Retirement Longevity

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Retirement Longevity

Postby Grt2bOutdoors » Mon Apr 23, 2012 8:58 am

It seems all the retirement investment literature and marketing attempts to steer one to a 25x or 30x expenses in total asset value to reach the promised land. Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary? How do you address this in your planning stages? I have started to question this since a number of folks I know have moved on and even though many of them took extremely good care of themselves never made it to 90, even those who's genes would have indicated otherwise. :confused
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Re: Retirement Longevity

Postby cheese_breath » Mon Apr 23, 2012 9:09 am

Even though most folks don't make it into their 90s, some do. My philosophy is better safe than sorry, so I'm planning for my mid 90s. If I go before that and leave some behind for the kids, that's OK. That's what parents do. Better that than run out too soon and end up mooching off them.
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Re: Retirement Longevity

Postby Grt2bOutdoors » Mon Apr 23, 2012 9:13 am

cheese_breath wrote:Even though most folks don't make it into their 90s, some do. My philosophy is better safe than sorry, so I'm planning for my mid 90s. If I go before that and leave some behind for the kids, that's OK. That's what parents do. Better that than run out too soon and end up mooching off them.


Thanks for that, that is still my goal as well. I guess it is part of human nature to question, especially when you seen it happening all around you.
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Re: Retirement Longevity

Postby nisiprius » Mon Apr 23, 2012 9:14 am

GRT2BOUTDOORS wrote:Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary?
It's not just you, as they say "you could look it up." Google on "life table" or "mortality table." Or allow me. (This is a chart I made for my own use and I used white males because I'm a white male and white females because my wife is a white female.)

Image
It is what it is. You are perfectly correct. Doing the math on that chart, no reason to be terribly precise, about 18% of all 65-year-old men will survive into their nineties, and about 26/87 = 30% of all women will survive into their nineties. So, yes, most of us will not make it into our nineties.

But, so what? What do you do when you have this information? It's contingency planning. An 18% or a 30% chance of needing money after age 90 is not exactly a struck-by-lightning chance. It happens. It happens a lot and heaven knows whether to call these nonagenarians "lucky" or "unlucky." It depends on the particular person. But it's not rare, especially not for the chicks. Even 100 is not really all that rare. What does reaching 100 get you? An interview in the local paper, maybe. I knew a lady who was 100 and was fine--mentally sharp, enjoying life. (I knew another lady who died in her early nineties, who said she was having a lousy time and the nursing home food was awful and they didn't give her enough pain meds and she hadn't had a good year since she turned 75. But she certainly wasn't contemplating any early termination, either. She reminded me of the Gilbert and Sullivan character who sings resentfully "And isn't your life extremely flat/With nothing whatever to grumble at?")
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Re: Retirement Longevity

Postby exoilman » Mon Apr 23, 2012 9:17 am

Agree 100% with cheese breath and Nisi.

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Re: Retirement Longevity

Postby ourbrooks » Mon Apr 23, 2012 10:05 am

This table might be the answer: http://www.nyc.gov/html/olr/downloads/pdf/nyceira/joint_table.pdf Dual life expectancies are much larger than single life expectancies.

For a couple who are both 65, the median life expectancy for at least one of the two is 26.2 years. That's a median expectancy; half of the couples will have one member who survives longer. Now, consider a couple in which one member is 7 years younger and retirement is started when the older person reaches 65; median expectancy is 30 years. Again, in half the couples, one will live longer.

To make things even scarier, look at this: http://www.bogleheads.org/wiki/Trinity_study_update The 25x factor is based on a 4% withdrawal rate; that's only a reasonable rate if neither of you plan on living more than 30 years and you're willing to accept a significant probability of spending all of your investments. Try 3% if you think one of you will be above average and live for 40 years after retirement start. That ends up being more like 33x

Of course, one answer to the problem is the dual life single premium immediate annuity; it's a bet between you and the insurance company about whether the couple will live longer than average. Leaves nothing on the table and you get to spend the money for as long as you live.
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Re: Retirement Longevity

Postby 555 » Mon Apr 23, 2012 10:08 am

GRT2BOUTDOORS wrote:It seems all the retirement investment literature and marketing attempts to steer one to a 25x or 30x expenses in total asset value to reach the promised land. Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary? How do you address this in your planning stages? I have started to question this since a number of folks I know have moved on and even though many of them took extremely good care of themselves never made it to 90, even those who's genes would have indicated otherwise. :confused

You do not need to depend purely on a safe withdrawal rate (SWR) strategy. Annuities effectively take the guesswork out of unknown longevity to a significant extent. So such savings are probably not needed. That said, it's good to save a decent amount. But also you can't predict where you portfolio will end up, so you need to be flexible, and plan (and update) on what you actually have, both during accumulation and decumulation.
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Re: Retirement Longevity

Postby 555 » Mon Apr 23, 2012 10:11 am

ourbrooks wrote:Of course, one answer to the problem is the dual life single premium immediate annuity; it's a bet between you and the insurance company about whether the couple will live longer than average. Leaves nothing on the table and you get to spend the money for as long as you live.

But you don't need to get it at the beginning of your retirement, and you don't need it for your whole income, so there's that flexibility.
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Re: Retirement Longevity

Postby richard » Mon Apr 23, 2012 10:33 am

555 wrote:You do not need to depend purely on a safe withdrawal rate (SWR) strategy. Annuities effectively take the guesswork out of unknown longevity to a significant extent. So such savings are probably not needed. That said, it's good to save a decent amount. But also you can't predict where you portfolio will end up, so you need to be flexible, and plan (and update) on what you actually have, both during accumulation and decumulation.

An annuity is also a bet that the insurance company will have the ability to make payments for the entire term and, in almost all cases, a bet that inflation won't have a major negative effect.
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Re: Retirement Longevity

Postby ourbrooks » Mon Apr 23, 2012 10:59 am

richard wrote:An annuity is also a bet that the insurance company will have the ability to make payments for the entire term and, in almost all cases, a bet that inflation won't have a major negative effect.


Inflation adjusted annuities have been around for a very long time. The old fashioned ones just increased the payments by a fixed percentage each year; the newer ones actually base the increase on the CPI-U. You can even role your own with a Vanguard variable annuity with a Guarenteed Lifetime Withdrawal Benefit rider.

The default rate of insurance companies on annuities has been extremely low; even AIG continues to pay on its annuities.

For an insurance company, making the payments on annuities is not really very hard work. Current annuity offerings have a calculated interest rate of around 1.6% Even with today's low interest rates, there's not much challenge in building a Treasury bond ladder corresponding to mortality rates and still leaving a percentage point or two for the insurance company.

A strategy that is advocated by minor names, like Zvi Bodie and deep thinkers like bob90345, is a layered approach. The foundation is pensions, Social Security, and annuities that provide a basic level of income which you won't outlive. On top of that, you can invest in a riskier portfolio for extra spending or to leave a legacy.
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Re: Retirement Longevity

Postby rai » Mon Apr 23, 2012 11:03 am

I see quite a few 90+ year olds even saw 99 years old from time to time in my line of work.

most people die of cancer/heart disease maybe infection (that's probably the big three).

But hey what if in the next 30 years there is a new treatment for heart disease or cancer that allows more people to live longer? You think that's possible? I think maybe it is.

If we all knew when we would die it would be a lot easier to say I'm 65 so I only have 14 years and 3 months to live so I only need 12x my yearly savings not 25x to 30x so I can save a lot less money and not run out.

if we make it to 65 we don't know if we will live to be 66 or 96 (or 106) that's a big difference. But that's the reason many of us plan on 3% to 4% safe withdrawal rate instead of 5% or more.

plus if you are married it's twice as likely that one will reach 90+
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Re: Retirement Longevity

Postby Midpack » Mon Apr 23, 2012 11:10 am

555 wrote:You do not need to depend purely on a safe withdrawal rate (SWR) strategy. Annuities effectively take the guesswork out of unknown longevity to a significant extent. So such savings are probably not needed. That said, it's good to save a decent amount. But also you can't predict where you portfolio will end up, so you need to be flexible, and plan (and update) on what you actually have, both during accumulation and decumulation. But you don't need to get it at the beginning of your retirement, and you don't need it for your whole income, so there's that flexibility.

richard wrote:An annuity is also a bet that the insurance company will have the ability to make payments for the entire term and, in almost all cases, a bet that inflation won't have a major negative effect.

There's my answer! I suspect I'll end up relying on a combination of portfolio withdrawals and annuitized income (Soc Sec and a purchased SPIA). If all goes well I won't take Soc Sec until age 70 and won't annuitize until about age 75 (or never if real returns are average or above past history). But I'll watch my portfolio vs SPIA quotes to make sure I don't fall below my annuitization hurdle (enough to provide basic or floor income needs) and may act earlier if necessary. Richard provides another good reason to wait to annuitize, and current interest rates are another (annuities are relatively costly today vs income provided). By doing so I hope to strike a balance between maximizing my returns and longevity protection. Best laid plans...
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Re: Retirement Longevity

Postby Sheepdog » Mon Apr 23, 2012 11:19 am

cheese_breath wrote:Even though most folks don't make it into their 90s, some do. My philosophy is better safe than sorry, so I'm planning for my mid 90s. If I go before that and leave some behind for the kids, that's OK. That's what parents do. Better that than run out too soon and end up mooching off them.

I am 78. I expected to be gone by now because my Dad died at 61. My wife's father died at 39 and her mother at 64, so she expected to be gone by now (age 72).
I am healthier than I was at 65 (but screwed up the veins in my legs somewhat going 15 miles training for a mini-marathon in 2010) so the 90s look very possible. I have always had the fear of running out, so I won't. The leftover will go mostly to our favorite charitable organizations as endowments, which is good, we feel. (Our kids say they don't want or need the money, but they will get some anyway.)
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Re: Retirement Longevity

Postby 555 » Mon Apr 23, 2012 11:24 am

Midpack posted this in another thread.
http://www.schulmerichandassoc.com/Mode ... lation.pdf
The idea is you don't get the annuity until you need it (but it is always a part of the plan. You can safely withdraw at a higher rate if you know you can fall back on an annuity.
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Re: Retirement Longevity

Postby englishgirl » Mon Apr 23, 2012 11:27 am

I really believe that annuitizing a portion of your portfolio is the way to go for many of us. I plan to annuitize enough to cover half of my necessary expenses, with hopefully another chunk coming from my portfolio for luxuries/travel, etc. That way, I don't have to save as much. I don't want to save too much, die young, and then not have enjoyed life.

Plus, family history and even your own personal fitness/diet/whatever habits aren't exactly rock solid things on which to base a plan. All my grandparents made into at least their 80's, and one grandfather is still going strong at 95. However, his daughter (my mother) died before the age of 40. So, what do I base my plans on? My mother's health and supposed genetic gift to me or my grandfather's? Now, in my case, the things I enjoy are pretty cheap. I do also live a healthy life, so I expect/hope to live a good long while and I'm planning accordingly. Hopefully if I do live the same length of time (or longer) as grandpa, I will be happy even if there aren't luxury cruises every other month! But I'm not going crazy or denying myself things now either.
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Re: Retirement Longevity

Postby ourbrooks » Mon Apr 23, 2012 11:31 am

Red flag here. Yes, I know that there a lot of statements out there about waiting on taking annuities. It's all based on mis-reading the work of Milevsky. There's a key assumption that Milevsky makes to justify waiting; he assumes, very clearly, that you don't need to spend ANY of the money you are saving for the annuity until you buy the annuity. If you need to live off of part of the money you are saving, the results don't apply; Milevsky even says so.

A simple, but real example: Suppose you need $12,000 a year in income. It'll cost you $172700 at age 65. If you wait until age 80, it will cost only $102887 but you'll have used up $180,000 in other capital. That's a total of $282,887. To make it pay to wait, you'll have to get a 10.24% return on your money while waiting until age 80. Not very likely.

There's a similar analysis that show that it doesn't pay to wait for interest rates for annuities to rise if you're burning money while waiting.

Milevsky and Young advise starting annuities no later than age 70; for many private annuities, such as TIAA-CREF or pensions, starting even earlier is better.
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Re: Retirement Longevity

Postby Watty » Mon Apr 23, 2012 11:42 am

If you have planned well then the chance of living more than 30 years in retirement and outliving your money at the age of 95 is a lot less than you might expect since then there are a lot of other factors that come into play if you live to be 95 that could allow you to have adequate money even if you live to be unusually old.

Some of these would be;

1) 50/50 chance of getting higher than planned investing returns. (higher chance if you planned conservatively)
2) 50/50 chance of spending less than planned while maintaining your targeted lifestyle. (higher chance if you planned conservatively)
3) Being able to cut back and live a more frugal lifestyle well before you run out of money if your funds are lower than expected when you are in your 80's or early 90's.

I really think that the most likely chance of outliving your money isn't the likelihood that you will live longer than planned but you that you will have below expected investing returns or higher than planned expenses and that you will run out of money when you are more like 80 to 85 years old.
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Re: Retirement Longevity

Postby ofcmetz » Mon Apr 23, 2012 11:51 am

GRT2BOUTDOORS wrote:It seems all the retirement investment literature and marketing attempts to steer one to a 25x or 30x expenses in total asset value to reach the promised land. Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary? How do you address this in your planning stages? I have started to question this since a number of folks I know have moved on and even though many of them took extremely good care of themselves never made it to 90, even those who's genes would have indicated otherwise. :confused



I often wonder if the reason they steer people to save so much is because most are saving almost nothing? Maybe a few see these savings recommendations and go from a 3% savings rate to something like at 10% savings rate? I'm referring to non-bogleheads as we are so very different than the norm.

There are so many unknowns in life. I write this after an elderly family member of mine died last week at the age of 83, and after having to work a suicide for a 19 year old college student this weekend. Two things that come up again and again around here are. 1. Have a plan and save a significant percentage towards it. 2. Be darn sure to not save so much as you aren't living life in the mean time. Finding that perfect balance is where it is at.

For those of us who still will get pensions, we should thank our lucky stars. For those others, they should really learn all they can about immediate annuities. I have a feeling that in a world of more limited social security and with no pensions these immediate annuities will fill a big gap.
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Re: Retirement Longevity

Postby chaz » Mon Apr 23, 2012 11:51 am

exoilman wrote:Agree 100% with cheese breath and Nisi.

Sam

Me too.
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Re: Retirement Longevity

Postby chaz » Mon Apr 23, 2012 11:51 am

exoilman wrote:Agree 100% with cheese breath and Nisi.

Sam

Me too.
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Re: Retirement Longevity

Postby 555 » Mon Apr 23, 2012 12:04 pm

This diddles with the numbers. Mortality credits aren't free money. They are paid to those that last longer by those who last shorter.
ourbrooks wrote:This table might be the answer: http://www.nyc.gov/html/olr/downloads/pdf/nyceira/joint_table.pdf Dual life expectancies are much larger than single life expectancies.

For a couple who are both 65, the median life expectancy for at least one of the two is 26.2 years. That's a median expectancy; half of the couples will have one member who survives longer. Now, consider a couple in which one member is 7 years younger and retirement is started when the older person reaches 65; median expectancy is 30 years. Again, in half the couples, one will live longer.

To make things even scarier, look at this: http://www.bogleheads.org/wiki/Trinity_study_update The 25x factor is based on a 4% withdrawal rate; that's only a reasonable rate if neither of you plan on living more than 30 years and you're willing to accept a significant probability of spending all of your investments. Try 3% if you think one of you will be above average and live for 40 years after retirement start. That ends up being more like 33x

Of course, one answer to the problem is the dual life single premium immediate annuity; it's a bet between you and the insurance company about whether the couple will live longer than average. Leaves nothing on the table and you get to spend the money for as long as you live.
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Re: Retirement Longevity

Postby GregLee » Mon Apr 23, 2012 12:44 pm

GRT2BOUTDOORS wrote:How do you address this in your planning stages?

I'm planning for the eventuality of getting quite old. I'm just not interested[*] in what happens after I die younger, likely though that may be. So I'm keeping some money back, keeping up my exercise, watching my diet. ([*] I am concerned about my wife's finances after I die, but that's provided for.)
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Re: Retirement Longevity

Postby dbphd » Mon Apr 23, 2012 1:45 pm

It depends a great deal on genetics. My mother at 99 is the youngest of 7 siblings, 3 of whom lived to be 100 (104, 102, 100). She is physically and mentally healthy, and seems very likely to live a few more years. She enjoys an active life in the assisted living building of a very nice retirement center in Santa Barbara, where she dines with friends, attends the many on-campus lectures, concerts, and chapel. Her one bedroom apartment has a small kitchen and even a powder room for guests. She uses her MacBook for email correspondence. [political comment deleted by admin alex. Note followups on this comment by various members also removed per forum policy.] The cost of this nice lifestyle is a bit over $65K a year, paid for by the family trust, a small pension, and social security.
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Re: Retirement Longevity

Postby rai » Mon Apr 23, 2012 2:27 pm

dbphd wrote:It depends a great deal on genetics. My mother at 99 is the youngest of 7 siblings, 3 of whom lived to be 100 (104, 102, 100). She is physically and mentally healthy, and seems very likely to live a few more years. She enjoys an active life in the assisted living building of a very nice retirement center in Santa Barbara, where she dines with friends, attends the many on-campus lectures, concerts, and chapel. Her one bedroom apartment has a small kitchen and even a powder room for guests. She uses her MacBook for email correspondence. The cost of this nice lifestyle is a bit over $65K a year, paid for by the family trust, a small pension, and social security.

sounds good to me, I like this option rather than eating Ramin noodles every day if I guess wrong and live too long (and don't save 25-30x living expenses) and have to live just off SS income.
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Re: Retirement Longevity

Postby Bongleur » Mon Apr 23, 2012 10:09 pm

ourbrooks wrote:If you need to live off of part of the money you are saving, the results don't apply; Milevsky even says so.

A simple, but real example: Suppose you need $12,000 a year in income. It'll cost you $172700 at age 65. If you wait until age 80, it will cost only $102887 but you'll have used up $180,000 in other capital. That's a total of $282,887. To make it pay to wait, you'll have to get a 10.24% return on your money while waiting until age 80. Not very likely.


What is the sum of money at 10.24% ?
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Re: Retirement Longevity

Postby Bongleur » Mon Apr 23, 2012 10:16 pm

If you have the $170k and only require $102K in 15 years, you can spend $4500 per year. So your net income need is $12k - $4.5k = $7500 per year; to be obtained by investing the sinking fund which starts at $170k.
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Re: Retirement Longevity

Postby RedJones » Mon Apr 23, 2012 10:17 pm

GRT2BOUTDOORS wrote: Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary?


Do you have fire insurance on your house? Which is more likely: you live into your 90's or your house burns down?
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Re: Retirement Longevity

Postby tetractys » Mon Apr 23, 2012 10:56 pm

I'm planning for 100, or 120--can't make up my mind. -- Tet
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Re: Retirement Longevity

Postby Skiffy » Tue Apr 24, 2012 12:23 pm

We've had many interesting discussions about aging lately, as all the in-laws and other relatives have been hitting 80. I don't know if it is growing up/living thru the depression, but not one of them really planned how they were going to live in retirement. Only one has a modest pension, one a 403(b). The rest are living on social security. ALL of their costs are going up, utilities, food, insurance, etc. ALL are secretive about their finances, we don't know how much money they have or what their expenses are. Bogleheads are different! Saving more, thinking more, planning more!
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Re: Retirement Longevity

Postby Cut-Throat » Tue Apr 24, 2012 12:31 pm

tetractys wrote:I'm planning for 100, or 120--can't make up my mind. -- Tet


If you are planning for 120, you have already lost your mind.

Dementia has already set in.
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Re: Retirement Longevity

Postby nisiprius » Tue Apr 24, 2012 2:57 pm

dbphd wrote:It depends a great deal on genetics.
Alas, my casual investigations suggest that this is not nearly as true as people think. Despite all the talk about "choosing your parents," the correlation of longevity between parents and children is there, but it's low, like maybe 30%.

Same thing for fitness. I try to stay fit, but I think that's more likely to be effective in maintaining my quality of life than in extending its duration.
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How do GLWB variable annuities adjust for inflation?

Postby bobcat2 » Tue Apr 24, 2012 3:16 pm

ourbrooks wrote.
Inflation adjusted annuities have been around for a very long time. The old fashioned ones just increased the payments by a fixed percentage each year; the newer ones actually base the increase on the CPI-U. You can even role your own with a Vanguard variable annuity with a Guarenteed Lifetime Withdrawal Benefit (GLWB) rider.

How does a Vanguard variable annuity with a GLWB rider adjust for inflation? My impression was that nearly all GLWB variable annuities, including Vanguard's, have guaranteed withdrawal rates that are nominal, rather than inflation adjusted.

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Re: Retirement Longevity

Postby Leesbro63 » Tue Apr 24, 2012 4:43 pm

RedJones wrote:
GRT2BOUTDOORS wrote: Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary?


Do you have fire insurance on your house? Which is more likely: you live into your 90's or your house burns down?


Apples and oranges because the cost to insure your house is way less than the cost to insure longevity.
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Re: Retirement Longevity

Postby jginseattle » Tue Apr 24, 2012 5:43 pm

The fact fact is that people are living longer. My nephews may make it to 110 or 115. How would you like to fund a retirement like that?

This is anecdotal, but I recently heard a financial advisor say that three clients, all of whom were doctors, came to him independently and each changed their plans to factor in a lifespan of 115 years.
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Re: Retirement Longevity

Postby Cut-Throat » Tue Apr 24, 2012 5:48 pm

jginseattle wrote:The fact fact is that people are living longer. My nephews may make it to 110 or 115. How would you like to fund a retirement like that?

This is anecdotal, but I recently heard a financial advisor say that three clients, all of whom were doctors, came to him independently and each changed their plans to factor in a lifespan of 115 years.


Not really. The facts do not agree with you. To factor this in to a retirement plan is akin to buying lottery tickets to retire in the first place. Get real!

A supercentenarian (sometimes hyphenated as super-centenarian) is someone who has reached the age of 110 years. This age is achieved by about one in a thousand centenarians.[citation needed]

There are estimated to be 300 – 450 living supercentenarians in the world, though only about 70 individual verified living supercentenarians are known.[1] A study conducted in 2010 showed that the countries with most supercentenarians were United States, United Kingdom, Japan, France and Italy.[2]

The first verified supercentenarians in human history died in the late 19th century. Until the 1980s, the maximal age to be attained by supercentenarians was 114, but this has now been surpassed. To date, there are 7 undisputed cases of people who have lived to 116 years of age or older. The oldest verified person ever is Jeanne Calment, who died in 1997 at the age of 122 years 164 days.
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Re: Retirement Longevity

Postby Jerilynn » Tue Apr 24, 2012 6:01 pm

Cut-Throat wrote:
jginseattle wrote:The fact fact is that people are living longer. My nephews may make it to 110 or 115. How would you like to fund a retirement like that?

This is anecdotal, but I recently heard a financial advisor say that three clients, all of whom were doctors, came to him independently and each changed their plans to factor in a lifespan of 115 years.


Not really. The facts do not agree with you. To factor this in to a retirement plan is akin to buying lottery tickets to retire in the first place. Get real!

A supercentenarian (sometimes hyphenated as super-centenarian) is someone who has reached the age of 110 years. This age is achieved by about one in a thousand centenarians.[citation needed]

There are estimated to be 300 – 450 living supercentenarians in the world, though only about 70 individual verified living supercentenarians are known.[1] A study conducted in 2010 showed that the countries with most supercentenarians were United States, United Kingdom, Japan, France and Italy.[2]

The first verified supercentenarians in human history died in the late 19th century. Until the 1980s, the maximal age to be attained by supercentenarians was 114, but this has now been surpassed. To date, there are 7 undisputed cases of people who have lived to 116 years of age or older. The oldest verified person ever is Jeanne Calment, who died in 1997 at the age of 122 years 164 days.

The one thing that can't be predicted is if a medical breakthrough will occur that will increase lifespan significantly. A cure for cancer, for example. That would sure mess up the ins companies' actuarial tables, don't you think?
Cordially, Jeri . . . 100% all natural asset allocation. (no supernatural methods used)
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Re: Retirement Longevity

Postby Stryker » Tue Apr 24, 2012 6:02 pm

There's must be something to being a stock investor and having longevity. In no particular order, John Templeton, Walter Schloss, Phil Fisher, and Philip Carret all lived into their 90's. Irving Kahn is still working in New York at the age of 106.
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Re: Retirement Longevity

Postby Cut-Throat » Tue Apr 24, 2012 6:18 pm

Jerilynn wrote:The one thing that can't be predicted is if a medical breakthrough will occur that will increase lifespan significantly. A cure for cancer, for example. That would sure mess up the ins companies' actuarial tables, don't you think?


Anything is possible, but I wouldn't plan on it.

You can set your retirement plan to 175 if you want, and buy some lottery tickets while you're at it.
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Re: Retirement Longevity

Postby jginseattle » Tue Apr 24, 2012 6:23 pm

Cut-Throat wrote:
jginseattle wrote:The fact fact is that people are living longer. My nephews may make it to 110 or 115. How would you like to fund a retirement like that?

This is anecdotal, but I recently heard a financial advisor say that three clients, all of whom were doctors, came to him independently and each changed their plans to factor in a lifespan of 115 years.


Not really. The facts do not agree with you. To factor this in to a retirement plan is akin to buying lottery tickets to retire in the first place. Get real!

A supercentenarian (sometimes hyphenated as super-centenarian) is someone who has reached the age of 110 years. This age is achieved by about one in a thousand centenarians.[citation needed]

There are estimated to be 300 – 450 living supercentenarians in the world, though only about 70 individual verified living supercentenarians are known.[1] A study conducted in 2010 showed that the countries with most supercentenarians were United States, United Kingdom, Japan, France and Italy.[2]

The first verified supercentenarians in human history died in the late 19th century. Until the 1980s, the maximal age to be attained by supercentenarians was 114, but this has now been surpassed. To date, there are 7 undisputed cases of people who have lived to 116 years of age or older. The oldest verified person ever is Jeanne Calment, who died in 1997 at the age of 122 years 164 days.


http://www.bbc.co.uk/news/health-12783874
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Re: Retirement Longevity

Postby Cut-Throat » Tue Apr 24, 2012 6:48 pm



Sure, go ahead and put this into your retirement plan, because it's possible.
And buy some some lottery tickets to cover it. Because it's possible you might win.

So, what life expectancy are you going to plan on? Please tell us?
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Re: Retirement Longevity

Postby wshang » Tue Apr 24, 2012 7:16 pm

Cut-Throat wrote:You can set your retirement plan to 175 if you want, and buy some lottery tickets while you're at it.

It just so happens when you plan for 50 year timeframe, you are essentially at an infinite withdrawl rate (of ~2%).
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Re: Retirement Longevity

Postby Leesbro63 » Tue Apr 24, 2012 8:54 pm

Jerilynn wrote:The one thing that can't be predicted is if a medical breakthrough will occur that will increase lifespan significantly. A cure for cancer, for example. That would sure mess up the ins companies' actuarial tables, don't you think?


What they lose on annuities, they'll make up on life insurance.
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Re: Retirement Longevity

Postby Leesbro63 » Tue Apr 24, 2012 9:27 pm

Stryker wrote:There's must be something to being a stock investor and having longevity. In no particular order, John Templeton, Walter Schloss, Phil Fisher, and Philip Carret all lived into their 90's. Irving Kahn is still working in New York at the age of 106.


Survivor bias.
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Re: Retirement Longevity

Postby VictoriaF » Tue Apr 24, 2012 9:40 pm

Cut-Throat wrote:
Jerilynn wrote:The one thing that can't be predicted is if a medical breakthrough will occur that will increase lifespan significantly. A cure for cancer, for example. That would sure mess up the ins companies' actuarial tables, don't you think?


Anything is possible, but I wouldn't plan on it.

You can set your retirement plan to 175 if you want, and buy some lottery tickets while you're at it.


Anything is possible applies on both ends. The best laid plan can fail due to geopolitical or geophysical events. Bill Bernstein has repeatedly made this point.

On the other hand, medical break-throughs can be both expensive and life-extending. For example, advances in stem-cell technologies may enable healing of vital organs, but they are not likely to be covered by health insurance (including Medicare). Even if the planned age is more modest than 175, the planned private cost of fixing one's organs could be enormous.

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Re: Retirement Longevity

Postby gkaplan » Tue Apr 24, 2012 9:43 pm

This comment should be deleted or at least edited for "politics".


You'd be better off clicking on that little inverted triangle in the upper right hand of the post, than complaining here.
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Re: Retirement Longevity

Postby RedJones » Tue Apr 24, 2012 9:50 pm

Leesbro63 wrote:
RedJones wrote:
GRT2BOUTDOORS wrote: Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary?


Do you have fire insurance on your house? Which is more likely: you live into your 90's or your house burns down?


Apples and oranges because the cost to insure your house is way less than the cost to insure longevity.


People don't buy insurance just because it is cheap. They buy it when they cannot afford to bear the loss themselves. Or, at least. that is the rational approach.
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Re: Retirement Longevity

Postby Leesbro63 » Tue Apr 24, 2012 10:16 pm

Thanks. I never did that before but just did!
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Re: Retirement Longevity

Postby dbphd » Tue Apr 24, 2012 11:14 pm

Leesbro63 and Frugal Al,

Getting so stressed by a playful comment is not conducive to longevity. If you insist on putting it into the aging context, it could be viewed as how ones views can fundamentally change with age. I find at 75 that my need for fast cars (Ferraris) has dissipated, and my cost of living with it. We keep our expenses within pension and social security incomes so we don't feel such a need to worry about out-living our investments. So this thread is to a great extent moot for me, except to note the role of genetics in longevity. Sorry to have ruffled feathers, I didn't mean to.
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Re: Retirement Longevity

Postby Leesbro63 » Wed Apr 25, 2012 9:12 am

RedJones wrote:
Leesbro63 wrote:
RedJones wrote:
GRT2BOUTDOORS wrote: Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary?


Do you have fire insurance on your house? Which is more likely: you live into your 90's or your house burns down?


Apples and oranges because the cost to insure your house is way less than the cost to insure longevity.


People don't buy insurance just because it is cheap. They buy it when they cannot afford to bear the loss themselves. Or, at least. that is the rational approach.


Yeah but they also don't buy insurance when they cant afford to bear the immediate cost of the premium, even if they have to retain a risk of much worse later on.
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Re: Retirement Longevity

Postby RedJones » Wed Apr 25, 2012 11:18 am

Leesbro63 wrote:
RedJones wrote:
Leesbro63 wrote:
RedJones wrote:
GRT2BOUTDOORS wrote: Is it just me or does it appear that most folks who make it to retirement at age 65 do not live into their 90's, making this all-out drive to reach a certain asset level all for naught or really, just for the benefit of heirs/and or some ultimate beneficiary?


Do you have fire insurance on your house? Which is more likely: you live into your 90's or your house burns down?


Apples and oranges because the cost to insure your house is way less than the cost to insure longevity.


People don't buy insurance just because it is cheap. They buy it when they cannot afford to bear the loss themselves. Or, at least. that is the rational approach.


Yeah but they also don't buy insurance when they cant afford to bear the immediate cost of the premium, even if they have to retain a risk of much worse later on.


That's not the argument I usually hear in these discussions and it's not the one the OP made. His view is that the risk is small, not that he can't afford to pay an insurance company to take it for him, for example. He just wants to have his cake and eat it, too. It might work out for him and I hope it does, but even so, it will not have been a prudent decision. IMO.
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