her that she doesn't really do a budget anymore. She records what we spend just to confirm charges are legit. She did not tell her the following because as I said she doesn't "talk money" to the relatives. When we first retired we had to do a budget because, it went something like this: Annually get 5% from investment fixed income, spend 3.6%. Now with SS and a compounding portfolio and even more conservative fixed income investing, we get (not including cap gains) 6.3% plus SS - 5.1%, spend 4.8%. I say this we because we could get sued and lose everything and still be able to survive on SS. Took SS at 70. Thank you God!
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Post by chang on Apr 23, 2023 12:24:41 GMT
Chang -- I don't mean to dissuade you from your decision, just to recount a bit of personal knowledge on how perspectives might evolve. I know two Philadelphia guys -- two close friends who took early retirement from teaching and SS at 62. Each, in his own way was confident and even boastful it was the smart path. One would inevitably chortle over the free time, the vacations and the nifty stuff he was buying from the gov's largesse. They are now in their 70s, and after years of inflation, are sour they could have gotten so much more each month had they only waited a little bit -- and are regularly bitter their COLAs are so meagre. Now we see each other much less, and when we do, I never touch on the topic. Am tired of the 20-minute harangues. I know they both think they are smarter than I am, and in some respects I suppose they are. It must be their bitter pill to pinch pennies around me now. FWIW. Thanks richardsok … I have two more years before I need to make any decision about it, so I’ll keep an open mind. I’ll almost certainly revisit this thread when the time comes.
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Post by gman57 on Apr 23, 2023 13:14:28 GMT
It ALL depends on your spending habits, your nest egg AND health. If you have plenty, ss is just pocket change spending money which lets your other money grow untouched longer. If you need it to live on that's a whole different story. Everyone is different. I took mine at 63 because I had a target ss monthly income I wanted and hit it at 63. Don't need it, but it sure is a nice present every month.
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Post by bobfl on Apr 23, 2023 13:42:05 GMT
64% of Americans are living paycheck to paycheck. We certainly did that for years. Living a frugal life, it was hard to accept when we couldn't save any of "that money that was needed for retirement". Upon further consideration, your statement is very true. If you take it at 62 you might feel like it is pocket change.
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Post by chang on Apr 23, 2023 16:07:34 GMT
I may have outlined my thinking before (it’s a long thread, sorry), but in brief:
- If I need the money at 62, then I’ll take it (because I need it).
- If I don’t need the money at 62, I’ll take it anyway, because I will earn more investing it (I hope?) than the increases I would get by waiting.
(I’m fairly sure I won’t *need* it at age 62. So case 2 will apply.)
And, thirdly,
- It’s my money, and I just like having MY money in MY accounts.
Also, I envision more discretionary spending (travel, toys, etc.) between ages 62-72 than 72-82. So what’s the point of having more income later, when you can’t use it? I don’t see myself taking up hang-gliding or off-road motorbike racing in my 80s.
That’s my logic for taking it at 62. Or latest 65!
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Post by bobfl on Apr 23, 2023 16:38:37 GMT
I may have outlined my thinking before (it’s a long thread, sorry), but in brief: - If I need the money at 62, then I’ll take it (because I need it). - If I don’t need the money at 62, I’ll take it anyway, because I will earn more investing it (I hope?) than the increases I would get my waiting. (I’m fairly sure I won’t *need* it at age 62. So case 2 will apply.) And, thirdly, - It’s my money, and I just like having MY money in MY accounts. Also, I envision more discretionary spending (travel, toys, etc.) between ages 62-72 than 72-82. So what’s the point of having more income later, when you can’t use it? I don’t see myself taking up hang-gliding or off-road motorbike racing in my 80s. That’s my logic for taking it at 62. Or latest 65! If you look at the charts, I can certainly understand your logic. Doesn't look like that much difference. But don't know why we are getting so much more than what the charts say. Maybe some type of weird calculation. I retired early so stopped paying in at 55, which should have impacted our monthly income. Maybe because I started paying into SS in my early teens. Just don't know why we get so darn much. But the extra money will help pay for a "best in state" skilled nursing home on our way out of this world.
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Post by yogibearbull on Apr 23, 2023 18:18:18 GMT
bobfl, earnings are indexed, or inflation-adjusted. 35 best years are used; if less than 35 years, 0s replace those years. Recent earnings history doesn't matter.
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Post by bobfl on Apr 23, 2023 18:41:22 GMT
bobfl , earnings are indexed, or inflation-adjusted. 35 best years are used; if less than 35 years, 0s replace those years. Recent earnings history doesn't matter. yogibearbull Thanks. I studied the method they used and did the calculations multiple times looking for an explanation. Doesn't matter. I'm happy.
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Post by catdog on Apr 23, 2023 20:21:34 GMT
FWIW I have heard an explanation on delaying social security until you are 70. Most have already heard this, but each year you wait after age 62 is like getting an 8% return on your money (8% increase in social security check). It stops at age 70. Eight percent sounds pretty good especially at an age where many are becoming more conservative investors.
Catdog
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Post by roi2020 on Apr 24, 2023 6:34:50 GMT
Let's assume the Social Security recipient's full retirement age is 67. If the recipient starts collecting Social Security the month they reach age 62, the benefit will be permanently reduced by 30%. Benefit adjustments for different ages (compared to age 67) are below.
63 -25.00% 64 -20.00% 65 -13.33% 66 -6.67% 68 +8.00% 69 +16.00% 70 +24.00%
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Post by chang on Apr 24, 2023 10:00:28 GMT
FWIW I have heard an explanation on delaying social security until you are 70. Most have already heard this, but each year you wait after age 62 is like getting an 8% return on your money (8% increase in social security check). It stops at age 70. Eight percent sounds pretty good especially at an age where many are becoming more conservative investors. Catdog I think you are mischaracterizing the situation. The payout may be 8% higher, but every year you wait is a year of principal you didn’t get! That’s why the break-even age is so far away … usually in the 80s. Any way I look at it, it seems to me that I want the principal flowing ASAP - which means at age 62.
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Post by Fearchar on Apr 24, 2023 11:31:07 GMT
My impression is that if you are sure you will never work again and receive serious wages before full retirement age, then yes go ahead and start collecting.
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Post by bobfl on Apr 24, 2023 12:25:02 GMT
FWIW I have heard an explanation on delaying social security until you are 70. Most have already heard this, but each year you wait after age 62 is like getting an 8% return on your money (8% increase in social security check). It stops at age 70. Eight percent sounds pretty good especially at an age where many are becoming more conservative investors. Catdog I think you are mischaracterizing the situation. The payout may be 8% higher, but every year you wait is a year of principal you didn’t get! That’s why the break-even age is so far away … usually in the 80s. Any way I look at it, it seems to me that I want the principal flowing ASAP - which means at age 62. I agree. Take it when you want to or need it. I did not retire with any income. We gathered all our assets and liquidated real estate and moved that money into fixed income and retired. We did everything we wanted and had some money left over that we did not use. So never took SS till 70. My fuzzy logic on SS was that if I die, SS cuts my wife's SS and she gets mine to help her potentially live many more years. So the bigger the SS check the better for her. Age 70 might seem old to you youngsters but time flies so fast when you retire that it came quick. Then at 70 when that SS check hit, I thought, Darn I kept my head in the game with my investments to make income and now this check (both spouses) shows up and it is almost equivalent to all the money I am making on my investments. What am I going to do with? So it just goes into increasingly conservative fixed income investments. I ask why did God do this to me. I started in ultra poverty, now I have all this extra money. The SS taken at 70 is about what our salary was for most of our later years with a professional career. I concluded that it will be how I "give" this money away when we die. I will try to give my part to the same type of poor child I was when I was young. Basically each person on the forum should do what they want, like you plan to do. We all have different stories.
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Post by racqueteer on Apr 24, 2023 12:25:09 GMT
We keep hearing this debate, but the reality is that there's no possible way to determine, beforehand, which approach will be most beneficial. Yes, you can always play "the odds are" game, but, actuarially, it makes no real difference which way you go. If it DID, then you can be sure that it would be accounted for in the payout.
HERE is what is irrefutable (imo, anyway):
1. If you NEED the money to survive, you really have no choice.
2. If you know you're going to die young, your choice, either way, is pretty clear.
3. If you DON'T need the money, the data does NOT reflect the benefit of taking the money and investing it, so the wait period to catch up is almost certainly longer than the statistics suggest.
4 If ANYTHING serious happens, and as you get "old", your ability to actually USE the money you're getting decreases. In that regard, if SS is extra to your physical NEEDS, it becomes of no actual value to YOU.
On balance, then, I fall into the camp that suggests that you take what is offered, WHEN it is first offered and enjoy it while you can. I guess the only exception would be if you want to max out your spouse's (eventual) benefit.
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Post by chang on Apr 24, 2023 12:37:11 GMT
racqueteer: I agree, but I don’t understand your “UNLESS…” comment. Seems to me that people in categories 1 & 2 will also take SS at 62.
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Post by win1177 on Apr 24, 2023 13:10:27 GMT
We keep hearing this debate, but the reality is that there's no possible way to determine, beforehand, which approach will be most beneficial. Yes, you can always play "the odds are" game, but, actuarially, it makes no real difference which way you go. If it DID, then you can be sure that it would be accounted for in the payout.
HERE is what is irrefutable (imo, anyway):
1. If you NEED the money to survive, you really have no choice.
2. If you know you're going to die young, your choice, either way, is pretty clear.
3. If you DON'T need the money, the data does NOT reflect the benefit of taking the money and investing it, so the wait period to catch up is almost certainly longer than the statistics suggest.
4 If ANYTHING serious happens, and as you get "old", your ability to actually USE the money you're getting decreases. In that regard, if SS is extra to your physical NEEDS, it becomes of no actual value to YOU.
On balance, then, I fall into the camp that suggests that you take what is offered, WHEN it is first offered and enjoy it while you can; UNLESS you fall into category 1 or 2 above.
Racqueteer, Are you saying that people (who don’t fall into category 1 or 2) should take SS at age 62? Win
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Post by racqueteer on Apr 24, 2023 13:12:03 GMT
racqueteer : I agree, but I don’t understand your “UNLESS…” comment. Seems to me that people in categories 1 & 2 will also take SS at 62. Not thinking clearly yet! Corrected.
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Post by racqueteer on Apr 24, 2023 13:20:44 GMT
We keep hearing this debate, but the reality is that there's no possible way to determine, beforehand, which approach will be most beneficial. Yes, you can always play "the odds are" game, but, actuarially, it makes no real difference which way you go. If it DID, then you can be sure that it would be accounted for in the payout.
HERE is what is irrefutable (imo, anyway):
1. If you NEED the money to survive, you really have no choice.
2. If you know you're going to die young, your choice, either way, is pretty clear.
3. If you DON'T need the money, the data does NOT reflect the benefit of taking the money and investing it, so the wait period to catch up is almost certainly longer than the statistics suggest.
4 If ANYTHING serious happens, and as you get "old", your ability to actually USE the money you're getting decreases. In that regard, if SS is extra to your physical NEEDS, it becomes of no actual value to YOU.
On balance, then, I fall into the camp that suggests that you take what is offered, WHEN it is first offered and enjoy it while you can; UNLESS you fall into category 1 or 2 above.
Racqueteer, Are you saying that people (who don’t fall into category 1 or 2) should take SS at age 62? Win Well, Win, that was my conclusion anyway. As things turned out, that discretionary cash allowed us to make some trips we would not have made, and that my subsequent, and unexpected, injury would have later prevented. Do the things you want to do as soon as it becomes practical; tomorrow isn't promised to any of us.
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