Rather macabre but necessary question

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plnelson
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Rather macabre but necessary question

Post by plnelson »

I'm 61 and still working (for the moment) and I recently received some grim medical news. I have polythycemia vera, a condition where your bone marrow produces an extreme excess of red blood cells. It's incurable and invariably fatal although with treatment it can be held in abeyance for some years. In reading the scientific literature (I have a good science background and don't bother with Wikipedia and WebMD) typical survival times are 5-7 years with some patients surviving 10 years. There are a few statistical outliers who made it to 20. The first few years are relatively symptom-free.

I have no children and my wife died several years ago. I have a net worth of around $2.2 million with about $500K being my house. (I will also have a small pension) I want to spend my remaining healthy years traveling, having some high adventure (I'm the outdoorsy type and like adventure travel), and living it up. But I'm not sure how to think about stuff like this financially.

Suggestions? Resources? Thanks in advance!
Boglegrappler
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Re: Rather macabre but necessary question

Post by Boglegrappler »

God bless you.

My only quick observation is to take into account that the existing knowledge of survival rates, etc, could turn out to be incorrect for you and you could do much better than expected. I have two friends in their 60s who were diagnosed with pancreatic cancer over five years ago and both seem to be doing decently well. I know its anecdotal, but don't rule out that current treatment protocols or other developments could change things for you in a way that wasn't the way to bet.
chaz
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Re: Rather macabre but necessary question

Post by chaz »

Consider a cruise to Antarctica.
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Fallible
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Re: Rather macabre but necessary question

Post by Fallible »

plnelson wrote:I'm 61 and still working (for the moment) and I recently received some grim medical news. I have polythycemia vera, a condition where your bone marrow produces an extreme excess of red blood cells. It's incurable and invariably fatal although with treatment it can be held in abeyance for some years. In reading the scientific literature (I have a good science background and don't bother with Wikipedia and WebMD) typical survival times are 5-7 years with some patients surviving 10 years. There are a few statistical outliers who made it to 20. The first few years are relatively symptom-free.

I have no children and my wife died several years ago. I have a net worth of around $2.2 million with about $500K being my house. (I will also have a small pension) I want to spend my remaining healthy years traveling, having some high adventure (I'm the outdoorsy type and like adventure travel), and living it up. But I'm not sure how to think about stuff like this financially.

Suggestions? Resources? Thanks in advance!
I'm sorry to hear about your illness and admire you greatly for already planning new adventures. I'm not certain what you mean about how to think about "stuff like this financially." Do you mean immediate retirement, financing your travel, or costs of medical treatment, or house sale, portfolio changes, all of the above?
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
jlawrence01
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Re: Rather macabre but necessary question

Post by jlawrence01 »

plnelson wrote:I have no children and my wife died several years ago. I have a net worth of around $2.2 million with about $500K being my house. (I will also have a small pension) I want to spend my remaining healthy years traveling, having some high adventure (I'm the outdoorsy type and like adventure travel), and living it up. But I'm not sure how to think about stuff like this financially.

Suggestions? Resources? Thanks in advance!

Life is finite whether you make it five years or longer. The advantage that people which serious chronic illness that you and I have been slapped in the face that reality and can act upon it. Do remember that there IS always a possibility that the worst case does not occur.

In the past 18 month, I retired and am in the process of moving to my new place. I am going to spend whatever time is left doing what interests me. My goal for 2016 is to climb a particular mountain that I am currently staring at.

In other words, JUST DO IT.
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plnelson
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Re: Rather macabre but necessary question

Post by plnelson »

chaz wrote:Consider a cruise to Antarctica.
A cruise to Antarctica is absolutely on my "bucket list", but for purposes of this question I'd like to stick to the financial planning aspects of this.

It's true that, as another poster observed, I can't rule out a miracle cure after I've blown through my fortune but I think I have to play the odds.
flyingaway
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Re: Rather macabre but necessary question

Post by flyingaway »

If it were me and if the problem is confirmed, I would probably stop working and start enjoying my life.
A few years ago, a blood test showed that I had elevated PSA score, but the biopsy was negative. Although the score has been elevated since then, I did not do more biopsy. However, I have allocated more money for fun and forced myself to have some vacation time every year, and stopped my ambition in work. (My situation is different and I have a wife and two kids).
Last edited by flyingaway on Tue Sep 09, 2014 11:38 am, edited 1 time in total.
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plnelson
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Re: Rather macabre but necessary question

Post by plnelson »

I'm sorry to hear about your illness and admire you greatly for already planning new adventures. I'm not certain what you mean about how to think about "stuff like this financially." Do you mean immediate retirement, financing your travel, or costs of medical treatment, or house sale, portfolio changes, all of the above?
I'm trying to compute what "my burn rate" should be. In other words if 90% of patients die in 7 years should I plan to spend 90% of my saving in 7 years, for example. I want to live as high off the hog as I can in the time I have left, since I have no dependents but I'm not sure how to factor in the possibility of beating the odds, miracle cures, etc.
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Raymond
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Re: Rather macabre but necessary question

Post by Raymond »

As mentioned above, it would suck to go on a Lamborghini-buying, Mount Everest-climbing spree and then end up living to 101 in a refrigerator box because you outlived your money :oops:

Seriously, though, in your place, I would consider retiring and downsizing by selling the house and renting, especially since you're considering travel.

Would it be possible to sell or give away stuff you don't need, and ask a relative if you could store whatever remains at their place?

Then go traveling, kayaking, or walking here.

To minimize the risk of outliving your money, consider a single premium immediate annuity (SPIA), although I don't know how your condition will affect your eligibility to buy one.

I wish you a long, healthy and happy life.
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flyingaway
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Re: Rather macabre but necessary question

Post by flyingaway »

I'm trying to compute what "my burn rate" should be. In other words if 90% of patients die in 7 years should I plan to spend 90% of my saving in 7 years, for example. I want to live as high off the hog as I can in the time I have left, since I have no dependents but I'm not sure how to factor in the possibility of beating the odds, miracle cures, etc.[/quote]

I would set aside some money for any medical bills.
LadyIJ
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Re: Rather macabre but necessary question

Post by LadyIJ »

Sorry if there are two posts - I send one and it didn't appear . . .
first, sorry about the diagnosis.
I agree with the poster who said he would quit. I would decide what a safe number to leave untouched would be for end of life care and if that should go on for awhile, and then I would spend, spend, enjoy and do! I've thought of the same thing because I have no family to speak of and my husband is 15 years older. I would reserve $300K for care and spend the rest . . . but you have to determine what that number would be fore you. Unless you want to leave it to someone or charities. But you worked for that money - long and hard - so I would go for it and enjoy and just maybe keep the house as a backup plan for cash later. . . or if you don't want to sell the house keep "x" amount for care near the end.
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rob
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Re: Rather macabre but necessary question

Post by rob »

In a lot of ways you have an advantage here because you have a far better idea of an end date than most of us and that give you a good planning path (sorry... but there is no easy way to word that and it's great your thinking about this in a positive light). If it were me... I would do some type of annuity to provide a low base and some longetivity insurance of a sort and then start working out a front loaded withdrawal plan. The big elephant in the room is the health care costs and the medication you will need to live a decent life. I don't know anything about it but also depends on the quality of life as the illness progresses..... if the quality of life is good for the 5-7 years than maybe the largest cost will be drugs. The good news is that without the need to leave a legacy and with that amt of dollars, I think it's going to allow for some great adventures. Best of luck (and planning :-) ).....

Edit: I'm sorry... I should have said some type of SPIA not any type of annuity in general (in boglehead form, I tend to ignore the bad ones exist)..... Maybe a couple layered with different high quality companies for different time periods.
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billern
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Re: Rather macabre but necessary question

Post by billern »

I have an odd question - are there insurance companies out there that sell annuities targeted to individuals in OPs circumstances? It seems like the actuarial tables would provide high annuity payouts for high-risk individuals. If one could purchase such an annuity, it seems like that could cover the risk (!?!) of living longer than expected.
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dbCooperAir
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Re: Rather macabre but necessary question

Post by dbCooperAir »

What do you currently spend/year?

If are happy today living on $50,000/year, I don't see and issue of ramping up the bun rate to $150,000/year for the next 7 years and spending about half of have saved thus far.


You asked more about spending/burn rate, knowing what you need today will help.
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technovelist
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Re: Rather macabre but necessary question

Post by technovelist »

billern wrote:I have an odd question - are there insurance companies out there that sell annuities targeted to individuals in OPs circumstances? It seems like the actuarial tables would provide high annuity payouts for high-risk individuals. If one could purchase such an annuity, it seems like that could cover the risk (!?!) of living longer than expected.
I'm pretty sure such annuities exist. It's definitely worth investigating for the OP.
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White Coat Investor
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Re: Rather macabre but necessary question

Post by White Coat Investor »

Sorry about your diagnosis. Seems like bucket list time to me.

http://www.youtube.com/watch?v=D8axAKaObDo

Remember that you're likely to be sicker (and will definitely be older) your last few years than you are now. If I were you I'd be scheduling adventurous trips I've always wanted to do with everyone I cared about, pausing only long enough to get the medical treatment I needed to extend my life as much as is reasonable.

Financially, I'd use a rather aggressive withdrawal rate- like 10%. You might also check into just how good of a rate an insurance company would give you on a SPIA. It might be really good with that diagnosis, especially if your doctor can write a letter making things sound particularly grim!

You can't take it with you, and it doesn't sound like there is anyone you're leaving behind that truly needs it. This is what you've been saving for.

I'd retire unless you love your job so much you would work for free.
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Re: Rather macabre but necessary question

Post by Penguin »

Best wishes to you for a long and healthy life.
I would suggest that you start collecting social security retirement benefits as soon as you are eligible (age 62).
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plnelson
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Re: Rather macabre but necessary question

Post by plnelson »

dbCooperAir wrote:What do you currently spend/year?

If are happy today living on $50,000/year, I don't see and issue of ramping up the bun rate to $150,000/year for the next 7 years and spending about half of have saved thus far.

You asked more about spending/burn rate, knowing what you need today will help.
Earlier this year I did some numbers based on the past few years and came up with $43K a year including the cost of an annual 1-week vacation I take on Cape Cod every year and a normal level of entertainment like movies and plays and restaurants, but not counting expensive one-offs like a 1st-class small boat cruise my wife and I took in Alaska shortly before she died (HER bucket list).

So I've been using $50K for basic retirement living planning purposes.
jaqueisse
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Re: Rather macabre but necessary question

Post by jaqueisse »

Watch the Japanese film Ikiru, from Kurosawa.

A man who has a boring clerk job working for the government gets diagnosed with a fatal disease. Realizing he has wasted his life, he seeks fervently to fill the emptiness in his life. Ultimately he finds happiness and purpose----not by changing his circumstances, but by changing himself.

Death comes to everyone----you were dying before you found out about it. Nothing has changed in your life, except how you view the time you have left.
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Re: Rather macabre but necessary question

Post by fposte »

plnelson wrote: It's true that, as another poster observed, I can't rule out a miracle cure after I've blown through my fortune but I think I have to play the odds.
I think you've got a more focused version of the question all of us face. What can I spend on a good life and still have enough if I live longer than I think?

I don't think it makes sense to match spend rate to survival rate--as an individual, you don't 90% survive, you either do or you don't, and your survival chances don't correlate to your needed income. I would vote more for a SPIA for the minimal acceptable income needs if you're trucking at 90, and then see what that leaves you with for short-term fireworks. The kind of stuff you're talking about finding most satisfaction in doesn't sound like it's Rockefeller level costly, so I think you would be able to buy a decent-income SPIA and still afford a fair bit of travel for quite a few years.

I hope you have terrific enjoyment for many years, whatever happens.
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Re: Rather macabre but necessary question

Post by 123 »

The OP may wish to file for Social Security Disability benefits when he stops working. A disability benefit is not reduced for age. In the absence of work and earnings a grim diagnosis may qualify for benefits. In addition to a higher benefit SSA disability benefits could mean getting coverage under Medicare earlier. While many people continue to work in spite of medical conditions when they stop work they may qualify.

An individual can file for both retirement and disability benefits. If the disability claim is allowed the benefit amount is adjusted.
Last edited by 123 on Tue Sep 09, 2014 12:46 pm, edited 1 time in total.
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flyingaway
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Re: Rather macabre but necessary question

Post by flyingaway »

Don't forget to take social security next year.
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Artsdoctor
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Re: Rather macabre but necessary question

Post by Artsdoctor »

https://www.lls.org/content/nationalcon ... iavera.pdf

Please make sure that you've met with a well-qualified hematologist. If you live in an area where there is a major, well-respected cancer center, ask to be referred there for a second opinion. PV can be complex but many people do well with treatment.
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Re: Rather macabre but necessary question

Post by lhl12 »

I don't know if your Will and estate plan are done, but if not they need to be. With luck you will bounce the check to the undertaker many years later than you might now think, but you should get all your affairs in order as quickly and efficiently as possible, so you don't need to think about that anymore.
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Re: Rather macabre but necessary question

Post by mudfud »

You can get a better idea about prognosis from these articles:

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Slowmaha
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Re: Rather macabre but necessary question

Post by Slowmaha »

Sorry for the news.

Do you have any current life insurance? You may want to consider a life/viatical settlement, could get some extra money for your adventures.

http://en.wikipedia.org/wiki/Life_settlement
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plnelson
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Re: Rather macabre but necessary question

Post by plnelson »

Penguin wrote:Best wishes to you for a long and healthy life.
I would suggest that you start collecting social security retirement benefits as soon as you are eligible (age 62).
See, I was thinking just the opposite.

My thinking was to delay SS as long as possible. By doing that I could use it as possible insurance against beating the odds, because if I do last 7 years and start SS at 68 or 69 I'll get a much bigger payout, after I've blown through my savings on expensive travel, wine, women, song, etc.

Totally off-topic, and speaking of women: my late wife fought a heroic battle with cancer for 4-1/2 years and I was always there holding her hand. I have no one to hold my hand now and I'd love to be in a relationship again. I JUST started dating again, using Match.com. I went on 2 wonderful, fantastic first dates over the Labor day weekend. And now this. If you think financial planning is hard with a terminal illness, just imagine trying to start a serious relationship.

Life is not boring.
freddie
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Re: Rather macabre but necessary question

Post by freddie »

EmergDoc wrote:Sorry about your diagnosis. Seems like bucket list time to me.

http://www.youtube.com/watch?v=D8axAKaObDo

Remember that you're likely to be sicker (and will definitely be older) your last few years than you are now. If I were you I'd be scheduling adventurous trips I've always wanted to do with everyone I cared about, pausing only long enough to get the medical treatment I needed to extend my life as much as is reasonable.

Financially, I'd use a rather aggressive withdrawal rate- like 10%. You might also check into just how good of a rate an insurance company would give you on a SPIA. It might be really good with that diagnosis, especially if your doctor can write a letter making things sound particularly grim!

You can't take it with you, and it doesn't sound like there is anyone you're leaving behind that truly needs it. This is what you've been saving for.

I'd retire unless you love your job so much you would work for free.
Google "Substandard Health Annuity". A couple of companies used to sell them but I haven't seen them recently.

I would make a list of what I want to do and how much it cost for the next 3-4 years. You might be surprised that it only cost 600k or so. Then you have to ask it is worth doing more (i.e. buy the BMW i8 instead of just the 3 ) or not. A charitable remainder trust might also help you (avoid some taxes, you don't have anyone to give the money to anyway) but you would have to run the numbers.

One thing to ask the doctor would be is there some sign that the disease is about to get much worse in the next year or two. For example do most people live fine until some marker gets to level x and then they are dead 18 years later or do they slowly deteriorate at some random rate?
kaudrey
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Re: Rather macabre but necessary question

Post by kaudrey »

Sorry for your diagnosis. I, too, would quit work and start travelling.

Let's say you have investments of $1.7M A 4% withdrawal rate would be $68K. But that will allow your portfolio, in theory to last 30 years, which you likely don't need. That and SS will give you lots of wiggle room to travel already, but then if you up the percentage even more, you can go to Antartica and wherever else you want.

It is easy to be over conservative, but if you put, say, $500K aside and plan not to touch that until year 10 (say), and allow yourself to use the other $1.2 million over the next 10 years, you'll have a cushion in case the best happens, but still enjoy yourself if it doesn't.

You can't take it with you. I wish you all the best.
MathWizard
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Re: Rather macabre but necessary question

Post by MathWizard »

My sympathies on your diagnosis.

Suggestion:

Check any life insurance policies you have for an "accelerated death benefits" rider.

This can allow you to tap benefits if you have a terminal illness, and is precisely for your
situation.

I think that on mine, I can pull up to 50% if I am not expected to last more than 2 years.

You might not have life insurance since you have no dependents, but I would have
about $200K through work as an automatic benefit whether I wanted it or not.
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Re: Rather macabre but necessary question

Post by nisiprius »

With regard to burn rate, you might be able to get an insurer to make that judgement for you. That is, there might be an insurer willing to quote you on an SPIA (single premium immediate annuity) based on "medical underwriting." If you can convince an insurer that your life expectancy is short, they will make the judgement of how long it is and how large a payment they can afford to make. You should at least find out whether this is possible, and what the numbers are.

With regard to travel, this is obviously your life. I will say that I personally did not like the movie "The Bucket List" because--despite attempts at redemption in the end--the emphasis seemed to be passive consumption of prepackaged experiences that did not require any investment of effort or skill development. The best thing I've ever read on human happiness is a short quotation from Charles Kingsley:
We act as though comfort and luxury were the chief requirements of life, when all that we need to make us really happy is something to be enthusiastic about.
So, by all means, "live it up," but also think about what is going to help you achieve a "state of flow" (let's see if I can spell his name first and then check: Czint... Czink... nope, can't do it... Mihaly Csikszentmihalyi).
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celia
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Re: Rather macabre but necessary question

Post by celia »

RETIRE! You deserve (and need) it.

You will be eligible for SS when you turn 62. This is one of the circumstances when it makes sense to start it early (even if you don't need the money), unless you are eligible to also collect your wife's SS at some time. (We would need more info on that.) You can only collect yours or hers.

Whether you are sick or not, you should have done estate planning by now. If not done, take the time to figure out what you want to happen and who you want to have power of attorney over your health care and over your finances. It does not have to be the same person for both.

Plan for 20 years! With continuing improvements in health care, our life expectancies keep rising.

In regards to your "burn rate", I don't think your money will be spent evenly each year. The last year will probably be the most expensive, because of health needs. The first year will also be expensive because of your "new-found freedom" to do the things you want. Make friends along the way with an eye to someone who has similar interests. Maybe the two of you can volunteer for things that matter to you (trail clearing/trash pick-up, renovating camp grounds for scouts or the public, docent at a National Park, etc) and you could leave any unspent money in your will to such a group, if not remarried.

Probably most important for you, is to see if there is a support group for people with your diagnosis. Ask your doctor or a specialist. The support group may be online, like this forum. Finding others who can support you (besides the caring Bogleheads) will help you in the long run and you will be able to give back to others too.
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Re: Rather macabre but necessary question

Post by Aptenodytes »

Penguin wrote:Best wishes to you for a long and healthy life.
I would suggest that you start collecting social security retirement benefits as soon as you are eligible (age 62).
Contrariwise, one could delay SS to 70 as part of the black-swan protection strategy. Spend what you have aggressively, and if you end up living longer than expected, fall back on the elevated SS.
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Re: Rather macabre but necessary question

Post by ralph124cf »

Do you like your job enough that you look forward to going to work? Some people are lucky enough to be in that position, and if you are one of them there is no reason to quit. Perhaps you could arrange for part time work that would give you enough time for extended vacations.

Ralph
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archbish99
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Re: Rather macabre but necessary question

Post by archbish99 »

Raymond wrote:To minimize the risk of outliving your money, consider a single premium immediate annuity (SPIA), although I don't know how your condition will affect your eligibility to buy one.

I wish you a long, healthy and happy life.
If you can find a SPIA with medical underwriting, a terminal diagnosis with a defined likely survival period may actually make a very handsome payout ratio. They'll bet on how long you survive -- and if you do come out on the long end of the odds, you've secured a great return on your money. Also, if you currently have life insurance (not sure you would, with no dependents, but in case...), some policies have a provision that will pay out while you're still alive if you have an incurable terminal diagnosis.
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Fallible
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Re: Rather macabre but necessary question

Post by Fallible »

plnelson wrote:
I'm sorry to hear about your illness and admire you greatly for already planning new adventures. I'm not certain what you mean about how to think about "stuff like this financially." Do you mean immediate retirement, financing your travel, or costs of medical treatment, or house sale, portfolio changes, all of the above?
I'm trying to compute what "my burn rate" should be. In other words if 90% of patients die in 7 years should I plan to spend 90% of my saving in 7 years, for example. I want to live as high off the hog as I can in the time I have left, since I have no dependents but I'm not sure how to factor in the possibility of beating the odds, miracle cures, etc.
Thanks and I see you already have good replies on the burn rate. Also, based on an experience with a relative's diagnosis of another type of cancer, I agree with the poster Artsdoctor that you should seek a second opinion now. And even if it's the same as the first, treatments may differ.

Again, I wish you the best.
"Yes, investing is simple. But it is not easy, for it requires discipline, patience, steadfastness, and that most uncommon of all gifts, common sense." ~Jack Bogle
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plnelson
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Social Security

Post by plnelson »

Several people have suggested taking SS early and I don't understand that.

With the savings I have I could sustain a pretty high burn rate for quite a while without touching SS. Furthermore lots of my savings is not in IRA/401K, which means I can withdraw it and stay in a 0-tax bracket for the first few years, giving me an opportunity for that time to pull down at least some of my IRA/401(k) at minimal taxes.

So to me it makes sense to hold off on SS, both because that way I stay in a low tax bracket while pulling out IRA/401(k) money, and also because the longer I wait the higher my SS will be. That way, if I beat the life-expectancy odds, or there's a miracle cure, I'll have something to live on.

But since several people have suggested going after SS early could someone explain why?
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Re: Rather macabre but necessary question

Post by archbish99 »

From a "get the most from SS" perspective, if you have a short life expectancy, you should start ASAP. That has the benefit of reducing the burn rate on your own investments and increasing what you'll be able to leave your heirs.

Except that you have no heirs, so that's not a priority for you.
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Re: Rather macabre but necessary question

Post by technovelist »

plnelson wrote:
Penguin wrote:Best wishes to you for a long and healthy life.
I would suggest that you start collecting social security retirement benefits as soon as you are eligible (age 62).
See, I was thinking just the opposite.

My thinking was to delay SS as long as possible. By doing that I could use it as possible insurance against beating the odds, because if I do last 7 years and start SS at 68 or 69 I'll get a much bigger payout, after I've blown through my savings on expensive travel, wine, women, song, etc.
Yes, I think that is a good plan, since you can then spend down your savings at a higher rate without having to worry about ending up in a cardboard box.
In theory, theory and practice are identical. In practice, they often differ.
Tamahome
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Re: Rather macabre but necessary question

Post by Tamahome »

I am sorry to hear about your diagnosis. My inclination would be to figure out how much money I would need to just get by if it turned out my diagnosis was wrong or they found a wonder drug next year. Keep that set aside. Spread the rest out over 10-12 years and enjoy the rest. If you wind up living longer, congratulations! You had a lot of fun and hopefully kept pictures so that you can remember it and you are not eating catfood. Of course, I am the type to over-save because it allows me to sleep at night.
I'm not a financial professional. Post is info only & not legal advice. No attorney-client relationship exists with reader. Scrutinize my ideas as if you spoke with a guy at a bar. I may be wrong.
epitomist
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Re: Rather macabre but necessary question

Post by epitomist »

flyingaway wrote:If it were me and if the problem is confirmed, I would probably stop working and start enjoying my life.
A few years ago, a blood test showed that I had elevated PSA score, but the biopsy was negative. Although the score has been elevated since then, I did not do more biopsy. However, I have allocated more money for fun and forced myself to have some vacation time every year, and stopped my ambition in work. (My situation is different and I have a wife and two kids).
The researcher that discover PSA 40 years ago, Richard J. Ablen has an opinion on the accuracy of the PSA test:
Richard J. Ablen wrote:Even then, the test is hardly more effective than a coin toss.
http://www.nytimes.com/2010/03/10/opinion/10Ablin.html
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Kevin M
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Re: Rather macabre but necessary question

Post by Kevin M »

Sympathies on the diagnosis.

Using rough, rounded estimates, with $2M earning 0% real, you could spend $100K/year and it would last 20 years, which is at the far outside range of your expected lifetime. This is 2X the $50K/year you mentioned, and does not include the pension or social security. You could bump that up to $200K/year for 10 years, which still is at the high end of your reasonable estimate of expected lifetime.

I agree with your thinking that it makes no sense to start Social Security at 62 and consider buying an SPIA. Deferring your SS start date is the best SPIA you can get at current low interest rates. I might consider taking SS at 62 only if you want to spend more than $200K/year, and plan on your reasonable outside estimate of a 10-year remaining lifetime. Otherwise, deferring SS gives you some longevity insurance to help cover the miracle cure type of scenarios.

I definitely would quit work now unless you love your work more than the other things you'd like to do (I am 62, retired at 55, and can't imagine going back to work).

Be sure to factor medical costs into your estimates.

As you've noted, you're more likely to be able to enjoy your bucket-list activities in the next few years than in later years, so get going on that list!

Unless you enjoy investing in stocks, and seeing the stock portion of your portfolio drop by 50% would cause you no anxiety, I would move everything into safe investments. It does not appear you have any need to take much risk to meet your goals, so why do it? You don't need any additional anxiety.

You can earn 2.25%-2.3% in 5-year CDs with almost no risk, which is more than 0% real at current inflation rates. Even with early withdrawals after one year you will earn 1.13% or more, and if inflation and/or interest rates increase much, just do early withdrawals and reinvest at higher rates. I would keep 1-2 years of expenses in an online savings account, currently earning 0.95% (so about -1% real).

I think this is a better deal than most other safe investments. You could use TIPS, but have to go out beyond five year maturities to get a positive real yield. I would stick with direct CDs for now, and maybe switch some to TIPS if real rates increase much. The annual purchase limit on I Bonds makes them of little use to you given your timeframe.

You can easily get FDIC/NCUA insurance coverage on $1.25M at a single institution by naming five beneficiaries in POD accounts. The beneficiaries can be individuals or IRS approved charities. So you would only need to use two banks or credit unions for your entire portfolio if it were all in taxable accounts. If in tax-advantaged accounts, you are limited to $250K per institution for IRA accounts (but can still get the higher amount of insurance on taxable accounts at the same institution).

Good luck!

Kevin
If I make a calculation error, #Cruncher probably will let me know.
supersharpie
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Re: Rather macabre but necessary question

Post by supersharpie »

plnelson wrote:
I'm sorry to hear about your illness and admire you greatly for already planning new adventures. I'm not certain what you mean about how to think about "stuff like this financially." Do you mean immediate retirement, financing your travel, or costs of medical treatment, or house sale, portfolio changes, all of the above?
I'm trying to compute what "my burn rate" should be. In other words if 90% of patients die in 7 years should I plan to spend 90% of my saving in 7 years, for example. I want to live as high off the hog as I can in the time I have left, since I have no dependents but I'm not sure how to factor in the possibility of beating the odds, miracle cures, etc.
It does sound as though recent advancements have made 10-20 year survivals common.

http://www.uptodate.com/contents/progno ... hemia-vera

Median survival rate = 13.9 years

http://www.cancer.gov/cancertopics/pdq/ ... onal/page3
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plnelson
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Re: Rather macabre but necessary question

Post by plnelson »

epitomist wrote:
flyingaway wrote:
Richard J. Ablen wrote:Even then, the test is hardly more effective than a coin toss.
http://www.nytimes.com/2010/03/10/opinion/10Ablin.html
My father died of prostate cancer and I've had two (negative) biopsies and I get a DRE and PSA every year and my take on the PSA is similarly skeptical - with one exception: Many patients have PSA's that are all over the map and in those cases PSA's are meaningless. But some patients (me for example) have PSA's that are low and virtually unchanging for years on end. In those patients a sudden sharp increase say from 1.2 to 6, in the absence of some other condition like acute prostatitis, should warrant a closer look.

And speaking of medical procedures that are discredited and out of date, back on our original topic of polycythemia vera - here's an interesting tidbit. Remember in the 18th century when bleeding was a standard treatment for all sorts of things? Polycythemia vera is one of the few (if not only) diseases in medicine where it's actually a standard treatment in 2014.
letsgobobby
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Re: Rather macabre but necessary question

Post by letsgobobby »

In some ways your situation is clearer than for someone younger, with dependents. In those situations living for 10 vs 20 more years is the difference between seeing their kids grow into adults, or not. Or not knowing whether they'll die with or without life insurance. Certainly the need to maintain health care for decades, for someone younger.

These are the questions I would ask myself in your situation.

How much do I spend annually right now?
Is this the house I want considering my new circumstances? Would something smaller, easier to care for, and cheaper, fit my needs better?
Is this *where* I want to spend the rest of my life, whether 5 years or 20? It will be easier to move now than a few years form now.
What is my bucket list? How much will those things cost? (maybe nothing - some bucket list experiences are free, local, etc)

*If I were in your situation* (which I'm not), I would look into a smaller home, possibly one story; possibly a condo/townhome minimizing my personal energy expenditure for upkeep; and cheaper. If I could sell my $500k home and get into something for $200k, I've got a $2M liquid portfolio. If my expenses were under $60,000 per year I would freely spend $10k-$20k per year for the next few years on the things I really wanted to do = $80k total. Worst case scenario: the market tanks 25% and you've spent $80k x 5 years and you find out you'll live 20 more. With a 50/50 portfolio and a $200k house rather than $500k you're down to $1.5 million and a $200k home and $60k in annual draw (4%) but now you've got SS coming in. That's hardly a bad position to be in. Now you can use SS to bump up your lifestyle. Maybe then you look at annuities if you need to.

(Obviously we could have a 50% or a 90% drawdown in the markets, but in your case more than ever I'm thinking, "Life is short.")

Then I would see where I was at
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VictoriaF
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Re: Rather macabre but necessary question

Post by VictoriaF »

plnelson wrote:Totally off-topic, and speaking of women: my late wife fought a heroic battle with cancer for 4-1/2 years and I was always there holding her hand. I have no one to hold my hand now and I'd love to be in a relationship again. I JUST started dating again, using Match.com. I went on 2 wonderful, fantastic first dates over the Labor day weekend. And now this. If you think financial planning is hard with a terminal illness, just imagine trying to start a serious relationship.

Life is not boring.
This is not off-topic. Happiness does wonders for one's health. Hope you find a great relationship that will enhance and extend your life.

Best wishes,

Victoria
Inventor of the Bogleheads Secret Handshake | Winner of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)
SpaceCowboy
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Re: Rather macabre but necessary question

Post by SpaceCowboy »

Sorry to hear about your diagnosis.
If it were me, I'd retire immediately. Take SS at 62, which maximizes the probable benefit in your case as your life expectancy is shorter than 82, which is around the break-even age. I'd investigate the medically underwritten SPIA market, but wouldn't buy unless I thought the payout was sufficiently high.
Since you have an excess of savings compared to your lifestyle expected expenses and current level of savings, I'd look at using a VPW plan, where I set the final age each year at something approximating my 80-90th percentile life expectancy and never less than 5 years out. While this will vary your annual withdrawal amount, you will never run out of money and should be able to live comfortably through the fluctuations. I'd probably also adjust my allocation to 60-70% fixed income. After setting up the plan, I'd go and have as much of a blast as I could.
Good luck in navigating the changes.
Live till I die
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Re: Rather macabre but necessary question

Post by Live till I die »

I registered for the first time, although I read the forum from time to time. I had to respond to your question, as my husband was diagnosed with primary myelofibrosis eight years ago, and his is the most grim diagnosis in the family of myeloproliferative neoplasms on the spectrum. I want to encourage you to seek out the best hematologist you can find, as these orphans cancers are not as well known as other hematological issues.
There are very valuable forums with a wealth of information available. I read the MPN-Net Digest daily and the moderators post very helpful information, links to abstracts, etc. There is also a monthly newsletter called MPN Forum Monthly, as well as professional sites that fund research and meetings.
You have not been given a death sentence here. My husband injects a long acting form of interferon weekly called Pegasys and he is absolutely stable, we hope until the next new discovery, and we hope cure. We live a very active lifestyle like yourself and plan for him to live at least another twenty years, hopefully more. He works at a fulfilling job in spite of being at an age when he could easily retire. We invest as if we will both live to be 95. Become informed and you will find that the sadness will pass with knowledge. Good luck.
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Lon
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Re: Rather macabre but necessary question

Post by Lon »

I can certainly relate to your situation since I was diagnosed with a very rare form of Lymphoma a few years back called Waldenstrom's Disease. I had no symptoms at diagnosis and like you, it was picked up by routine blood tests.
My initial reading of the disease idicated a 5 year life expectancy after diagnosis. I participate in a support group and we have many 20 plus year survivors. My disease in not curable, but treatable and I have been in remission since 2007 and still have no noticeable symptoms and will in all likelyhood die of something else. Fortunately I have all my bases covered with medical care including long term care if needed, and my finances are fine. I made a decision when I was diagnosed with this disease, to get on with my life, and so I have.
dolphinsaremammals
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Re: Rather macabre but necessary question

Post by dolphinsaremammals »

Artsdoctor wrote:https://www.lls.org/content/nationalcon ... iavera.pdf

Please make sure that you've met with a well-qualified hematologist. If you live in an area where there is a major, well-respected cancer center, ask to be referred there for a second opinion. PV can be complex but many people do well with treatment.
Absolutely go to the best medical place, and maybe check out more than one. I got told several years ago that I had a condition that would lead to blindness, and now the situation is I am projected to have decent eyesight the rest of my expected life time. Doctors vary, knowledge varies, things change.

As to spending, I would do as many of the things you'd like to do when you're most physically fit. I still would set aside enough savings to live comfortably to one hundred, though. With your savings, house, pension, and Social Security, you should be able to do that. Do what you enjoy, don't just throw money away for the sake of throwing it away. If there's money left over when you die, you can leave it to some worthwhile cause.

p.s. Getting into a support group or seeing a psychologist would not be a bad idea.
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