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Chip <c...@i...org> writes:
> dapperdobbs wrote:
>
> > Also keep in mind that every 10k of pension or retirement benefits
> > implies an underlying net worth of about 143k, assuming a 7% rate
> > of return.
> This is interesting. Can you give me a cite or URL where this is
> spelled out? I have heard of a 12X mult of the yearly pension, but
> this exact figure is new to me.
The thing is that pensions are more complex than such a
simple rule of thumb can account for. To come a lot
closer, I'd say to go get some quotes for current prices
for immediate annuities. The values, you'll note, depend
on variables such as current interest rates, your age,
your sex, if it's a second-to-die (and then, on your
spouse's age and sex, too, of course), if it's inflation
indexed or not, etc.
But for what it's worth, a 65yr-old man in my state
can get single-life income, no payments to beneficiaries,
no inflation adjustments annuity paying around $675/mo
for $100,000. That's $8100/yr, or about 8%.
The same annuity for a 45-yr-old man pays only about 6%,
and even less if it's a woman instead of a man.
You'll probably need to talk to an insurance agent to
get quotes for more complex situations (ie. specific
companies, inflation-index, etc).
--
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On Sep 29, 7:14 pm, B...@f...net wrote:
> But for what it's worth, a 65yr-old man in my state
> can get single-life income, no payments to beneficiaries,
> no inflation adjustments annuity paying around $675/mo
> for $100,000. That's $8100/yr, or about 8%.
For a lifetime annuity purchased in a taxable account, the purchase
cost is amortized over 360 months for under 56, 310 months for 56-60,
260 months for a 61-65 year old, 210 months for 66-70, and 160 months
for 71 and older. That will reduce the taxes from the annuity.
--
Ron
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A quick annuity calculator here:
http://www.immediateannuities.com/
Some people might put a portionof their savings
(say 1/3) in annuity to generate baseline living expenses
and invest the rest more aggressively.
Annuities pay slightly more than 30-year treasuries (6%)
if you are under 60, then increase with age.
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On Sep 27, 4:46 pm, m...@y...com wrote:
> Hello Fellow financial planners & investors,
>
> I have been a do-it-yourselfer, investing for 15 years, since I
> started a job after completing an engineering PhD (I am in silicon
> valley area, but I am not a comp science or electronics engineer).
> Over the years, my wife and I have been aggressive savers, with a view
> towards early retirement, and we think we have done well. Would
> appreciate some critique and analysis, and discussions on potential
> blind spots we may be missing.
>
> Self age: 41; spouse: 35; two kids, 7 and 4.
> GOAL: Retire by 45, definitely by 50.
I think your details suggest you have the accumulation aspect of
retirement planning down.
I second the advice to get a will.
I would look at the following aspects to improve situation:
1) Make sure you have 6-12 months expenses in cash (emergency fund)- I
did not see this mentioned.
2) You need to start thinking of withdraw techniques. This has tax
implications on many levels and over the next 5-10 years this might
suggest what you buy or invest in.
3) I would make sure you have a good handle on retirement expenses.
Will travel increase? Will spending increase? Health care costs?
Moving?- if so will property taxes and maintainence change?
4) 2) and 3) kind of go hand in hand. Withdraw techniques can suggest
how much you need to save, the budget suggests how much earnings you
need from investments each year. If you chose to live off dividends
alone (a good early retirement plan- as dividends tend to keep up with
inflation), you might want to increase what you send to the DRIPs now,
as well as liquidate some of the company stock for this as well.
5) If you chose a more conservative allocation going forward, I would
advise to use muni bonds because of 28% fed tax rate and I assume a
high amount of state taxes too.
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On Sep 30, 3:53 pm, jIM <n...@h...com> wrote:
> I would look at the following aspects to improve situation:
> 1) Make sure you have 6-12 months expenses in cash (emergency fund)- I
> did not see this mentioned.
The OP has a $500,000 non-retirement account so he doesn't need to
have 6-12 months of cash for emergencies since some brokerages allow
one to borrow against that type of account. The OP could also sell
those funds that aren't depressed and have a large tax impact.
--
Ron
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