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odiousgambit
odiousgambit
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June 12th, 2017 at 5:24:20 PM permalink
Quote: lilredrooster

there is yet another option. according to the linked annuity calculator you and your wife if you were both age 65 you could buy a single premium joint immediate lifetime annuity for $100K which would generate $5616 per year or $468 per month which is considerably more than 4%. One of the two of you would have to live about to age 83 in order to have been paid back the entire $100K. One of the two of you would need to live about to 92 to have generated $150K in annuity payments. the downside of course is that if you both leave early you will be able to bequeath less to your heirs. there is also an option to have the monthly payments increased each year according to an inflation calculation but that will of course lower your initial monthly payouts. i plan to do this for myself when the time comes. of course you are paying the house to assume the risk but i'm willing to trade that for the certainty. in this situation i'm not looking for an advantage play. just a fair deal.

https://www.immediateannuities.com/information/annuity-rates-step-1.html



I'd be very slow to accept this is a good deal. I mistrust this calculator. To buy an annuity in and of itself isn't necessarily a bad deal, but insurance companies - and, I am inclined to believe, this outfit - are notorious for bad ones. They often promise 7% returns these days but insurance companies for reasons I am unsure of generally will generate something similar to banks as far as interest in all their products, such as 'term life'. So how do they return 7%? [or whatever] ... they return part of the principal as needed to keep this promise. And, since they keep the money basically when you die, they are happy to do the actuarial work to make sure this works out for them. If you discover you have made a bad deal, you can't get out of it properly because a commission has been paid to whoever sold it - a very powerful incentive to misrepresent what is being offered.

Every once in a while some outfit gets in trouble for selling inappropriate products to seniors.

Like most things, there are positives. Usually you pay no income tax. A younger retiree who is scared to death of other investments other than bank savings accounts and what he would get in 'term life' products might as well go for a shitty annuity product too. Often such people would never save anything if it weren't for these vehicles.

Having said all that I am no expert and have my prejudices as you can see.

BTW I'd probably shoot myself if I only go 4% return on my investments in the long run.
"We thank with brief thanksgiving Whatever gods may be That no man lives forever, That dead men rise up never" Nor any gambler the long run see ever ........apologies to Swinburne for that last line
Wizard
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Wizard
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June 12th, 2017 at 5:31:27 PM permalink
Quote: Ibeatyouraces

Abolish it and give everyone their money back! It's been a scam from the get go.



The money doesn't exist to give. While there in theory exist "trust funds," it is money that future generations owe the current one.
It's not whether you win or lose; it's whether or not you had a good bet.
Ibeatyouraces
Ibeatyouraces
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June 12th, 2017 at 6:06:39 PM permalink
Quote: Wizard

The money doesn't exist to give. While there in theory exist "trust funds," it is money that future generations owe the current one.


True definition of a ponzi scheme.
"And that's the bottom lineeeee, cuz Stone Cold said so!"
lilredrooster
lilredrooster
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June 13th, 2017 at 1:53:44 AM permalink
Quote: odiousgambit

I'd be very slow to accept this is a good deal. I mistrust this calculator.


i believe that the one annuity that i mentioned; single premium lifetime immediate, with no other conditions, is the one in which the house accepts the lowest edge. but anyway, the figures the calculator gives you can easily be checked with no obligation. but it sounds like you're not comfortable with annuities or insurance companies. of course, it's very important that you are comfortable with your investments. i think you already know this, but just in case or for others, the reason the payout seems large is that of course, sometimes the annuitants will die early and the house will receive a windfall.
Last edited by: lilredrooster on Jun 13, 2017
everybody wants to go to heaven but nobody wants to die
lilredrooster
lilredrooster
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June 13th, 2017 at 2:13:26 AM permalink
Quote: Skeptic

Of course it's not going away but the purchasing power of $1 will be nothing in 20 years just as $1 today buys a whole lot less than it did 20 years ago. Our SS payments are based on the dollars we are earning today (and the last 20 years), not the value of a dollar 20 years from now. The only thing that can stop that is serious deflation which will wipe out asset values (meaning a segment of retirees will have even less to work with at retirement).



it sounds like you are not aware of COLA (cost of living adjustment) which is an annual calculation for adjusting the payments upwards due to inflation. in December of 2016 the s.s. payouts were increased by 3% due to the COLA. this is done every year if some abstruse calculation that they make warrants it. but maybe you are aware of this and are pointing out something deeper. i'm not sure.
everybody wants to go to heaven but nobody wants to die
Doc
Doc
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June 13th, 2017 at 7:18:09 AM permalink
Quote: lilredrooster

... in December of 2016 the s.s. payouts were increased by 3% due to the COLA.

That is an interesting point, and as a Social Security recipient, I have some first-hand info.

Yes, the Social Security monthly gross benefits were increased. However, the Medicare premiums that are deducted from those payments were increased by the exact same dollar amount. There was no increase in the net benefits deposited in my bank account each month. It was strictly a matter of transferring funds from one government program to another related program.



I don't think I really have anything to offer on the basic topic of this thread.
lilredrooster
lilredrooster
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June 13th, 2017 at 7:53:06 AM permalink
Quote: Doc

Yes, the Social Security monthly gross benefits were increased. However, the Medicare premiums that are deducted from those payments were increased by the exact same dollar amount. There was no increase in the net benefits deposited in my bank account each month. It was strictly a matter of transferring funds from one government program to another related program.



i made a mistake in my earlier post. the increase was not 3% it was 0.3%. so that may partly explain it. i think this is a very complicated issue and the possible reason for this is that the cost of medical insurance is inflating by a greater amount than inflation as a whole.
everybody wants to go to heaven but nobody wants to die
terapined
terapined
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June 13th, 2017 at 8:16:50 AM permalink
Quote: Doc

That is an interesting point, and as a Social Security recipient, I have some first-hand info.

I don't think I really have anything to offer on the basic topic of this thread.


At what age did you retire. Do you work part time?
I am thinking about retirement. I am 58.5 yrs old. Thinking of going for it at 62. I doubt I will live long. Lifestyle and health problems. I figure i will be lucky to hit 75. My understanding is you can make up to 17k part time with no penalty. Thinking of retirement at 62 and working part time
"Everybody's bragging and drinking that wine, I can tell the Queen of Diamonds by the way she shines, Come to Daddy on an inside straight, I got no chance of losing this time" -Grateful Dead- "Loser"
billryan
billryan
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June 13th, 2017 at 10:13:01 AM permalink
I retired at 57 and most certainly will collect at 62. My father died of a heart attack at 53, his brother at 57.
My mother had four brothers. Three died between 56 and 67.
Years ago, my Internist shared a suite with an orthopedic surgeon who worked with many pro athletes.
During an exam, he walked me into the OS office and asked him how many eighty year old patients he had that weighed 300 pounds or more. He could not think of a single one.
It's what you do and not what you say If you're not part of the future then get out of the way
Doc
Doc
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June 13th, 2017 at 12:47:07 PM permalink
Quote: terapined

At what age did you retire. Do you work part time?

I retired at 58 with a (reduced) pension from my employer and started drawing Social Security benefits at 62 and Medicare benefits at 65. I do not work (at least not for any compensation) at all. I describe my status as "delightfully unemployed." I occasionally comment that unemployment is quite nice for those who can afford it. I consider it to be my full-time responsibility to have fun.

As noted in your post and that by billryan, I had some doubts about living a long life, and therein lies part of my reasoning for the early retirement and early start to drawing Social Security benefits. While I am overweight (close to 100 pounds heavier than when I first finished college -- you can check my photo in several of the group shots of WoV gatherings), my concerns are less about an unhealthy lifestyle or health problems than about family history.

My father died a couple of weeks after turning 70, having spent six months of his final year in a hospital, three months of that in intensive care. His father died at the age of 76 but with little well being after 70 or 72. He had complications from diabetes, had lost both legs, and in one week had two strokes that left him paralyzed on one side of what was left of his body. He had dementia in his last six months to a year.

My mother's father died at the age of 51 from what was at least his third heart attack. My older brother died of cancer at the age of 65. My younger brother went out jogging at the age of 51 and woke up while being loaded into an ambulance. At the ER, they couldn't figure out how he had survived. Later that week, he had quadruple bypass surgery. Not a family history that leads one to expect to experience being truly old and healthy.

I am now 71. About two months ago, I was helping a neighbor with a little home repair task, felt tired, passed out, and woke up as the EMTs arrived. They ran an EKG and told me it showed an anomaly. Based on their recommendation, I spent a night in the hospital connected to monitors, had an echo-cardiogram the next day, and was later discharged with what sounded like a clean bill of health. I don't really know what to think about my current health status, but I plan to keep trying to have a little fun in whatever time I have left, hopefully plenty (of both time and fun.)

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