Annuities?

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Cortopassi
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Re: Annuities?

Post by Cortopassi » Sat May 19, 2018 9:00 am

mathjak107 wrote:
Sat May 19, 2018 5:27 am
here is a nice comparison of the difference in dollars but it does not figure in spending down invested assets to delay nor the spousal benefits your spouse can't get until you file .

the 2nd one shows you break even compared to a balanced portfolio.

Image

Image
Thanks for this info and I just wanted to say, a bit scary how my chart, which I created in a vacuum, looks so similar to JP Morgan's!
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Re: Annuities?

Post by mathjak107 » Sat May 19, 2018 9:04 am

most charts will look a like because the math is the math .

there are other factors involved in deciding when to take ss , like taxes , aca subsidies , survivor benefits , future rmd's , dependency on markets and rates etc. so it can be quite complex , certainly far more complex than what if i die is .
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Re: Annuities?

Post by WiseOne » Sat May 19, 2018 9:49 am

How does the increase in full retirement age to age 67 affect this calculation?
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Re: Annuities?

Post by mathjak107 » Sat May 19, 2018 10:22 am

t would have to be recalculated because it certainly will effect it . there are fractions you multiply by on the ss website to reconfigure.
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Re: Annuities?

Post by ochotona » Sat May 19, 2018 11:02 am

Maximizemysocialsecurity.com
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Re: Annuities?

Post by Cortopassi » Sat May 19, 2018 11:28 am

This is like the young kids and testing do they want one jellybean now, or if they can sit and wait for 15 minutes they get two.

My gut (right now) continues to tell me take it all, as soon as I can, unless I don't need it. When I hit 62 I will have to assess where things are at.
Ideally I would have already been retired/semi-retired for 2 years, so I will have a better sense of how my real spending and expenses match against the real world.

Ocho, I took the test and gave me back that I will live to 95.

When I run my retirement simulator (FYI I use Personal Capital) and compare SS starting at 62 vs. 67 with all other assets and growth projections the same, the breakeven takes until age 91, whereas the spend down on my assets between 62 and 67 is a bit more pronounced in the scenario where I delay SS until 67.

And if my luck holds, that 5 year period between 62 and 67 will be the worst ever for the stock and bond market in history....and my spend down will be enough to cause me great anxiety...

Hence, the original post asking about annuities!
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Re: Annuities?

Post by Mountaineer » Sat May 19, 2018 11:40 am

Cortopassi wrote:
Sat May 19, 2018 11:28 am
This is like the young kids and testing do they want one jellybean now, or if they can sit and wait for 15 minutes they get two.

My gut (right now) continues to tell me take it all, as soon as I can, unless I don't need it. When I hit 62 I will have to assess where things are at.
Ideally I would have already been retired/semi-retired for 2 years, so I will have a better sense of how my real spending and expenses match against the real world.

Ocho, I took the test and gave me back that I will live to 95.

When I run my retirement simulator (FYI I use Personal Capital) and compare SS starting at 62 vs. 67 with all other assets and growth projections the same, the breakeven takes until age 91, whereas the spend down on my assets between 62 and 67 is a bit more pronounced in the scenario where I delay SS until 67.

And if my luck holds, that 5 year period between 62 and 67 will be the worst ever for the stock and bond market in history....and my spend down will be enough to cause me great anxiety...

Hence, the original post asking about annuities!
;D There is a reason for the old adage, "A bird in the hand is worth two in the bush." Or, as Vanguard might say, past performance does not assure future success.

May you have the wisdom you need and the good luck to go with it. :)
DNA has its own language (code), and language requires intelligence. There is no known mechanism by which matter can give birth to information, let alone language. It is unreasonable to believe the world could have happened by chance.
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Re: Annuities?

Post by mathjak107 » Sat May 19, 2018 11:41 am

the nice thing is to have enough money so you can have choices as to when to take it. i always say money may not buy happiness but it buys choices in life .

i went with 65. i work 1 day a week so i did not want to give money back . i like what i do so i really enjoy doing that day or occassional 2 days .

in the year i will be fra i can earn up to 45k and give nothing back . so 65 was a good balance for me. my wife took it at 62 .
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Re: Annuities?

Post by barrett » Sat May 19, 2018 11:55 am

Cortopassi wrote:
Sat May 19, 2018 11:28 am
This is like the young kids and testing do they want one jellybean now, or if they can sit and wait for 15 minutes they get two.

My gut (right now) continues to tell me take it all, as soon as I can, unless I don't need it. When I hit 62 I will have to assess where things are at.
Ideally I would have already been retired/semi-retired for 2 years, so I will have a better sense of how my real spending and expenses match against the real world.

Ocho, I took the test and gave me back that I will live to 95.

When I run my retirement simulator (FYI I use Personal Capital) and compare SS starting at 62 vs. 67 with all other assets and growth projections the same, the breakeven takes until age 91, whereas the spend down on my assets between 62 and 67 is a bit more pronounced in the scenario where I delay SS until 67.

And if my luck holds, that 5 year period between 62 and 67 will be the worst ever for the stock and bond market in history....and my spend down will be enough to cause me great anxiety...

Hence, the original post asking about annuities!
All very interesting. My big realization in reviewing this stuff as a result of this thread is that my wife won't need to claim based on my earnings. She's now reached the point where it will be more favorable to collect based on her own earnings. Crap, I'd better not tell her and give her one more reason to hit the road.

And, as I'm sure you know, Cortopassi, the whole SS system could go through something of an overhaul before you claim. I'm already 59.7 and I'm counting on some major changes before I claim at age 70 in 2028 and my wife claims at 67 in 2034.
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Re: Annuities?

Post by ochotona » Sat May 19, 2018 2:28 pm

I'm going to discount the future Social Security cash flows after a certain date like what was it 2034 when the trust fund runs out of money? The trustees report that only 79% of the benefits will be able to be paid out? So discount by at least that much.
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Re: Annuities?

Post by barrett » Sat May 19, 2018 2:46 pm

ochotona wrote:
Sat May 19, 2018 2:28 pm
I'm going to discount the future Social Security cash flows after a certain date like what was it 2034 when the trust fund runs out of money? The trustees report that only 79% of the benefits will be able to be paid out? So discount by at least that much.
Yeah, the wording on the annual statements is deliberately wishy washy, I think. My last one says "... by 2034, the payroll taxes collected will be enough to pay out only about 77% of scheduled benefits." They don't really say where we are right now. I mean, it doesn't go from 100% to 77% overnight, right?

I can't imagine that Congress will do much until the very last minute, so maybe in another decade (right as Cortopassi is getting ready to claim!). The age increases under the 1983 changes to SS affect those born up to 1960. I would expect that one of the changes will be that those born in 1961 or later will see a gradual increase in age at which they can collect (both the minimum age to get anything as well as one's FRA).

But I am obviously just speculating.
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Re: Annuities?

Post by Cortopassi » Sat May 19, 2018 3:22 pm

barrett wrote:
Sat May 19, 2018 11:55 am

All very interesting. My big realization in reviewing this stuff as a result of this thread is that my wife won't need to claim based on my earnings. She's now reached the point where it will be more favorable to collect based on her own earnings. Crap, I'd better not tell her and give her one more reason to hit the road.

Obviously there are things I have no idea about WRT SS, like this claiming discussion. Is the government website the best place to learn about this or some other site?
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Re: Annuities?

Post by mathjak107 » Sat May 19, 2018 6:43 pm

i learned by reading books on the subject . there is a lot to know. of course now with the doing away with file and suspend , the ability to pay back ss whenever you want and start over and restricted application for those who were not 62 in 2015 or older , it is easier .

there are different rules and formulas for ss retirement and different rules and formulas for survivor .

i am pretty well versed in it now except i did not have to learn about the windfall elimination provision .

with 80 million voting baby boomers it would be political suicide letting ss take a reduction . as usual it will be dealt with in the 11th hour .
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Re: Annuities?

Post by mathjak107 » Sun May 20, 2018 3:43 am

Cortopassi wrote:
Sat May 19, 2018 3:22 pm
barrett wrote:
Sat May 19, 2018 11:55 am

All very interesting. My big realization in reviewing this stuff as a result of this thread is that my wife won't need to claim based on my earnings. She's now reached the point where it will be more favorable to collect based on her own earnings. Crap, I'd better not tell her and give her one more reason to hit the road.

Obviously there are things I have no idea about WRT SS, like this claiming discussion. Is the government website the best place to learn about this or some other site?
just don't buy any annuity product without plans to delay ss first or you will pay more and get less . i guess that can be lesson 1 .
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Re: Annuities?

Post by WiseOne » Sun May 20, 2018 8:08 am

barrett wrote:
Sat May 19, 2018 2:46 pm
ochotona wrote:
Sat May 19, 2018 2:28 pm
I'm going to discount the future Social Security cash flows after a certain date like what was it 2034 when the trust fund runs out of money? The trustees report that only 79% of the benefits will be able to be paid out? So discount by at least that much.
Yeah, the wording on the annual statements is deliberately wishy washy, I think. My last one says "... by 2034, the payroll taxes collected will be enough to pay out only about 77% of scheduled benefits." They don't really say where we are right now. I mean, it doesn't go from 100% to 77% overnight, right?

I can't imagine that Congress will do much until the very last minute, so maybe in another decade (right as Cortopassi is getting ready to claim!). The age increases under the 1983 changes to SS affect those born up to 1960. I would expect that one of the changes will be that those born in 1961 or later will see a gradual increase in age at which they can collect (both the minimum age to get anything as well as one's FRA).

But I am obviously just speculating.
That 77% number is useful to know. I've been discounting my future Social Security income by 20% for planning purposes, but maybe I should up that to 25%.

The FRA increase to 67 for those born after 1960 will decrease the boost you can get by delaying SS to age 70, so it's already effectively an SS cut. I guess the next step, when Congress gets around to it, is to continue the FRA increase all the way to age 70, and probably to delay the age when you can start taking benefits to 65. That way they can cut SS benefits by just about the right amount without actually having to say they're cutting benefits.
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Re: Annuities?

Post by mathjak107 » Sun May 20, 2018 8:46 am

well all i can say is keep working and paying in , my check depends on you ha ha ha
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Re: Annuities?

Post by barrett » Sun May 20, 2018 9:11 am

WiseOne wrote:
Sun May 20, 2018 8:08 am
barrett wrote:
Sat May 19, 2018 2:46 pm
ochotona wrote:
Sat May 19, 2018 2:28 pm
I'm going to discount the future Social Security cash flows after a certain date like what was it 2034 when the trust fund runs out of money? The trustees report that only 79% of the benefits will be able to be paid out? So discount by at least that much.
Yeah, the wording on the annual statements is deliberately wishy washy, I think. My last one says "... by 2034, the payroll taxes collected will be enough to pay out only about 77% of scheduled benefits." They don't really say where we are right now. I mean, it doesn't go from 100% to 77% overnight, right?

I can't imagine that Congress will do much until the very last minute, so maybe in another decade (right as Cortopassi is getting ready to claim!). The age increases under the 1983 changes to SS affect those born up to 1960. I would expect that one of the changes will be that those born in 1961 or later will see a gradual increase in age at which they can collect (both the minimum age to get anything as well as one's FRA).

But I am obviously just speculating.
That 77% number is useful to know. I've been discounting my future Social Security income by 20% for planning purposes, but maybe I should up that to 25%.

The FRA increase to 67 for those born after 1960 will decrease the boost you can get by delaying SS to age 70, so it's already effectively an SS cut. I guess the next step, when Congress gets around to it, is to continue the FRA increase all the way to age 70, and probably to delay the age when you can start taking benefits to 65. That way they can cut SS benefits by just about the right amount without actually having to say they're cutting benefits.
One of the things that was apparent to me when I was looking over my SS statements yesterday (I have paper statements from 2000 to 2010) was how much the last recession appeared to affect the SS shortfall projections (fewer people paying in because they didn't have jobs is my guess). My statement dated 6/17/09 shows 78% as of 2041, and my statement dated 6/11/10 shows 76% as of 2037. So the current numbers are probably optimistic considering that recessions are a pretty regular thing.
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Re: Annuities?

Post by Cortopassi » Sun May 20, 2018 9:25 am

mathjak107 wrote:
Sun May 20, 2018 3:43 am
Cortopassi wrote:
Sat May 19, 2018 3:22 pm
barrett wrote:
Sat May 19, 2018 11:55 am

All very interesting. My big realization in reviewing this stuff as a result of this thread is that my wife won't need to claim based on my earnings. She's now reached the point where it will be more favorable to collect based on her own earnings. Crap, I'd better not tell her and give her one more reason to hit the road.

Obviously there are things I have no idea about WRT SS, like this claiming discussion. Is the government website the best place to learn about this or some other site?
just don't buy any annuity product without plans to delay ss first or you will pay more and get less . i guess that can be lesson 1 .
mj, I don't even understand lesson 1. You mean somehow related to taxes? Or meaning the annuity is not the best vehicle and if I did that I better delay SS to make up for less than expected from the annuity?
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Re: Annuities?

Post by mathjak107 » Sun May 20, 2018 9:32 am

social security is the best annuity you can buy .

for the amount in checks you give up from 62 to 70 you can't buy any commercial annuity that gives you as much , passes to a spouse and is cola adjusted . so before you buy an annuity plan on delaying ss . you layout out what you are not getting from ss out of your portfolio from 62 to 70 and fund your draw that way ..

it would not be wise to take early ss and then spend that money on a commercial annuity .
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Re: Annuities?

Post by Libertarian666 » Wed May 23, 2018 11:39 pm

mathjak107 wrote:
Fri May 18, 2018 7:05 am
it would be poor financial sense to ever buy any annuity before delaying taking ss first .

there is no commercial annuity that you can buy that would pay as much , be cola adjusted and pass to a spouse that would be as good as what you would get from ss for the cost of laying out the ss amount you are not collecting from 62 to 70.

it is the best value in an annuity you can buy . annuities should only be considered after you delay taking ss . it is a terrible deal in comparison taking early ss and then buying a commercial annuity product.

cola adjusted annuities are the worst deals out there and the main reason you never want to use annuities in isolation . keep in mind your personal cost of living is very different from the adjustments the cpi gives you . there is little in common between your cost of living and a price index which has most of the items not applying to you or the way you buy or even your location .

you want your inflation protection in growth vehicles .
I don't trust SS not to be means-tested at some point.
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Re: Annuities?

Post by Libertarian666 » Wed May 23, 2018 11:47 pm

I have spent a lot of time writing a program to show the effects of different social security claiming times, life insurance, and annuities. It's available free at rhino-retirement-analyzers.com.

I'll also send a copy of the companion book in PDF form to anyone here who wants to read it.

BTW, I'm a licensed life insurance agent in AZ, CA, FL, IA, MI, OH, PA, TX, and VA, so if anyone who lives in one of those states is interested in buying a fixed annuity like the ones listed on immediateannuities.com, I'd be happy to discuss that with them. The cost to the purchaser is the same no matter what agent you use.

Note: I don't believe in, and will not sell, any variable annuities, including "fixed indexed".
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Re: Annuities?

Post by Libertarian666 » Wed May 23, 2018 11:50 pm

mathjak107 wrote:
Sun May 20, 2018 9:32 am
social security is the best annuity you can buy .

for the amount in checks you give up from 62 to 70 you can't buy any commercial annuity that gives you as much , passes to a spouse and is cola adjusted . so before you buy an annuity plan on delaying ss . you layout out what you are not getting from ss out of your portfolio from 62 to 70 and fund your draw that way ..

it would not be wise to take early ss and then spend that money on a commercial annuity .
SS does not pass to a spouse in the same way as joint and survivor annuities do. In fact, if both spouses have the same SS payment, the survivor gets 0 benefit from the first spouse's SS account after the first spouse dies. (Oversimplified but generally accurate).
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Re: Annuities?

Post by mathjak107 » Thu May 24, 2018 3:06 am

this is true , under those circumstances . but it is rare there is not a higher and lower benefit in ss . especially in survivor benefits which can contain not only delayed credits but where it is not based on half amounts either. even if both benefits are the same if you were at least 62 in 2015 you can let your benefit grow and collect spousal no matter who's is bigger.

you also get to have ex wives if they qualify collect off your record no matter how many there are , you can't do that with an annuity. the fact still stands , do not buy an annuity without delaying ss first , it makes no sense . there is no better cola adjusted annuity that will pay you as much for the price !
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Re: Annuities?

Post by Libertarian666 » Thu May 24, 2018 9:39 am

mathjak107 wrote:
Thu May 24, 2018 3:06 am
this is true , under those circumstances . but it is rare there is not a higher and lower benefit in ss . especially in survivor benefits which can contain not only delayed credits but where it is not based on half amounts either. even if both benefits are the same if you were at least 62 in 2015 you can let your benefit grow and collect spousal no matter who's is bigger.

you also get to have ex wives if they qualify collect off your record no matter how many there are , you can't do that with an annuity. the fact still stands , do not buy an annuity without delaying ss first , it makes no sense . there is no better cola adjusted annuity that will pay you as much for the price !
For all those who want ex-wives to collect on their record, this is definitely very important.

I suspect most people with ex-wives aren't in that category.

And I agree that if you believe that SS will remain the same rather than being cut or means-tested, delaying SS is probably a good choice. But it's not the black-and-white situation that you claim.
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Re: Annuities?

Post by mathjak107 » Thu May 24, 2018 2:22 pm

well if you don't delay then you can end up more dependent on markets ,rates and inflation outcomes as your check will be 70% less at the age of 70.

so from 70 on delaying makes you more longevity dependent but a lot less market,rate and inflation dependent. so you have your choice .
survivor benefits can be a lot bigger too .

for the record i went in the middle at 65 and my wife 62
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