File FAFSA with 7 figure non-retirement portfolio?

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Tycoon
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File FAFSA with 7 figure non-retirement portfolio?

Post by Tycoon »

Is anyone with substantial assets willing to share whether filing a FAFSA has helped their child, or children, at all? My oldest is matriculating this fall and though she has not chosen a college, all of them keep prodding her to submit a FAFSA. I've researched and run the numbers and I just don't see how it will benefit her at all. Am I missing something?
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by livesoft »

Did not help at all. We filed one-time before freshman year, saw the results, and have not filed one since. Student was still able to get part-time job at the university. Others have written that a FAFSA may be needed for certain merit scholarships. In our case, I do not believe not filing hindered any outcomes.

I think it is probably a useful exercise for a family to file a FAFSA. At least then, one can respond with some experience to forum posts about FAFSA questions.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by ajcp »

"They" don't know how big your portfolio is and probably don't know exactly whether you'll get anything, so they figure that it won't hurt.

My parents had much less assets than you and fafsa didn't help me at all. You could get offered loans, but assuming you have the money and are paying for your kids, I'd be shocked if you get anything worthwhile.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by TomatoTomahto »

I think it probably depends on the school. If she's a candidate for merit-based aid, they'll probably want a FAFSA. Need-based aid obviously will want one (and perhaps a CSS form also).

In my son's case, we decided that he stood no chance for need-based aid, and his school doesn't award merit-based aid, so we didn't bother with FAFSA.

I suggest spending some time at http://talk.collegeconfidential.com/fin ... olarships/ as this kind of question is their bread and butter. Since we stood no chance at aid, I didn't spend any time researching it.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Tycoon »

Thanks Tomato, I've spent more time than a person should trolling collegeconfidential.com. This was just my last gasp before I write off the FAFSA and spend my time doing something productive. I appears that she will not benefit from filing.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by TomatoTomahto »

Tycoon, the bad news is that you and I won't get any aid. The good news is that we have worked hard enough, been lucky enough (because there's always an element of luck), and deferred consumption enough that we will be in a position to write the check. It might sound bizarre, but I actually look forward to writing the check -- I worked and saved to make this possible, more than I did it to buy clothing, cars, etc.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by LadyGeek »

This thread is now in the Personal Finance (Not Investing) forum (financial aid).
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by dickenjb »

It only takes 20 minutes to fill out the form - but I predict you will get the same result I did. EFC (expected family contribution) of $99,999 per year.

I knew I was in trouble when they only gave you 6 figures to the left of the decimal point to enter your assets. The instructions tell you to enter "$999,999" if your assets exceed the space available on the form. That should have been a hint.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Tycoon »

TomatoTomahto wrote:Tycoon, the bad news is that you and I won't get any aid. The good news is that we have worked hard enough, been lucky enough (because there's always an element of luck), and deferred consumption enough that we will be in a position to write the check. It might sound bizarre, but I actually look forward to writing the check -- I worked and saved to make this possible, more than I did it to buy clothing, cars, etc.
I can't say I'm looking forward to writing the check(s) :(. But we are fortunate enough to be able to write them and for that I am thankful. She's been offered significant merit aid at the schools she's been accepted to so my burden won't be as heavy as yours. But like ajcp stated, "they" don't know my daughter's situation until she submits, and I can see why the school would ask. I mainly wanted to confirm that it wouldn't benefit her to file.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by tibbitts »

I believe that some scholarships that are merit or income-based might require fafsa on file, and possibly some college employment opportunities might as well, so I'm not seeing the advantage to not filing.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by TomatoTomahto »

From http://www.collegeconfidential.com/dean ... opeful.htm
BUT … the bad news is that some colleges (admittedly not many) do require the FAFSA for all scholarships, whether need-based or not, so you have to dig around on college Web sites and read all the fine print to make sure that your son’s target schools aren’t on that list.
Double check to be sure.

Re writing the check, you're going to have to write it anyway, might as well smile and consider it a milestone. I might be like my father, who went from an immigrant mopping stairs to someone who, while not rich, could provide for his family, including college. One tax day he came to me and told me that he had paid more in taxes that year than he had earned two years previous; he turned it into a proud event.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Tycoon »

Thank you all for taking the time to respond.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by letsgobobby »

dickenjb wrote:It only takes 20 minutes to fill out the form - but I predict you will get the same result I did. EFC (expected family contribution) of $99,999 per year.

I knew I was in trouble when they only gave you 6 figures to the left of the decimal point to enter your assets. The instructions tell you to enter "$999,999" if your assets exceed the space available on the form. That should have been a hint.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by zzcooper123 »

I had the same EFC results from the FAFSA and stopped completing it after my daughter's freshman year. She continued to get her merit-based scholarship.
I also had concerns about the laying out my entire financial situation onto a (possibly) unsecured site.
I heard a story where a high earning neighbor was reimbursed $500 by the institution to complete the FAFSA. The college must have wanted the data pretty bad.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by siamond »

Doesn't take long to fill the FAFSA, possibly less time than it takes to read this thread... :wink:

For sure, you will not get need-based scholarships, but there are some other scholarships that your child might be entitled to, and the FAFSA is required. In our case, the (costly East coast private) college that my elder son currently attends has a minimum $1000 scholarship for everybody, as long as they maintain a moderately ok GPA... Not big bucks compared to the annual tuition/room/books, but hey, we'd rather get it than not.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by tbradnc »

tibbitts wrote:I believe that some scholarships that are merit or income-based might require fafsa on file, and possibly some college employment opportunities might as well, so I'm not seeing the advantage to not filing.
Yep.. We also score a 999999 but because my daughter is going to school on a scholarship I have to fill one out every year just because....
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by chw »

As others have said, it may be required for merit based aid (at least for freshman year). Also, it will be required to obtain any Stafford loans you plan to utilize.

I wouldn't spend a lot of time finding out whether or not it's needed. It doesn't take long to complete. Probably worthwhile to do at least for the Freshman year and see what benefit it may bring. Better that, than find out you've missed out on merit aid, or other types of aid the university may offer that's not need based. After the first year, you should have a good idea if it's really needed, and stop then.

Regarding your 7 figure portfolio- is any of this sheltered in retirement/401K type accounts? If I recall, these type of accounts are exempt from the calculation for aid, though unless a substantial part of it is sheltered, it probably may not matter.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Tycoon »

None of the schools offering merit aid stated that any of the money is tied to submitting the FAFSA. We have 7 figures in non-sheltered money and more in sheltered. Only a few privates want to know about the sheltered money and other "assets" - but only if she applies for need based aid. Because her parents saved aggressively, spent wisely, and invested smart she will not qualify for need based aid and I'm okay with that as I don't want this thread to turn into a social engineering discussion.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by goodenoughinvestor »

In the case of divorce, there are some schools that only request that the "custodial" parent fill out the forms. That means that if both parents plan to contribute to college but one "ex" has much lower income than the other (and isn't remarried, because a step parent's income counts, too) then it's worth the time it takes for that parent to fill out the FAFSA, CSS, etc.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by livesoft »

A recent article/video on FAFSA from Morningstar that might interest readers of this thread:
http://www.morningstar.com/cover/videoc ... ?id=638271
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Peter Foley »

I filled out the form for my oldest daughter because the college insisted. We got nothing. I did not fill out the form for my youngest daughter and there was no pressure to do so.

By the way - we charged the tuition on a Discover card to get the 1% cash back that was available at the time.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by MnD »

I think filing it hurt our daughters outcome on some merit aid applications she submitted.
We were told that merit aid can and is used in cases where you a highly qualified student applies and household resources are just over the line for need aid.
A merit aid award in this situation can be extremely influential on college selection.

Where you have a household that is way over the line for need aid as in our case, the presumption is that the student is going to select the most desired college they get in to and merit aid is not going to be very influential at all, and very well could be revenue "wasted" if offered and the student selects that school.

She ended up attending a school that awarded a nice merit aid award determined by formula for the top X% of students based on GPA, class standing and test scores.
In retrospect she definitely picked the best school so if the FAFSA did ding her on some of the more discretionary merit awards, I'm fine with that outcome. :mrgreen:
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by programmer »

Yeah the FAFSA was pretty depressing. Filled it in but didn't submit though all of the college admission officers and HS guidance councilers put moderate pressure on all families to fill it out.

Son was offered decent merit aid at one good school, but chose one of the full fare schools. After 3+ semesters, it seems he made the best decision.

I just wish they'd accept credit cards so I could get some cash back.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Keep It Simple »

Reviving this thread as it is FAFSA time this year.

A friend is debating whether it is worth it to fill this form out if it is certain he will not receive need based aid. I told him I would ask the most intelligent people I know so here I am.

One other question I was asked by this friend is if he will have to unfreeze his credit if he submits this? Does anyone have any experience with this? If you must unfreeze your credit, do you have to unfreeze all three and for how long?

Thanks,

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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by nisiprius »

Long story here. It didn't help at all and I completely resent the wasted hours I spent applying for college aid for my kids because everyone told me I just had to. It's about as much work as filing a tax form--every number on it is just different enough that you can't just copy out of the 1040 boxes into the FAFSA boxes.

If common sense says you don't need aid to get the kids through college, I think the best thing is to assume that the FAFSA people are not stupid.

However, of course, even today I'd never have the strength of character not to apply, with the chorus of voices saying "Don't be sure! You gotta try!"
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by livesoft »

I do not recall that the FAFSA cares about credit card debt at all, so unfreezing never came up while filling out the form.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by itstoomuch »

Yes.
DS received a 15% institutional grant to the COA, from a major private tech university. This school does not do merit aid; It's either Need aid or unrestricted grants. All grants & FA were FAFSA filing dependent. Need based aid is based on the FAFSA and maybe the Profile. Non-need grants still need the forms but are not dependent on them. Any student loans absolutely need the the FAFSA. In our era, the student loans on both the student side and parent side got down to as low as 1% simple, 10 year fixed. CD's earning close to 3% for 1yr. We borrowed 77%. Paid 5%. Grant 15%. Outside scholarships 3%. One of my Poorest financial decisions was not to borrow 82% of college costs. :oops:
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by investordoc »

If you live in a state that has a lottery scholarship program you need to fill it out. When my two kids went to out of state college I didn't bother because the lottery only pays if you go to an instate school. My step children are going to my instate school and we needed to fill out the fafsa in order to receive the money. It didn't help otherwise.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Jack FFR1846 »

Merit aid is based on high school grades. Nothing to do with fafsa. Our son was accepted and given merit scholarship long before I filed the fafsa. Merit aid is subtracted from coa, not added as an asset. Grants, loans and work study come out of fafsa

Many colleges have online estimators to see what you might expect for aid. You do have to understand that subsidized stafford loans and private loans (which they will list) are not need based and are not really aid. They are ways to finance college costs.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by HIinvestor »

Some Us DO require kids who apply for merit awards to submit FAFSA. We told our S to avoid applying to those Us, as we really wanted him to attend a U that would give him at least 50%+ tuition. He did apply at several schools known for generous merit awards for kids with grades and SATs like his and got generous awards at 3 of them. We never completed any FAid docs, even when we had 2 kids in college at the same time. The FAid calculator estimated our share to be well over the COA for the two kids. We had too many assets and too much income to qualify for anything. ;). It's important to be realistic.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by AZMax »

No down-side to filling it out, but I simply wasn't willing to part with all my financial details unnecessarily. It would not have provided any benefit in my particular situation. Two kids received both private and school merit-based scholarships with no FAFSA.

However, we got significant arm twisting from 2 state schools to complete the FAFSA, even basically insinuating that it was required for every student no matter what. My son was explicitly told that he had to complete it to be eligible for a specific private scholarship (administered by the school) for which financial need was not a factor.
Even for those of us who don't qualify for grants, they'll insist that you should complete it so that you can qualify for loans. My experience is that their primary objective is maximizing their income (whether from parents, students or the gov't). Providing an education is their secondary concern and they certainly don't care how much debt parents, students or the gov't take on in the process. This isn't a rant - it's just the impression I get from the 2 state schools that I've dealt with.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by beyou »

The whole merit aid issue is not so mysterious.

Private schools will give you merit aid if warranted, as a bargaining tool.
If your child helps their avg SAT scores, they give it to you.

OTOH, public schools run on a tight budget.
They may give merit aid (less common but it happens).
When they do, they are hoping to get reimbursed part of it by the Fed and possibly
state governments. Any aid you get by filing goes right in their pockets in some cases.

My son got a full tuition scholarship at one public university and they
made it clear we MUST file FAFSA and a similar state form.
They get the aid we might have gotten (if we qualified).
Two other state schools in 2 states give partial merit and did not ask to file.
Two private schools gave large merit aid and did not ask to file.

I was forced to file because the one and only school that required it was the one
we sent our son. He may transfer and if he does, I can stop this useless exercise.

Keep in mind, the guidelines are about 5-6% of most assets (not 401k/IRA) and 20% of income.
Do the math. Schools that use CSS can follow other formulas and ask for more data to include more assets/income.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Tycoon »

We ending up not filing a FAFSA. My daughter earned enough merit money to get refunds her first two semesters. She's a fortunate child.

Like someone else wrote, schools want to get any Federal or State money they can. I believe this is the reason they strongly "encourage" students to submit a FAFSA; at least at the schools my daughter applied to.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by Bill M »

tibbitts wrote:I believe that some scholarships that are merit or income-based might require fafsa on file, and possibly some college employment opportunities might as well, so I'm not seeing the advantage to not filing.
+1
Both our kids got merit scholarships, but the college wouldn't consider the applications without first knowing there would be no need-based aid.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by songman52 »

Some schools require the FAFSA before the school will award any of its own (institutional) aid. Even though a family probably will not qualify for need-based aid, the school wants to verify it through having the actual EFC. In some state programs, like the Louisiana TOPS, filing the FAFSA is a requirement as part of the eligibility process. Once a family has completed its tax return(s) the FAFSA is not difficult to file online.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by texasdiver »

My guess is that the schools want the FAFSA for their databases even if you aren't close to qualifying (perhaps especially then).

Generally speaking I expect most schools are very interested in being able to profile their student population in terms of race, ethnicity, where they are from, and WEALTH. Perhaps especially wealth to the extent that these days the fundraising starts even before the child graduates. If your FAFSA says you are worth say $10 million you are probably painting a target on your back for future fundraising campaigns. If not for the FAFSA, how would the college ever know which of its students are rich kids?

I'm guessing that is why they require it for some things like merit aid that isn't supposed to be need based.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by miles monroe »

i asked my sons college (private school in ga) the question, and was told they required fafsa to be eligible for the non fafsa other money; which was the hope scholarship and the georgia equalization money given to private school students. so in our case it was worth the time.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by TomatoTomahto »

texansdiver wrote:If your FAFSA says you are worth say $10 million you are probably painting a target on your back for future fundraising campaigns. If not for the FAFSA, how would the college ever know which of its students are rich kids?
I have never filled out a FAFSA for my current or previous student. They don't seem to have had any difficulty deciding that we should be mined for donations. The tipoff might be that we didn't apply for FA, or our zip code, or maybe they bother everyone :D
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by texasdiver »

TomatoTomahto wrote:
texansdiver wrote:If your FAFSA says you are worth say $10 million you are probably painting a target on your back for future fundraising campaigns. If not for the FAFSA, how would the college ever know which of its students are rich kids?
I have never filled out a FAFSA for my current or previous student. They don't seem to have had any difficulty deciding that we should be mined for donations. The tipoff might be that we didn't apply for FA, or our zip code, or maybe they bother everyone :D
These days any school worth sending your kids to probably has very sophisticated data collection and analysis systems. Maybe not Amazon.com and Facebook level of sophisticated but still pretty good. The FAFSA has to be a part of that. All these schools have seen an explosion of administrators over the past decade. I imagine many of them are churning data and making powerpoints with it. There is no doubt that everyone gets the fundraising appeals. Although there might be higher level targeted ones for the folks with real money. That's certainly what I would do.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by TomatoTomahto »

Texasdiver, my wife "volunteered" us to make phone calls and send postcards for our son's college. We got a packet of the 20 parents we were to call, and it appears that they had a fair amount of information about the victims. I have a sense that our calls had no effect; the people that intended to give prior to our call did so, and the others didn't. I am pretty sure that nobody's mind was changed.

On data collection, I have an example from high school. I was pressed into service to make phone calls for my kids' (private) high school. I respected that they gave out quite a few scholarships, and one reason that my kids attended is that those scholarships made for a more diverse student population, which we value. At the orientation for callers, someone half-jokingly suggested using Zillow to determine the value of the prospective donor's house and to tailor the request based on that. Maybe I'm naive, but I found it offensive. I made the calls that year, but never again.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by livesoft »

I worked for a non-profit for many years. Development makes no distinction about one's wealth when it comes to phone calls. Everybody is a prospect because you never really know who will have money in the future. And colleges and universities know this extremely well. I think there was a guy called Howard Hughes who never did graduate from college for instance. There are many other examples.

I am never upset when anybody asks me for money, a favor, or a handout. I am quite capable of saying No, either politely or impolitely. But I am also capable of saying Yes.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by goodenyou »

dickenjb wrote:It only takes 20 minutes to fill out the form - but I predict you will get the same result I did. EFC (expected family contribution) of $99,999 per year.

I knew I was in trouble when they only gave you 6 figures to the left of the decimal point to enter your assets. The instructions tell you to enter "$999,999" if your assets exceed the space available on the form. That should have been a hint.

The good news is that total costs are ONLY close to $70,000 per year. So, your ok! :oops: I am sure filing FAFSA gives schools what they love....DATA and Demographics.
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Re: File FAFSA with 7 figure non-retirement portfolio?

Post by itstoomuch »

imo, Complete the form for freshman year. You don't need to complete 2015 FAFSA in 2015 but can do so till end May 2016 for the 2015 Academic year. Likewise you can take a Stafford loan upto May 2016 for academic 2015 year.

In our time it was fairly easy to arbitrage interest rates 2002-06.
Rev012718; 4 Incm stream buckets: SS+pension; dfr'd GLWB VA & FI anntys, by time & $$ laddered; Discretionary; Rentals. LTCi. Own, not asset. Tax TBT%. Early SS. FundRatio (FR) >1.1 67/70yo
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