$700,000 to last a lifetime: what do you do with it?

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n2ojones
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$700,000 to last a lifetime: what do you do with it?

Post by n2ojones »

Hi..

This was a component of a question I asked in another sub-forum. Thought I'd try my luck here.

Without complicating this question, let me just say that I am 50...married and probably will never be able to work again. I have $300k in cash. Can net about $400k if I choose to sell my real estate in Hawaii.

My wife is a Thai national and we would consider a move to her country. I don't think we could live on much less than $4k per month (even there) but may be forced to do so.

I have very little knowledge of stocks and bonds but will work hard to learn.

If you had $700k and knew it would have to last about 30 years and believe SS will still be around in a dozen years.....what would you do?

I thank you in advance.
livesoft
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Post by livesoft »

I would use it to buy a book on how to live on $25K or less a year including all health/dental/medical expenses. I would also try to get my wife to work in a high paying job.
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Re: $700,000 to last a lifetime: what do you do with it?

Post by Mel Lindauer »

n2ojones wrote:Hi..

This was a component of a question I asked in another sub-forum. Thought I'd try my luck here.

Without complicating this question, let me just say that I am 50...married and probably will never be able to work again. I have $300k in cash. Can net about $400k if I choose to sell my real estate in Hawaii.

My wife is a Thai national and we would consider a move to her country. I don't think we could live on much less than $4k per month (even there) but may be forced to do so.

I have very little knowledge of stocks and bonds but will work hard to learn.

If you had $700k and knew it would have to last about 30 years and believe SS will still be around in a dozen years.....what would you do?

I thank you in advance.
You might also look into a Single Premium Immediate Annuity to see if that would provide you anywhere near enough to live in Thailand for the rest of your days.
Best Regards - Mel | | Semper Fi
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bob90245
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Post by bob90245 »

If I were 65 and planned to live 30 years to 95, I would take no more than 4% in the first year and adjust for inflation thereafter. So that would be $28K in the first year.

If I need more, I would put no more than $300K in an inflation-adjusted fixed immediate annuity (split equally among 3 insurers). That would get me $16.5K in the first year. With $400K left over, I would take no more than $16K in the first year. So total income comes to $32.5K in the first year.

That's way below the $48K you're after.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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n2ojones
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Post by n2ojones »

Thanks for the replies....I forgot to mention that I have a partner share in a business that nets an average of $1500 per month. If i could find this annuity that nets $2666 per month...that puts me real close to where I need to be with SS kicking in in 2022. How do I go about obtaining such an annuity and is this a better idea than a mix of stocks and bonds?

Just noticed you said if you were "65". Are such annuities available to a 50 yr old?
Last edited by n2ojones on Sat Jan 09, 2010 10:50 pm, edited 2 times in total.
musbane
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Post by musbane »

Um, bob... He's not 65 - he's 50.
livesoft
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Post by livesoft »

You should read bob's thread on predictable retirement income and the link there-in: http://www.bogleheads.org/forum/viewtopic.php?p=628957

You should get Jim C. Otar's "Unveiling the Retirement Myth", read it and understand it. It has lots of info on annuities and other things to help folks who are underfunded. It contains a very strong dose of reality, but is indispensable for folks nearing retirement.
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Post by DaveH »

Depending on your lifestyle, you can definitely do Thailand for 25k/year.
The fewer our wants, the nearer we resemble the gods. — Socrates
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n2ojones
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Post by n2ojones »

Thanks livesoft,

I will read the link and buy the book. Trust me..this is not a planned retirement. Serious injuries and a loss of about half my assets have me backed into a corner. I am attempting to make lemonade and appreciate the advice of this forum's members.
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n2ojones
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Post by n2ojones »

DaveH wrote:Depending on your lifestyle, you can definitely do Thailand for 25k/year.
I love Thailand but not sure I would love Thailand on 2k per month. Bangkok is getting pricey as is Phuket. Issan is out so Chiang Mai is about my best option. Rents are cheap but we'd have to re-locate during the burning season.

You in Thailand, Dave?
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Post by ObliviousInvestor »

n2ojones,

I read your other post as well. I'm not an expert on the issues you're dealing with, but having read the Bogleheads' Guide to Retirement Planning, I think it would be a helpful resource.
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DaveH
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Post by DaveH »

n2ojones wrote:
DaveH wrote:Depending on your lifestyle, you can definitely do Thailand for 25k/year.
I love Thailand but not sure I would love Thailand on 2k per month. Bangkok is getting pricey as is Phuket. Issan is out so Chiang Mai is about my best option. Rents are cheap but we'd have to re-locate during the burning season.

You in Thailand, Dave?
It depends how you do it. If you do it expat/western style, you spend 5 times as much as you do if you live Thai style. There is plenty in between.

Chiang Mai is not that expensive but I'd take the south any day. Phuket is pricey but all around PhangNga there are nice places to live. Krabi is also an awesome, diverse place with lots of services and you can live cheap.

Buy a little house and a car for 45k and hang out. Eat Thai food most of the time.

If you find that the most expensive thing you do is to return to the states, then you are on track with the budget :)

We have a place of the coast of Kuraburi, south of Ranong.
The fewer our wants, the nearer we resemble the gods. — Socrates
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n2ojones
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Post by n2ojones »

Thanks again, Dave.

I can do those things. I have little interest in the trappings of a westerrn-style life while in the Kingdom. I can eat off the street stalls but need a fairly nice place to live. I will go bananas with 3am karaoke from the house of my neighbors. ;) I would also like to check out Kanchanaburi (sp?) as it is rather close to the big mango. You have any thoughts on the place?
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n2ojones
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Post by n2ojones »

ObliviousInvestor wrote:n2ojones,

I read your other post as well. I'm not an expert on the issues you're dealing with, but having read the Bogleheads' Guide to Retirement Planning, I think it would be a helpful resource.
Thanks for your help. I will read everything I can. I've read this forum for about 30 hrs in the past week. It is great. What I really need is a glossary of terms. It's like a different language spoken here and that is definitely slowing my progress..but I will learn. ;)
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Post by mhalley »

Certainly every subject has its own terms. Look on the Wiki for any basic questions you have, it is a great tool. For example, common abbreviations are here: http://www.bogleheads.org/wiki/Forum_Ab ... d_Acronyms
Good luck.
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Post by kayman »

n2ojones wrote:
ObliviousInvestor wrote:n2ojones,

I read your other post as well. I'm not an expert on the issues you're dealing with, but having read the Bogleheads' Guide to Retirement Planning, I think it would be a helpful resource.
Thanks for your help. I will read everything I can. I've read this forum for about 30 hrs in the past week. It is great. What I really need is a glossary of terms. It's like a different language spoken here and that is definitely slowing my progress..but I will learn. ;)

It's not really a glossary, but the Bogleheads wiki should answer most of your questions:

http://www.bogleheads.org/wiki/Main_Page

I admit that it will be hard to get to $4k/month from $700k, but you should be happy/proud that you have that much to work with, given the compromised situation you are in. Imagine if you had little/no savings! (like most Americans)

I'm sure with some flexibility and the help of people on this forum (who are much smarter than me) you'll make it work. Good luck!
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Post by n2ojones »

Thanks Kayman and Mhalley...that is exactly what I needed. After so many hrs of reading, and for me it's not easy reading, I still don't even fully understand "TIPS". There is just so much information and without knowing exactly what I need...or how to even pose an intelligent question, well, it's all a bit overwhelming.

I am grateful for what we have and feel so badly for friends not doing so well. But we have lost so much that I am on the verge of paranoia (panic may be the better term). This recent series of events, for me personally, have been both mind-blowing and humbling. I probably needed a dose of humility and will somehow be stronger for it.
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Post by IL Int Med »

$700,000 gives you about $30,000 per year, assuming you withdraw about 4% per year. Check out this recent thread about living on less than $50K per year in which many U.S. posters said they could easily do so, on much less. It'll certainly mean you need to move from Hawaii though.

http://www.bogleheads.org/forum/viewtop ... 1263086208


As an aside, I notice that you really seem to put yourself and your abilities down. To have built a successful business, I'm sure you have more than adequate people and sales skills, otherwise why would customers hire you and not someone else? I am sure bring a lot more to the table than just your ability to swing a hammer and I am sure you can find gainful employment in another field, if you believed more in yourself.

This pessimism and negatively is not what I'd expect from a small business owner, unless you're depressed and it's the depression talking. If this is the case, seek treatment! There's no shame in being depressed, 1 out of 5 people suffer from major depression at some point in their lives. Among some of the risk factors: job loss, major illness, chronic pain.
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Post by n2ojones »

I'm definitely having a harder time getting happy...that's for sure. But I do find happiness, in some form or another, many times a day. I do appreciate your sentiment. It is clearly thoughful. But I am not down on myself. The business is doomed not for anything I've done but because we are running out of money fighting a bogus lawsuit. Even after we are exonerated..our name will be forever linked to a 10 million dollar screw-up. Then you throw in the neck and back and economy and IRS and RE market and well...yeah, I guess I am a bit depressed.

I am also a fan of the Seattle Seahawks. I should probably be on Thorazine. ;)
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Post by DennisRoche »

I don't know how bad your health is but you perhaps you could consider some part-time, non-stressful employment while in Thailand. You have the advantage of a Thai spouse. This will probably help in securing a work permit. It seems there's a demand for native English teachers in many countries of the world, for example.
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Post by captain3d »

I learned a lot just by listening to free pod casts. I like Ray Lucia as his show covers so many areas from callers. There are many others out there. Are you familiar with itunes and podcasts?

here he is...
http://radiotime.com/program/p_20588/Th ... _Show.aspx

Also there was a lot of interest in the 'permanent portfolio' during the recent crash as it is very diversified and some what crash proof. At the least it has some sound thinking about different financial situations...

http://crawlingroad.com/blog/2008/12/18 ... /#more-189

http://crawlingroad.com

The bottom line is you need to adjust your life to live on less or invent a new way for you both to make money. And again congratulations on not being the typical no savings house hold.

phil
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Post by james22 »

bluto
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Post by bluto »

I read and responded to your other post and I'm happy that you are getting more feedback here, but please forgive me for sharing an observation made in the other post.

Obviously you have suffered quite a shock and are doing your best to 'make lemonade'. In your other post you implied you wanted very clear descriptions of what to do next. You also explained that you have been burned in the past by advisors, accountants, and partners. I urge you to do nothing until you have had a chance to read all of the books mentioned above and you feel very comfortable with all the language and products available to you. Managing your own finances is not difficult, it just takes a little time. You've run your own business and are more than qualified to manage your own finances. If I can do it, anyone can!!

You'll get great advice here, but there is no substitute for your own informed judgement.

Best wishes,
Blut
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Post by ResNullius »

If you can't work anymore, then you might be able to set yourself up with SS disability. This would add some bucks to the equation.
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Post by bob90245 »

n2ojones wrote:Just noticed you said if you were "65". Are such annuities available to a 50 yr old?
Not for the same amount. They'll offer you two-thirds the income. I just checked Vanguard's Quote Page:

http://www.aigretirementgold.com/vlip/V ... uestaQuote

For a single 50-year-old male, a quote for a lifetime inflation-adjusted fixed immediate annuity gets you $10,658.04 in the first year.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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Congratulations on your new coach.

Post by Hexdump »

NFL Seahawks set to hire Pete Carroll as new coach:

In your life plan, are there to be any provisions for leaving "stuff" to heirs ?

The advice you get here is golden and I would recommend that after you do your reading and construction of a plan. publish it here and have it reviewed.

Good luck, and stay away from the Thai chili peppers !!

An additional thought was whether you have considered investments in the local currency, the Baht ?
Were I to relocate, I would do research on it.

hex
Last edited by Hexdump on Sun Jan 10, 2010 11:20 am, edited 1 time in total.
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Post by bob90245 »

musbane wrote:Um, bob... He's not 65 - he's 50.
If it were me, I would wait until age 65. And even in that "best case", the numbers fall short. So it goes without saying (which I didn't, because it goes without saying) that the numbers for age 50 are only going to be worse. For example, if I were age 50, I would not use an inflation-adjusted initial withdrawal rate of 4%. I would use 3% instead.
Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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Post by investnoob »

Hi N2ojones. I'm very new to the world of investing as well. But I thought I'd pop in to give you another resource to check out.

www.early-retirement.org

This website is full of people who have made a go of early retirement. So I think they might have some advice to offer. Also, many of them are bogleheads.

Hope this helps, and good luck.
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Post by bb »

I am curious why you have not mentioned going on disability as an
option. Is there any chance you would be better off staying in the us
and going on disability instead of moving? Or is the decision to move
not based on financial reasons?
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Post by tibbitts »

We don't understand your exact situation, but shouldn't you either be able to work at something, or qualify for SS disability now?

Paul
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Post by investnoob »

Hi guys, his situation is explained in this thread:

http://www.bogleheads.org/forum/viewtop ... 1263140300

n2ojones, it might be worthwhile if you go back to that thread and edit your first post to include stuff like current income/expenses so that everyone has a clearer picture of your situation.
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Re: $700,000 to last a lifetime: what do you do with it?

Post by junior »

n2ojones wrote:Hi..

This was a component of a question I asked in another sub-forum. Thought I'd try my luck here.

Without complicating this question, let me just say that I am 50...married and probably will never be able to work again. I have $300k in cash. Can net about $400k if I choose to sell my real estate in Hawaii.

My wife is a Thai national and we would consider a move to her country. I don't think we could live on much less than $4k per month (even there) but may be forced to do so.

I have very little knowledge of stocks and bonds but will work hard to learn.

If you had $700k and knew it would have to last about 30 years and believe SS will still be around in a dozen years.....what would you do?

I thank you in advance.
Investment advisor William Bernstein estimates you can spend about 4% of your money per year without running out, but he has gotten a bit more pessimistic in later writings so I'm not sure what he'd say if he addressed this topic today

Here's one of the articles, in the "retirement Calculator from Hell" series:

http://www.efficientfrontier.com/ef/101/hell101.htm


So you might aim to try to spend about 25,000 per year and of course you'll have social security as well down the line, you'll need to do some reading on a sensible portfolio, there's good books on the recommended reading list here, including Bernstein's own, some of which you may be able to find at your local library.
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Post by junior »

The standard for Social Security disability is (essentially) whether you are unable (or can convince a judge you are unable) to perform any work, even a minimum wage job.

If you believe you are unable to work due to a disability, physical or mental, you should apply for social security disability. There might be nonprofits organizations that can help you fill out the application. People usually only need a lawyer if they are turned down for disability and want to appeal the decision to an administrative judge, the lawyer will take a cut if you win.
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Post by DaveH »

DennisRoche wrote:I don't know how bad your health is but you perhaps you could consider some part-time, non-stressful employment while in Thailand. You have the advantage of a Thai spouse. This will probably help in securing a work permit. It seems there's a demand for native English teachers in many countries of the world, for example.
Casual/part-time work has become very tough to find in Thailand over the last few years. Even a visa is tricky to get although if you are 50 years old with some cash to bring in you'll get an no-work expat/retirement visa easily.

What many expats are doing is finding ways to make money online or through the Internet. Many people find gigs that can be done via email like writing/editing, etc. I know a CPA who runs a small practice from Thailand, and I have been able to linger there for months when doing a writing project. Getting paid in the US also makes taxes/etc. work well if you can set it up right.

n2ojones wrote:Thanks again, Dave.

I can do those things. I have little interest in the trappings of a westerrn-style life while in the Kingdom. I can eat off the street stalls but need a fairly nice place to live. I will go bananas with 3am karaoke from the house of my neighbors. ;) I would also like to check out Kanchanaburi (sp?) as it is rather close to the big mango. You have any thoughts on the place?
Kanchanburi is a good example of a place you can live that isn't all that expensive/touristy but has good facilities. It's close to BKK but plenty of traditional thai neighborhoods where you can live well cheaply. There are plenty of tourists coming through to see the River Kwai, etc. but they don't stay long and you won't see farang if you are off the tourist path.

There's a good hospital there, from what I hear, and a small expat community. You will need to speak Thai to really settle in. If you are interested in Buddhism, that's a great area to be in! Next time you are there, take a train out there then rent a motorbike are cruise the hilly areas near town.
The fewer our wants, the nearer we resemble the gods. — Socrates
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Post by KyleAAA »

I second the applying-for-SS-disability strategy. My father ended up having to do that and it was a lifesaver for my parents. Plus, my mother is now entitled to his higher disability payout when she reaches retirement age. If you're truly disabled, you shouldn't have a problem getting approved. That will give you some breathing room while you figure out your finances.
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Post by Beagler »

Does your wife bring in any income?

Any kids you can rely upon for help during this difficult time?

I also caution you not to make any decisions until you've read the books already mentioned.

Best of luck.
“The only place where success come before work is in the dictionary.” Abraham Lincoln. This post does not provide advice for specific individual situations and should not be construed as doing so.
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Post by The Dude Abides »

Putting this out for debate: would this be a good situation for investing part of the money in a multifamily cash-flow property? Say a small apartment building in a college town?
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Post by muddlehead »

to op. haven't read other posts. cd's for the next 10-15 yrs. live on interest. at currently doable 4%, that's 28k per yr minus a bit for taxes. see you in 15 yrs.
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Post by Patchy Groundfog »

junior wrote:The standard for Social Security disability is (essentially) whether you are unable (or can convince a judge you are unable) to perform any work, even a minimum wage job.

If you believe you are unable to work due to a disability, physical or mental, you should apply for social security disability. There might be nonprofits organizations that can help you fill out the application. People usually only need a lawyer if they are turned down for disability and want to appeal the decision to an administrative judge, the lawyer will take a cut if you win.
I helped a relative through this process. He was turned down initially, but approved on appeal. We didn't have an attorney, but we would have gotten legal help if the initial appeal hadn't worked.

You will need to show that you've made every effort to recover enough to hold a job, by finding a pain management specialist and being totally compliant with the treatment plan. A good pain practice will work with you to tweak the medications to get maximum benefit with minimum side effects. When and if that doesn't work, you should apply for disability. A case like yours is the reason SS disability exists.

It's really hard to read about all that's happened to you -- a perfect storm of misfortune. I know that with general contractors reputation is everything, not just with owners but subs and suppliers as well -- construction is a small world. But is there any chance you could work as say, a site superintendent, where you wouldn't have to sit for long periods?
The best things in life aren't things.
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Post by DaveH »

The Dude Abides wrote:Putting this out for debate: would this be a good situation for investing part of the money in a multifamily cash-flow property? Say a small apartment building in a college town?
Quite a bit of risk associated with that. I'm not sure it fits the desired model.
The fewer our wants, the nearer we resemble the gods. — Socrates
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Post by citywayne »

Sorry to hear about your situation. I am not being critical, just trying to suggest a 'step back and take a deep breath' moment.
Is it possible that years of living very comfortably in a high cost area and the stress of your situation has colored your outlook a bit.
Having traveled a bit in Asia myself, I have found that unless you choose a high 'ex-pat' luxury condo area, you can live on much less than 50k per year. You may want to take another look at exactly what type of life style you want to live and develop an itemized budget that would support it. Be reasonable in your estimates, remembering that it probably does not cost Hawaii prices for similar items.
Best of luck to you.
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n2ojones
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Post by n2ojones »

I would like to thank you all individually for your responses and submitted resources but have noticed doing so creates redundantcy for you viewers.

In order to better seek answers to my many questions...I started a thread in another sub-forum. That act has also created redundantcy and has also made it hard for me to keep up with your replies.

I would love it if you could visit that thread and post your replies as I think I'd be wise to let one or the other fade away. Your help has been extremely valuable and unsure of what thread I am in at the moment.. I hope I am shutting the right one down! ;)

OK...the other thread is called FORCED TO RETIRE AT 50. Actually, I think that was the original thread. Now you see why I don't take pain meds...I'm sketchy enough without 'em.
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Post by LH »

http://www.aigretirementgold.com/vlip/V ... uestaQuote

Vanguard SPIA quotes.

http://www.aigretirementgold.com/vlip/V ... e=Overview

Vanguards how to make your savings last a lifetime page.
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Post by Analystic »

"Single Premium Immediate Annuity"

I say no to these. Inflation will eat you alive. Interest rates are at an all-time low. Depending on where you buy a sizable chunk of your money goes to commission on day one. Your cash stream will forever depend on the solvency of the company. IMHO.

Also, check this:

http://www.afb.org/section.asp?SectionID=1&TopicID=129

You may wish to re-examine your assumptions.

I don't want to get all new-age on you but ... does life have a reason or purpose ... your life? You will have some time to reflect on that.
Disclaimer: I am making all of this up.
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Post by ddb »

DaveH wrote:Depending on your lifestyle, you can definitely do Thailand for 25k/year.
Well not to be too much of a smart aleck, but depending on your lifestyle, you can live anywhere for 25K/year.

- DDB
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Post by ddb »

Analystic wrote:"Single Premium Immediate Annuity"

I say no to these. Inflation will eat you alive. Interest rates are at an all-time low. Depending on where you buy a sizable chunk of your money goes to commission on day one. Your cash stream will forever depend on the solvency of the company. IMHO.
Agree with your caution regarding locking into a fixed product when rates are at historical lows. Inflation concern can be mitigated, though, by purchasing a SPIA that provides inflation adjustments.

- DDB
"We have to encourage a return to traditional moral values. Most importantly, we have to promote general social concern, and less materialism in young people." - PB
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Post by DaveH »

ddb wrote:
DaveH wrote:Depending on your lifestyle, you can definitely do Thailand for 25k/year.
Well not to be too much of a smart aleck, but depending on your lifestyle, you can live anywhere for 25K/year.

- DDB
Fair enough. That was some vague language. I just meant that one can live comfortably on 25k/year within the context of an expat living in Thailand with reasonable living standards that such a person would enjoy/expect.

On the contrary, you wouldn't have a shot at it in New York, Hong Kong, Singapore, Paris, etc. :)
The fewer our wants, the nearer we resemble the gods. — Socrates
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bob90245
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Joined: Mon Feb 19, 2007 8:51 pm

Post by bob90245 »

Analystic wrote:"Single Premium Immediate Annuity"

I say no to these. Inflation will eat you alive. Interest rates are at an all-time low.
They've been saying that for years.

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Ignore the market noise. Keep to your rebalancing schedule whether that is semi-annual, annual or trigger bands.
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