What a timely video for me. I'm currently playing with single premium immediate annuity calculators. While I feel confident in using a safe withdrawal rate, the safety and the mortality credits make single premium immediate annuities very appealing for part of my portfolio.
I don't disagree. It does take a special person to see the value in doing it that way because consumers cringe at the word annuity. Yet, those who tend to read more financial planning books seem to be more open to your idea in my experience.
We bought some deferred annuities kicking in at about 83, and are maximizing one SS Check for the survivor benefit. My main concern with annuities is the lack of any real inflation protection, and the inability to adjust them. They certainly can provide peace of mind. I think that maximizing SS is a more cost effective and better option for the bulk of base income. A smaller amount in annuity on top of that may make some sense. We can probably safely assume that the value of a dollar in 20 years will be one half to one third of today’s $
@@randolphh8005 yes inflation is one of the risks with annuities and I'll definitely be aggressive with the rest of my portfolio to combat when necessary
I’m 71 & planning to retire very soon. What I’m doing is transferring all my 401K / 457 to BROKERAGE TRADITIONAL IRA A/C… my contribution would be broken in two CDs for one year each..& some of the amount would be kept in money market to get me certain amount every month as an additional income. WAS MY THIS DECISION IS REASONABLE; as I don’t want to loose or to take any risk of loosing any money; which would decrease from year to year; but boost my income for many years; along with SS & PENSION
You will need to account for RMDs. You can certainly go with CDs, but look also at treasury and CD ladders, held to maturity there is no risk. If you have much money there will be all kinds of tax issues. You should at least talk to a financial advisor that charges an hourly rate. You have to take RMDs at 72 I think. Spend a little money and a lot of time getting some education and advice. Having a pension is great, but also complicates things
@@randolphh8005 Thanks for the advice… the CDs are for one year only & RMD would be taken care before reinventing. The 401K / 457 were from prudential & transferred by them to CD. Traditional brokerage a/c is also setup from our monthly expenses.
Now imagine if instead of trying to figure out what's the most you can spend, you focus more on what's the least you need to be happy and comfortable. After all, the problem isn't dying with "too much" money, it's running out of money before you run out of gas. Our version of "the good life" is incredibly inexpensive and we can continue as we are for at least another 12 years or so without taking a penny from our investments/savings/retirement accounts and perhaps even longer as our personal inflation rate is pretty low. What was once a complex problem with serious consequences if miscalculated becomes a laughable memory as you watch your wealth continue to grow exponentially until your final day. Cheers!
The risks you mention are correct and real. However, the number one risk in retirement is dying early and not getting to enjoy your money. About one half of those retiring will not make it 20 years, and many will die well before that. Because people have to plan for the possibility that 5-10% of us will live to 95(mostly females), we have to be conservative. A whole lot of people will die with plenty of money, which is nice for legacy goals, but not if that is not a major focus. The concept of creating enough base income with SS and perhaps annuities is at least a partial solution. Both of our mothers are 87 and in adequate health. Both dads died at 86. Moms are now living on $2000-2500 per month with NO portfolio or other assets(never had portfolios) One does nothing, the other still travels to family. The kids have helped a little with housing expenses and emergency expenses. If they each had $3500-4000/mo, they would be in great shape. My point is you don’t need a lot of money when you are old if you have no debt and housing is payed for. LTC is a risk but can be taken care of with insurance or a paid for residence. This is why our plan is to spend down our portfolio substantially over 20 years while we can enjoy it. I plan to take SS at 70 with a survivor benefit of $4500 in today’s dollars. That will guarantee that neither of us will ever be destitute, even if we spend every last penny of our investments. My wife took SS early. As long as we are both alive our checks will be about $7000 per month, and we have a couple small annuities kick in at 83 to protect the widowed spouse. Obviously a safety first approach. If we had $5 million instead of $2million we would be more probability based. The size of the portfolio is a major factor in deciding to go probability based. I would never want to risk a 20% chance of running out of money due to a major market crash, for the chance to make an extra $1 million, as there is no second chance.
Sounds like a sound plan. You're probably right about long term healthcare. The challenge we see most is the actual logistics of who takes care of the person in need, very impactful and probably the biggest decision to make...preferably in advance.
I highly recommend New Retirement software - it has the capabilities Nick identifies in this video.
Nice, clear and consise summary of the two primary philosophies in retirement spending, along with how they can be combined to manage risk.
Well said!
What a timely video for me. I'm currently playing with single premium immediate annuity calculators.
While I feel confident in using a safe withdrawal rate, the safety and the mortality credits make single premium immediate annuities very appealing for part of my portfolio.
I don't disagree. It does take a special person to see the value in doing it that way because consumers cringe at the word annuity. Yet, those who tend to read more financial planning books seem to be more open to your idea in my experience.
We bought some deferred annuities kicking in at about 83, and are maximizing one SS Check for the survivor benefit. My main concern with annuities is the lack of any real inflation protection, and the inability to adjust them. They certainly can provide peace of mind. I think that maximizing SS is a more cost effective and better option for the bulk of base income. A smaller amount in annuity on top of that may make some sense. We can probably safely assume that the value of a dollar in 20 years will be one half to one third of today’s $
@@randolphh8005 yes inflation is one of the risks with annuities and I'll definitely be aggressive with the rest of my portfolio to combat when necessary
Excellent Information!!!!
Glad you think so!
I’m 71 & planning to retire very soon.
What I’m doing is transferring all my 401K / 457 to BROKERAGE TRADITIONAL IRA A/C… my contribution would be broken in two CDs for one year each..& some of the amount would be kept in money market to get me certain amount every month as an additional income.
WAS MY THIS DECISION IS REASONABLE; as I don’t want to loose or to take any risk of loosing any money; which would decrease from year to year; but boost my income for many years; along with SS & PENSION
Thank you for watching!
You will need to account for RMDs. You can certainly go with CDs, but look also at treasury and CD ladders, held to maturity there is no risk. If you have much money there will be all kinds of tax issues. You should at least talk to a financial advisor that charges an hourly rate. You have to take RMDs at 72 I think. Spend a little money and a lot of time getting some education and advice. Having a pension is great, but also complicates things
@@randolphh8005
Thanks for the advice… the CDs are for one year only & RMD would be taken care before reinventing. The 401K / 457 were from prudential & transferred by them to CD.
Traditional brokerage a/c is also setup from our monthly expenses.
*reinvesting
Now imagine if instead of trying to figure out what's the most you can spend, you focus more on what's the least you need to be happy and comfortable. After all, the problem isn't dying with "too much" money, it's running out of money before you run out of gas. Our version of "the good life" is incredibly inexpensive and we can continue as we are for at least another 12 years or so without taking a penny from our investments/savings/retirement accounts and perhaps even longer as our personal inflation rate is pretty low. What was once a complex problem with serious consequences if miscalculated becomes a laughable memory as you watch your wealth continue to grow exponentially until your final day. Cheers!
Well said!
The risks you mention are correct and real.
However, the number one risk in retirement is dying early and not getting to enjoy your money. About one half of those retiring will not make it 20 years, and many will die well before that.
Because people have to plan for the possibility that 5-10% of us will live to 95(mostly females), we have to be conservative. A whole lot of people will die with plenty of money, which is nice for legacy goals, but not if that is not a major focus.
The concept of creating enough base income with SS and perhaps annuities is at least a partial solution.
Both of our mothers are 87 and in adequate health. Both dads died at 86. Moms are now living on $2000-2500 per month with NO portfolio or other assets(never had portfolios) One does nothing, the other still travels to family. The kids have helped a little with housing expenses and emergency expenses. If they each had $3500-4000/mo, they would be in great shape.
My point is you don’t need a lot of money when you are old if you have no debt and housing is payed for. LTC is a risk but can be taken care of with insurance or a paid for residence.
This is why our plan is to spend down our portfolio substantially over 20 years while we can enjoy it.
I plan to take SS at 70 with a survivor benefit of $4500 in today’s dollars. That will guarantee that neither of us will ever be destitute, even if we spend every last penny of our investments. My wife took SS early. As long as we are both alive our checks will be about $7000 per month, and we have a couple small annuities kick in at 83 to protect the widowed spouse.
Obviously a safety first approach. If we had $5 million instead of $2million we would be more probability based. The size of the portfolio is a major factor in deciding to go probability based. I would never want to risk a 20% chance of running out of money due to a major market crash, for the chance to make an extra $1 million, as there is no second chance.
Sounds like a sound plan. You're probably right about long term healthcare. The challenge we see most is the actual logistics of who takes care of the person in need, very impactful and probably the biggest decision to make...preferably in advance.