Golden Years is a Guessing Game
 

Have you notice when the subject comes up about retirement and savings in
tv, magazines or visiting your financial adviser, you're supposed to know these questions.

They want you to guess how long you're going to live ....WHAT?

They want to know how long your savings will last.....WHAT?

Both these questions for most people are impossible to answer entering into retirement.
How can we even come close to an educated guess?

Your Thoughts

I generally don’t do the magazine things and we have never had a financial advisor but you are right, who knows the answer to the questions. What do you say, I plan to die in 3 years, 6 months…, no one knows. For me I was forced to retire at 56 which is earlier than planned and went on disability plus my pension. The pension is not as expected since I did not work to 65 but it is a good trade off not working.

No one knows what is next, we just hope that it all works out with the funds we have. We live off the checks and not the savings.

For most people, I think you need to live off your pension and/or Social Security income, plus the income generated from your investment portfolio. Then, it really doesn't matter how long you live. I would not feel comfortable dipping into my investment principal, and hoping to die before I ran out of money.

I would be even more P O. if I died with the the principal intact.:icon_wink:

over the years I've attended a few of these 'free meal sales seminars' and listened to various financial advisors tell me how screwed I am, and that I'm at risk if I don't hand over all my accumulated wealth to them to manage for me

We've even gone as far as to meet with a few of them afterwards to hear their 'story' of how they're going to 'protect my financial future'

Funny how it always seems to far more about them, than me

One thing is certain, you won't care when your dead.....

But you do get a nice free dinner.

I like to ask them for their credentials and listen to what they say.

One was a former math teacher who had this financial program that gives him the answer to your situation.

Another was a salesman who told me he took a couple of on line financial courses.

Asked him if he knew what a CFP was and he looked at me as if I had two heads.

Amazing though how many people do sign up for the second meeting one on one.

But the dinners were nice.

I took a different approach. Maybe 25 years ago, I built a giant spreadsheet with all of my assets, all of my income sources, and all of my expenses. I incorporated the ability to make assumptions about inflation and returns on my assets, as well as tax rates.

I used all of that data and my assumptions to project when I would run out of money. Most reasonable scenarios (without selling my houses) put that number at about 105 years of age. At that point I need to be dead or face a significantly reduced standard of living.

As people are seeing today, it is best to have a generous assumption for inflation, because that is the killer of retirement plans, that and bear markets.

Actually you don’t know that for certain.

Glad I don't know how long I will live. But you never see a Brinks truck following a Hearst.

Crystal Ball
 

Yes, sometimes you must draw a line in the sand when it comes to setting a benchmark in planning for the future. Life expectancy, genetic disposition, family history and health are good indicators of mortality. However, when it comes to "guessing" how long you need retirement income, the use of a fixed indexed annuity with a guaranteed income withdrawal benefit takes the uncertainty out of the equation. This financial vehicle guarantees income to you (and your surviving spouse) for life, even if your balance goes to zero! A death benefit to non-spousal beneficiaries exists if a positive account balance is present at death.

Assuring that cost control measures for funding your health care costs are in place is one of the benefits of a Medicare Advantage or Medigap health insurance policy, supplemented by a stand-alone COMPREHENSIVE dental and vision plan.

When it comes to "how much", you should always maintain some liquidity for those months that your pension, social security, and the annuity doesn't measure up to your income needs. A realistic budget, taking into consideration the timing of your withdrawals and periodic increases in costs (inflation). Your individual history is usually the best indicator of future needs.

Can't trust brokers as much after this
 

Nothing more needed than one's best GUESS to use in retirement duration calculations.
No mystery.
No right or wrong.

Not an advocate of any businesses that use the offer free anything to come and listen to their pitch. There is always, ALWAYS a hook. Always!

Some educated guesses,
 

You’re absolutely right neither end if life nor investment life are certain, but here are some thoughts.

Your best predictors of your life span are your parents and grandparents due to your genes etc. I know my parents and grandparents all lived to approximately the same ages. The one study I read indicated that, by not including any parents or grandparents who died of accidents, war, etc., if you add 4 years to the age of your parents when they each died, and 8 years to each of your grandparents, the average is your best prediction of end of life.

As far as investment returns, in the long term, the stock market (as a whole) returns 9 or 10% annually. Fixed income investments are down in the 2-to-4%. Netting a balanced portfolio against average inflation you’re looking at 3-to-5% maybe? The old rule of thumb of spending 3-4% annually of your portfolio means that your investments will last your lifetime?

Just some thoughts. Lots of variables

"the stock market (as a whole) returns 9 or 10% annually"

Starting points are huge in that calculation. We have been in probably the longest bull market in history. Valuations are roof level. I don't think we are done yet, because I have not seen what I consider to be a blow-off top. However, we are building stock market bubbles, housing bubbles, debt bubbles, and crypto-bubbles. When this mess tops, we are going to have a very bad decade follow. It's my biggest concern for retirement planning.