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#1 Old 07-15-2006, 03:46 PM
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How much money would you need to retire? Include your figure in 2006 american dollars and the age you want to retire at.



I've seen some surveys that are sad or funny depending on my mood.



Me: For 1/2 people at 65 the minimum target is 1.5/2 million.
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#2 Old 07-16-2006, 04:34 AM
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"Retire"? What is this word "retire"?



I expect to work until I become unable to, then I expect to be dirt poor until I die.



Cheerful, ain't it?
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#3 Old 07-16-2006, 04:41 AM
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Why would you need 1.5 million dollars to retire?



I was thinking $400,000 should last me from age 65 to 85. //
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#4 Old 07-16-2006, 04:41 AM
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#5 Old 07-16-2006, 05:16 AM
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This will sound like a stupid question, but how do you figure out how much you'll need to retire?



I don't know how to calculate how much I'll need every year after I retire.
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#6 Old 07-16-2006, 10:00 AM
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Originally Posted by veggiejanie View Post

This will sound like a stupid question, but how do you figure out how much you'll need to retire?



I don't know how to calculate how much I'll need every year after I retire.



How much do you need a year now? What will change when you retire? For the second question the big differences are that you will be paying your own insurance premiums and your healthcare costs will be much higher. If you are pretty certain you will own a home and want to stay there then you won't need money for a mortgage payment either. Also remember your 401(k) distribution gets taxed all at once.



If you can ballpark your annual expenses at retirement then you have to decide how you will fund those. I arrived at my figures by pricing a life annuity* for my estimated annual expenses and then adding a chunk of money that I felt was appropriate to fund vacations and charitable contributions.



*This gets tricky because you have to make interest rate assumptions and if you are 40 years from retirement, like me, there is no use in predicting. I used a lowish assumption (although it doesn't seem low after the last several years) which might push my figure up but I am risk averse. I'm not actually recommending that you fund retirement with a big annuity but it gives a good ballpark estimate for young people because it prices in mortality. I'll have to use much more sophisticated planning methods as I get older (and probably hire an advisor to do so).
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#7 Old 07-16-2006, 12:24 PM
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Or you can use a retirement calculator....



um, yeah.....*points up there*
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#8 Old 07-16-2006, 12:27 PM
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The retirement calculator asked you to enter how much you need to retire though, which kind of defeats the purpose... I didn't know what to enter for any of the questions.
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#9 Old 07-16-2006, 01:27 PM
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Originally Posted by kpickell View Post

The retirement calculator asked you to enter how much you need to retire though, which kind of defeats the purpose... I didn't know what to enter for any of the questions.





A good default is 70% of your current income. I wouldn't go under that.
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#10 Old 07-16-2006, 01:29 PM
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Originally Posted by Tame View Post

A good default is 70% of your current income. I wouldn't go under that.





I think that's the default setting for that calculator.
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#11 Old 07-16-2006, 01:34 PM
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Originally Posted by remilard View Post

How much do you need a year now? What will change when you retire? For the second question the big differences are that you will be paying your own insurance premiums and your healthcare costs will be much higher. If you are pretty certain you will own a home and want to stay there then you won't need money for a mortgage payment either. Also remember your 401(k) distribution gets taxed all at once.



I haven't looked at this in a while, but I believe you can distribute the 401K withdraw over time, as long as all of it is withdrawn by age 70.5.



Quote:

*This gets tricky because you have to make interest rate assumptions and if you are 40 years from retirement, like me, there is no use in predicting. I used a lowish assumption (although it doesn't seem low after the last several years) which might push my figure up but I am risk averse. I'm not actually recommending that you fund retirement with a big annuity but it gives a good ballpark estimate for young people because it prices in mortality. I'll have to use much more sophisticated planning methods as I get older (and probably hire an advisor to do so).



Eh, your estimate would be pretty close.

We met with a financial planner when I reworked my life insurance a few years back, and my estimates were on track. We currently are saving well above what we are projected to need, and my income will grow at much better than inflation over time (assuming nothing really hinky happens.)



I typically use a return of 8-10% for my estimates.
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#12 Old 07-16-2006, 01:38 PM
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Originally Posted by remilard View Post

How much do you need a year now? What will change when you retire? For the second question the big differences are that you will be paying your own insurance premiums and your healthcare costs will be much higher. If you are pretty certain you will own a home and want to stay there then you won't need money for a mortgage payment either. Also remember your 401(k) distribution gets taxed all at once.



If you can ballpark your annual expenses at retirement then you have to decide how you will fund those. I arrived at my figures by pricing a life annuity* for my estimated annual expenses and then adding a chunk of money that I felt was appropriate to fund vacations and charitable contributions.



*This gets tricky because you have to make interest rate assumptions and if you are 40 years from retirement, like me, there is no use in predicting. I used a lowish assumption (although it doesn't seem low after the last several years) which might push my figure up but I am risk averse. I'm not actually recommending that you fund retirement with a big annuity but it gives a good ballpark estimate for young people because it prices in mortality. I'll have to use much more sophisticated planning methods as I get older (and probably hire an advisor to do so).



Thank you for explaining it for me. I didn't want to just pick a number out of the sky, which honestly, I feel like I'd be doing right now if I tried to estimate how much I'll need.
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#13 Old 07-16-2006, 02:34 PM
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Originally Posted by Tame View Post


I typically use a return of 8-10% for my estimates.





I think for many of us that estimate would be too high, those who stick their money in a money market and hope it does ok (oooo, a whopping 4%)....
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#14 Old 07-16-2006, 02:35 PM
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If you look at historical (and I mean back to the beginning) data for the stock market, 8-11% falls within the average.



Money market on the other hand... I think some savings accounts offer higher interests rates than the returns on those.
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#15 Old 07-17-2006, 01:19 PM
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It all depends on where I end up retiring. I live in one of the most expensive housing markets in the country (the San Francisco bay area) and I certainly won't be able to retire here (unless I get very lucky). I haven't done much looking at other areas to live, so I'm not sure what I'll need.



I fully expect that I'll be working until I'm at least 70, but that could change if I work for the right company under the right circumstances. However, I'm not betting on that and saving towards my future with my wife.
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#16 Old 07-17-2006, 06:36 PM
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Quote:
Originally Posted by remilard View Post

How much money would you need to retire? Include your figure in 2006 american dollars and the age you want to retire at.



I've seen some surveys that are sad or funny depending on my mood.



Me: For 1/2 people at 65 the minimum target is 1.5/2 million.



The "rule of thumb" that I've heard of is that you will need 75 to 80 percent of pre-retirement income in order to retire comfortably. I think you need to work back from this to see what amount of savings could reliably generate this amount of income.



Another issue is this: if you are going to retire, are you going to move from your present location to another location or stay where you are/were pre-retirement? From what I've read, only about 5 percent of retirees move more than 40 miles from their pre-retirement location after they retire. But if you were willing to move from, say, California to, say, Nebraska, and if you owned a home in California, you could probably buy a similarly-sized home for much less and pocket the difference, i.e., use it to generate investment income.
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#17 Old 07-17-2006, 07:17 PM
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The "rule of thumb" that I've heard of is that you will need 75 to 80 percent of pre-retirement income in order to retire comfortably. I think you need to work back from this to see what amount of savings could reliably generate this amount of income.



This still leaves yield curve and mortality assumptions to consider. 75-80 percent for how long? How much should I insure against dying early? How much should I insure against living too long? What about people who retired in 2000 and couldn't make money in fixed income investments or very much in low risk high divident stocks? Should I have enough money so that I won't be screwed by 5 years of that environment?
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#18 Old 07-17-2006, 08:34 PM
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This still leaves yield curve and mortality assumptions to consider. 75-80 percent for how long?



True. 75 to 80 percent indefinitely, or at least for your predicted lifespan. Taking the rates on 20 or 25 year Treasury bonds would be a good place to start. To make the arithmetic simple, let's say you retire at 65 and need income for 20 years (your projected life expectancy). Let's say your pre-retirement income is $100,000. So you would need a minimum of $75,000 in income. Let's say 20 year T-Bonds are paying 5 percent.

75000/.05 = 1,500,000.00. That would be the minimum you would need for retirement, given these assumptions. (Note: these are ignoring things like pensions and Social Security, for the sake or simplicity, so are not necessarily realistic.)





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Originally Posted by remilard View Post

How much should I insure against dying early? How much should I insure against living too long?



Well, I'm trying not to be sarcastic or snarky here, but the problem of dying early would really be the problem of your dependents, wife, POSSLQ, whatever. Generally, you would build up a "life estate" during your working years and gradually decrease your insurance coverage as this "life estate" was built up.



In terms of "living too long," there are several answers. One is that we are solving for x, which is the minimum amount a person would need to retire comfortably. But let's say that realistically a person would need z in order to retire, where z = x + y,

and y would be invested in growth-related investments designed to keep ahead of inflation, etc. The second answer is that we are assuming that the retiree would be living off income from 65 to 85, say, anf if he lived beyond 85, he would "annuitize" (sp?) his investments, i.e., live off the income plus withdrawing a certain percentage of principal.

The third answer is that if you are really worried about this, then you need to plan to move to Mexico or Brazil or some other third-world country to retire from 65 to 75 or 80, and then move back to the US for the rest of your life. You will save enough to make the rest of your stay in the US possible.



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Originally Posted by remilard View Post


What about people who retired in 2000 and couldn't make money in fixed income investments or very much in low risk high divident stocks? Should I have enough money so that I won't be screwed by 5 years of that environment?



It would be prudent to have z rather than x before you retire, to provide for growth.



P.S.: I think I've stated this before, but I'll state it again. I was actually in charge of managing my parents' investments for them and preparing them for retirement. During the last 2 or 3 years of my father's working life, he was making his peak career income. Nevertheless, his post-retirement investment income exceeded his working/career income. His retirement income actually exceeded his pre-retirement salary income, due in part to his pension and Social Security income. But even his investment income alone exceeded his pre-retirement salary income.



My Dad lived for about 7 years after his (forced) retirement. He was financially comfortable, but no "lifestyles of the rich and famous." Nevertheless, if he had lived an additional 10 years, he could have looked forward to being richer each year.



Bottom line: Yes, it is possible to to retire in financial comfort.
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#19 Old 07-17-2006, 09:30 PM
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Let's say 20 year T-Bonds are paying 5 percent.

75000/.05 = 1,500,000.00. That would be the minimum you would need for retirement, given these assumptions. (Note: these are ignoring things like pensions and Social Security, for the sake or simplicity, so are not necessarily realistic.)



20 year T-bonds are paying about five percent but that leaves me with two problems:



1. That gives me a glimpse of the 20 year treasury yield curve now, not when I retire. This is only helpful at retirement so it tells me nothing about what I should save now which is the essence of the problem for young people.



2. That is about two percent in real terms so your calculation is dramatically overstating my real income throughout retirement in that scenario.



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Well, I'm trying not to be sarcastic or snarky here, but the problem of dying early would really be the problem of your dependents, wife, POSSLQ, whatever. Generally, you would build up a "life estate" during your working years and gradually decrease your insurance coverage as this "life estate" was built up.



Well they do call them dependents for a reason.



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In terms of "living too long," there are several answers. One is that we are solving for x, which is the minimum amount a person would need to retire comfortably. But let's say that realistically a person would need z in order to retire, where z = x + y,

and y would be invested in growth-related investments designed to keep ahead of inflation, etc. The second answer is that we are assuming that the retiree would be living off income from 65 to 85, say, anf if he lived beyond 85, he would "annuitize" (sp?) his investments, i.e., live off the income plus withdrawing a certain percentage of principal.



I happen to think probabalistic measures of mortality and interest rate risk are more savvy, but whatever floats your boat. I'm not sure "living off interest" is sophisticated strategy but it does tend to conservative estimates. However, living of interest from fixed income investments did not work out at all for people retiring in the late 90s/early 2000s. They ate through principal too fast during the lean years and are working at Wal-Mart now.



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The third answer is that if you are really worried about this, then you need to plan to move to Mexico or Brazil or some other third-world country to retire from 65 to 75 or 80, and then move back to the US for the rest of your life. You will save enough to make the rest of your stay in the US possible.



I'm not personally worried.
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#20 Old 07-18-2006, 07:11 AM
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20 year T-bonds are paying about five percent but that leaves me with two problems:



1. That gives me a glimpse of the 20 year treasury yield curve now, not when I retire. This is only helpful at retirement so it tells me nothing about what I should save now which is the essence of the problem for young people.



Well, no, it doesn't "tell you nothing." From what I have read, financial planners have had to consider the problem of how to plan for an event in the distant future (say 20 or 30 years from now or more), especially given the expectation of a rate of inflation that is not trivial. What is the best method of doing this? From what I have read, the best method is to use current figures, and then adjust the plan as circumstances change. That is why this information was presented. If you have a better method, I'd like to hear it and to hear the reasons you think it is better. If you think I am concealing some better method up my sleeve (for some reason I cannot fathom), then you are mistaken.



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2. That is about two percent in real terms so your calculation is dramatically overstating my real income throughout retirement in that scenario.



No. This is a mistake and confusion on your part, IMHO. You asked the question: "How much do I need to retire?" The answer to this question is based on what sum would generate 75 to 80 percent of your pre-retirement income. The "two percent in real terms" comment pre-supposes you had asked a quite different question--something like: "How much do I need to retire AND ALSO preserve the purchasing power of my retirement capital?" This second question is quite different and would require a quite different answer.



I think you will find it a fairly difficult row to hoe to save 1.5 million by retirement. But if you wanted to treat the 5 percent return on Treasury bonds as being a "real" 2 percent return, then divide 75,000/.02 = $3,750,000 = 2.5 x 1,500,000. You've just made your retirement goal 2.5 times higher. I think the reasoning behind this is flawed, but if that's what you want to aim for, then good luck to you.





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Well they do call them dependents for a reason.



Yes, but I think you are again missing the point. You asked one question: "How much will I need to retire?" Then you are introducing a second question: "How much needs to be available to my dependents should I die before age (whatever)?" This second question is quite separate and needs to be calculated from the dependent's/dependents' point of view. You might need x to retire and n to provide for your dependents, so you might need x+n to provide for both goals.





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I happen to think probabalistic measures of mortality and interest rate risk are more savvy, but whatever floats your boat. I'm not sure "living off interest" is sophisticated strategy but it does tend to conservative estimates. However, living of interest from fixed income investments did not work out at all for people retiring in the late 90s/early 2000s. They ate through principal too fast during the lean years and are working at Wal-Mart now.



It would seem that the people you are talking about did not have enough interest to equal 75 percent of their pre-retirement incomes.



One other thing I should mention is this. Let's say Tim and Tom are twins. Let's say each has $1.5 Million at retirement. Tim takes his money and invests it all in 20 to 25 year T bonds. Tom takes his money and invests it in a good mutual fund (or several such). Tom also calculates Tim's monthly income, and sets up a withdrawal plan with his mutual fund(s) to sell just enough shares on the first of the month to give him an equivalent income. I have heard that in the vast majority of cases where these two strategies have been compared over a 5 year period or longer, Tom does better than Tim. I haven't read these studies, but that is what I've been told.



If this is the case, then this strategy might give you a better means of generating income while preserving purchasing power than the more simplistic strategy of investing in T-Bonds would.
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#21 Old 07-18-2006, 07:34 AM
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No. This is a mistake and confusion on your part, IMHO. You asked the question: "How much do I need to retire?" The answer to this question is based on what sum would generate 75 to 80 percent of your pre-retirement income. The "two percent in real terms" comment pre-supposes you had asked a quite different question--something like: "How much do I need to retire AND ALSO preserve the purchasing power of my retirement capital?" This second question is quite different and would require a quite different answer.



Oh give me an effin break Joe. You thought I meant "how much do you need to retire such that your purchasing power decreases each year during retirement?"



Quote:
I think you will find it a fairly difficult row to hoe to save 1.5 million by retirement.



This presupposes a lot about my income and my savings habits.





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Yes, but I think you are again missing the point. You asked one question: "How much will I need to retire?" Then you are introducing a second question: "How much needs to be available to my dependents should I die before age (whatever)?"



Again, are you being serious? I think most people would like to retire with the capability to meet all of their obligations, including to dependents. This retirement question is complicated precisely because simplifying assumptions like "the treasury yield curve is static", "you don't have any dependenets", "you will live your life expectancy exactly and then die" can be misleading.



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It would seem that the people you are talking about did not have enough interest to equal 75 percent of their pre-retirement incomes.



Did you see interest rates on CDs 3 years ago? 30 year T-bills are a crappy investment for an 80 year old, I'll leave it as an exercise to the reader to figure out why.



Just because your dad made bank on fixed income investments in the mid 90s doesn't mean we should all expect to retire when interest rates are at 10 year highs.
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#22 Old 07-18-2006, 04:59 PM
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Oh give me an effin break Joe. You thought I meant "how much do you need to retire such that your purchasing power decreases each year during retirement?"



Sorry, but I cannot "give you a break" because I really believe you asked one question that stated one goal and now you are putting forth three or four different goals.



I think it is a mistake to "personalize" this issue. Go to any good public or

college library. Pull all the books on financial planning and retirement planning off the shelf and turn to the sections that deal with saving/investing for retirement. You'll pretty much find the same thing as I told you or that Tame has stated: you will need 75 to 80 percent (or at least Tame's 70 percent) of your pre-retirement income. And then they set forth formulas to calculate what amount of money you will need to generate this income from investments. The T-Bond method I mentioned above is about the simplest.



No financial planning book I've seen tries to inflation-proof both the retirement income and the retirement principal. Put another way, the vast majority of financial planning books interpret the question "How much do I need to retire?" not to include inflation protection throughout retirement. If you find any books or sources to the contrary, I'd be very interested in getting their citations or URLs.



Again, I would refer you to the discussion above that talked about having z rather than x before retiring, where z=x+y, and y was a sum that could be invested in growth investments to provide some cushion against inflation while x was the minimumamount needed to retire.





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This presupposes a lot about my income and my savings habits.



Well, no. I don't know anything about your personal life. But here again you are trying to overly personalize the situation. I thought the question was a general one about how much people need to retire, and not one totally specific to Remilard. Also, you took this one sentence apart from the context of the rest of the paragraph.



I will say that from what I have read of Commerce Department figures, of every 20 Americans who reach age 65, one will be financially independent (i.e., financially able to retire) and 19 will no be financially dependent. I think it is reasonable to say that for most people, i.e., 95 percent of Americans, even reaching the targets that you consider inadequate is difficult.







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Again, are you being serious? I think most people would like to retire with the capability to meet all of their obligations, including to dependents. This retirement question is complicated precisely because simplifying assumptions like "the treasury yield curve is static", "you don't have any dependenets", "you will live your life expectancy exactly and then die" can be misleading.



Again, go to the library and pull down the books on financial planning. Providing for your dependents is usually treated in a separate chapter about insurance coverage and is not subsumed under retirement planning. Again, if you find books or sources to the contrary, I'd be very interested in getting the citations, URLs, etc.





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Did you see interest rates on CDs 3 years ago? 30 year T-bills are a crappy investment for an 80 year old, I'll leave it as an exercise to the reader to figure out why.



There is no such thing as a 30 year T bill.



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Just because your dad made bank on fixed income investments in the mid 90s doesn't mean we should all expect to retire when interest rates are at 10 year highs.



My father's investments were a mixture of fixed-income and equity investments.



No, you cannot be sure that you will be retiring when interest-rates are at a relative high.

You seem to have misunderstood using investing in 20 to 25 year T-Bonds as a hypothetical planning tool to determine what sum would be the minimum needed for retirement with literally following that as an investment strategy. See the discussion of "Tim and Tom" above. The lower interest rates are when one reaches retirement age, the more this argues for a "Tom" rather than a "Tim" investment strategy.



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This presupposes a lot about my income and my savings habits.



I think that if this is meant to imply that you have been able to save a significant amount of money, then I think you should hire a professional financial planner to develop a financial plan for you. He (or she) will probably require you to fill out an extensive questionairre before providing you with any information and advice, and therefore the sterile and unproductive bickering about semantics in this thread will hopefully be avoided.
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#23 Old 07-18-2006, 06:12 PM
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No financial planning book I've seen tries to inflation-proof both the retirement income and the retirement principal. Put another way, the vast majority of financial planning books interpret the question "How much do I need to retire?" not to include inflation protection throughout retirement. If you find any books or sources to the contrary, I'd be very interested in getting their citations or URLs.



How about the bloomberg retirement calculator linked above in the pay yourself thread?



Quote:
Again, go to the library and pull down the books on financial planning. Providing for your dependents is usually treated in a separate chapter about insurance coverage and is not subsumed under retirement planning. Again, if you find books or sources to the contrary, I'd be very interested in getting the citations, URLs, etc.



Ever heard of life and contingent annuities? Annuities with installment refunds? Annuities are, 99% of the time, retirement saving vehicles and they provide options for supporting someone other than the primary annuitant after the primary annuitant has died. So there is a common example (hundreds of billions of dollars a year in sales) of a retirement product that explicitly comingles retirement income and considerations for dependents. Defined Benefit plans usually do that too.



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There is no such thing as a 30 year T bill.



I meant bond, sue me it was early.



Quote:
You seem to have misunderstood using investing in 20 to 25 year T-Bonds as a hypothetical planning tool to determine what sum would be the minimum needed for retirement with literally following that as an investment strategy.



I understand it but it isn't much better than picking numbers out of the air. You could take a snapshot of the treasury yield curve at anytime and use it to approximate the yield curve X years into the future. Why take todays curve? I also think any retirement strategy that ignores mortality is too simple.



Quote:
I think that if this is meant to imply that you have been able to save a significant amount of money, then I think you should hire a professional financial planner to develop a financial plan for you. He (or she) will probably require you to fill out an extensive questionairre before providing you with any information and advice, and therefore the sterile and unproductive bickering about semantics in this thread will hopefully be avoided.



Are you available?
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#24 Old 07-18-2006, 06:39 PM
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#25 Old 07-19-2006, 10:45 AM
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Ever heard of life and contingent annuities? Annuities with installment refunds? Annuities are, 99% of the time, retirement saving vehicles and they provide options for supporting someone other than the primary annuitant after the primary annuitant has died. So there is a common example (hundreds of billions of dollars a year in sales) of a retirement product that explicitly comingles retirement income and considerations for dependents. Defined Benefit plans usually do that too.



I don't pretend to be an expert on insurance or insurance products. I have had actual experience in investing in annuity products. Many of these have turned out to perform quite poorly. Many of these products have had "A" ratings, until they ran into trouble, at which point they were quickly downgraded, so their high ratings had almost no predictive value for the investor. There have been quite a number of scandals involving annuities, including Executive Life and Charter Security Life and other life insurance companies, which sold all kinds of "pie in the sky" promises, then were quickly downgraded by the ratings companies, quickly ran into trouble, were either taken over by the regulators or forced into "shotgun weddings" with other insurance companies, which offered substitute annuities at drastically reduced terms. Almost all these investors would have been better off if they had invested their funds in T-Bonds rather than annuities. Annuities typically either do not pay competitive rates or they are subject to the kind of defaults I have described.





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I meant bond, sue me it was early.



Gosh, and I thought you were infallible.





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Originally Posted by remilard View Post


I understand it but it isn't much better than picking numbers out of the air. You could take a snapshot of the treasury yield curve at anytime and use it to approximate the yield curve X years into the future. Why take todays curve? I also think any retirement strategy that ignores mortality is too simple.



This was already answered above. Too bad your reading comprehension is poor. You have failed, of course, to suggest any better strategy.





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Originally Posted by remilard View Post




Are you available?



No, I am not available. I don't pretend to be a certified financial planner. And even if I was, I'd seek to avoid a person like you as a client.



I've cautioned you before about not trying to personalize this situation. You've ignored my cautions. Fine, you've earned a place on my "ignore" list for the rest of the year.



I'm surprised you don't offer yourself as a financial planner, since you seem to fancy yourself as an expert in these matters.
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#26 Old 07-19-2006, 10:59 AM
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Originally Posted by OregonAmy View Post




I hope you're still able to laugh when:

a) you find yourself "widowed", and

b) you find yourself the beneficiary of all sorts of

annuity products that are worth pennies on the

dollar vs. what was originally promised.
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#27 Old 07-19-2006, 06:08 PM
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I don't pretend to be an expert on insurance or insurance products. I have had actual experience in investing in annuity products.



I have actual experience pricing annuity products. I guess that makes me a scam artist in your book.



None of this changes the fact that I demonstrated that products which combine retirement with dependent benefits are common and that a mainstream source calculates retirement income in real terms. You claimed I couldn't do either of these.



Quote:
This was already answered above. Too bad your reading comprehension is poor. You have failed, of course, to suggest any better strategy.



You said todays yield curve is a "good enough" approximation for the yield curve at any point in time. I asked how this was better than picking a number out of the air that sounds good. I must have missed your answer.



Funding your monthly expenses with a 20 year bond creates a huge duration mismatch. I would suggest, and I believe most financial planners do, to invest in fixed income instruments with shorter durations, like a year. One year CDs with online banks are competitive with treasury bonds. Hell, online savings accounts are competitive with treasury bonds. The risk tolerant retiree might invest in high dividend blue chip stocks or buy call options on a stock index (say as an equity indexed annuity).



Quote:
I'm surprised you don't offer yourself as a financial planner, since you seem to fancy yourself as an expert in these matters.



My employer seems to think I am good enough.
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#28 Old 07-20-2006, 07:28 AM
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Quote:
Originally Posted by Joe View Post

I hope you're still able to laugh when:

a) you find yourself "widowed", and

b) you find yourself the beneficiary of all sorts of

annuity products that are worth pennies on the

dollar vs. what was originally promised.







are you threatening me? /cornholio
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#29 Old 07-21-2006, 01:50 AM
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You people need to remember financial calculators and financial advisors are designed to sell you products. They are biased to sell you as many products as possible.



Why not look at your lifestyle instead of money? My grandfather saved for a perfect retirement. He had a massive pension, house paid off and the rest. When he retired, he played a few rounds of golf, watched a few re-runs of Ironside and took lots of naps. And then died 3 years after his retirement. All of that saving was for nothing. I also believe he died partly because he didn't consider himself a useful part of society.



There are many different options to the above.



1) You could save a small nest-egg and move to a foriegn country, like India or Costa Rica or Thailand and so on, and live very well on very little money while enjoying tropical climate.



2) You could do what George does in my village. He runs a little newsagent shop and lives upstairs. He must be well into his 90s but he's still a vital part of the community. He keeps active and earns a living.
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#30 Old 07-21-2006, 02:57 PM
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egg and move to a foriegn country, like India or Costa Rica or Thailand and so on, and live very well on very little money while enjoying tropical climate.



The trouble with this approach is some people want to be close to their children and grandchildren, most of whom will likely live in the country they were born in.



Quote:
Originally Posted by mrfalafel View Post

2) You could do what George does in my village. He runs a little newsagent shop and lives upstairs. He must be well into his 90s but he's still a vital part of the community. He keeps active and earns a living.



This presumes good health, which is something not everyone can count on. If you're saving for potential long-term health care bills, you better save a lot more than if you think you're going to be perfectly healthy.



Or you could live in an inexpensive country until you get sick, and then commit suicide, but I don't recommend it.

Q: How many poets does it take to change a light bulb? A: 1001...one to change the bulb, 1000 to say it's already been done.
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