How to retire early by targeting a low/zero balance at the end of life?

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K8ya
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How to retire early by targeting a low/zero balance at the end of life?

Post by K8ya » Sat May 25, 2019 1:37 am

Without the need or desire to leave an estate to anyone, one could theoretically retire earlier, withdraw an amount that eats at the post inflation value of his investments, and run it down to a small amount right around the time he dies.

But without knowing when death day is and such large variance (dying at 75 vs 110) the whole idea seems shaky.

I've heard that there are negative life plans in France. The recordholder, a 122 year old french lady, bankrupted the lawyer she bought her plan from as the incentives for the seller hope for the beneficiary to die earlier.

Do we have options like that in the US?

Curious if anyone has looked into early retirement without the desire to leave an estate/balance at the end of life.

The next best thing I can think of is slowly letting the investment's value run out. Say one has a target to retire on $50,000/yr. He could choose to retire when achieving $60k but at a 5% withdrawal rate instead of the traditional 3-4%. Each year a paycut follows, creating some risk of it getting too low, but also allowing for retirement to come sooner since you're withdrawing 25+% more each year.

Elbowman
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by Elbowman » Sat May 25, 2019 2:14 am

If you have no desire to leave an estate, annuities (SPIA) can be a good option once you are older.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by GerryL » Sat May 25, 2019 2:36 am

K8ya wrote:
Sat May 25, 2019 1:37 am


I've heard that there are negative life plans in France. The recordholder, a 122 year old french lady, bankrupted the lawyer she bought her plan from as the incentives for the seller hope for the beneficiary to die earlier.

Do we have options like that in the US?
From a Dec 29, 1995 NYT story "A 120-Year Lease on Life Outlasts Apartment Heir":
"Andre-Francois Raffray thought he had a great deal 30 years ago: He would pay a 90-year-old woman 2,500 francs (about $500) a month until she died, then move into her grand apartment in a town Vincent van Gogh once roamed.
But this Christmas, Mr. Raffray died at age 77, having laid out the equivalent of more than $184,000 for an apartment he never got to live in."

"Buying apartments "en viager," or "for life," is common in France. The elderly owner gets to enjoy a monthly income from the buyer, who gambles on getting a real estate bargain -- provided the owner dies in due time.
Upon the owner's death, the buyer inherits the apartment, regardless of how much was paid."

The woman's name was Jeanne Calment, and she died in 1997. But recent news stories have questioned whether she was really that old and some people contend that "Jeanne" was actually her daughter Yvonne.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by AlohaJoe » Sat May 25, 2019 2:51 am

K8ya wrote:
Sat May 25, 2019 1:37 am
I've heard that there are negative life plans in France. The recordholder, a 122 year old french lady, bankrupted the lawyer she bought her plan from as the incentives for the seller hope for the beneficiary to die earlier.
She signed the contract at age 90, which is hardly "early retirement". And the lawyer wasn't bankrupted. It was only €380/month. He just died before he could use the apartment. After he died, his family kept up the payments. Eventually the lady died and the family got the apartment.
Do we have options like that in the US?
Yes, there are annuities and reverse mortgages. None of them are appropriate for an early retiree, though.
Curious if anyone has looked into early retirement without the desire to leave an estate/balance at the end of life.
The overwhelming majority of all retirement research assumes there is no desire to leave an estate/balance at the end. So you can just refer to the large body of existing research.

There are no tricks that will make early retirement cheaper or easier. It takes a lot of money. And the difference between "end with $0" and "end with $1,000,000" is usually 0.25% or less on withdrawal rates.

In practice, saying "I don't care about leaving money behind" just doesn't change how much you can spend every year by very much.

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K8ya
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by K8ya » Sat May 25, 2019 5:07 am

AlohaJoe wrote:
Sat May 25, 2019 2:51 am
There are no tricks that will make early retirement cheaper or easier. It takes a lot of money. And the difference between "end with $0" and "end with $1,000,000" is usually 0.25% or less on withdrawal rates.

In practice, saying "I don't care about leaving money behind" just doesn't change how much you can spend every year by very much.
That's quite surprising, in that case it doesn't seem worth it. I'll have some Exceling to do this weekend!

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by The Wizard » Sat May 25, 2019 5:24 am

AlohaJoe wrote:
Sat May 25, 2019 2:51 am

...And the difference between "end with $0" and "end with $1,000,000" is usually 0.25% or less on withdrawal rates...
I'm thinking it has more to do with Mr. Market and sequence of returns than a withdrawal rate planned ahead of time...
Attempted new signature...

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by AlohaJoe » Sat May 25, 2019 5:28 am

K8ya wrote:
Sat May 25, 2019 5:07 am
That's quite surprising, in that case it doesn't seem worth it. I'll have some Exceling to do this weekend!
It's not that surprising when we take a step back and think about how 50 or so years (i.e. the time period an early retiree is going to be considering) is a really long time for things to compound, so tiny percentage differences end up resulting in large differences in final portfolio value.

Here's a post from EarlyRetirementNow that shows the differences: https://earlyretirementnow.com/2016/12/ ... depletion/
In contrast, over a 60-year horizon, there is only a relatively tiny distance between the dots and the 45-degree line, only about 0.19%. Lowering the withdrawal rate by less than one-fifth of a percentage point can make the difference between running dry after 60 years and capital preservation. That’s good news and bad news at the same time. If you care about leaving a bequest you don’t have to curb your consumption by much to ensure maintaining your portfolio value for 60 years. But the bad news is that over a 60-year horizon, small changes in the withdrawal rate can have huge consequences on final outcomes.
The differences tend to show up when you're much older, in your 70 or 80s and there's less time left for compounding to turn small differences into large differences.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by longinvest » Sat May 25, 2019 9:22 am

K8ya wrote:
Sat May 25, 2019 1:37 am
Curious if anyone has looked into early retirement without the desire to leave an estate/balance at the end of life.
Maybe the OP will like to learn about our wiki's Variable-percentage withdrawal (VPW) method, if retiring soon.

If still in the accumulation phase, the OP might want to consider the Variable savings rate (VSR) method.
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by JoMoney » Sat May 25, 2019 10:21 am

I expect a great many retirees plan to eat into their retirement nest-egg for their remaining life.
Doubtful that allowed them to "retire early", it's just what is necessary. Along with that, I expect social security is also highly relied upon to supplement what they have (or don't have).
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by rj342 » Sat May 25, 2019 1:12 pm

I do like some of the philosophy in Die Broke, about using your more of your wealth to make a difference, assuming you have a family, while you are alive, in ways that will help but not spoil them. Of course pulling that off - depending how much you have and your own security until death - is the hard part.

One flaw in all that, is the slowly increasing chance some nontrivial advances in longevity could happen in the next 20-30 years.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by Quaestner » Sat May 25, 2019 2:38 pm

Elbowman wrote:
Sat May 25, 2019 2:14 am
If you have no desire to leave an estate, annuities (SPIA) can be a good option once you are older.
+1. Those mortality credits will give you more spending power. You still need to think about inflation, though. One option is a deferred income annuity that doesn't kick in until you're a certain age - 80? 85?. If you use this, then you know your portfolio only needs to last a certain time. I would think spending down your portfolio would be easier with the certainty that there's income coming if you live long enough for the annuity to start.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by yousha » Sat May 25, 2019 2:45 pm

Wouldn't it be great if you could die broke!

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by randomguy » Sat May 25, 2019 6:53 pm

K8ya wrote:
Sat May 25, 2019 1:37 am

The next best thing I can think of is slowly letting the investment's value run out. Say one has a target to retire on $50,000/yr. He could choose to retire when achieving $60k but at a 5% withdrawal rate instead of the traditional 3-4%. Each year a paycut follows, creating some risk of it getting too low, but also allowing for retirement to come sooner since you're withdrawing 25+% more each year.
In the worst case, the person with 4% dies pretty much broke so it alone doesn't help. People talk about annuities but for a pre 65 year old, they don't increase SWR either. What you can do is spend more money when things go well.

If you want to do declining spending, that is fine but you would have to define how/when you are doing it and figure out what you can take out without getting too low. The person with say 1 milllion dollars could take 100k out and do something like spend 46k for 10 years and 36k afterwards. If things go well (i.e. they hit year 10 with say 1 million real) they could avoid the spending cut but they have to accept the possibility of it happening. There are a zillion other schemes out there. In general the more you want to spend early, the more you need to be willing to cut spending later.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by randomguy » Sat May 25, 2019 6:55 pm

yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
I would rather spend 10 million and die with 10 million than spend 5 million and die with 0. Dying broke isn't a goal to seek out. It might happen as a side effect of your plan.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by AerialWombat » Sat May 25, 2019 7:50 pm

One could make the assumption that after age 70, they only live off Social Security and pension if they have one. Then, retire when their portfolio is big enough to hit zero right when they start SS when it will be the max.

For my own situation, I only need my securities portfolio to supply the delta between current positive cash flow from rentals and my lifestyle needs until the time when my first three rentals are paid off. So, I only need my portfolio to last 25 years from now. Then, I can live pretty well just on the rental income. Then, a few years later, SS kicks in.
“Life doesn’t come with a warranty.” -Michael LeBoeuf

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by JoMoney » Sat May 25, 2019 8:41 pm

AerialWombat wrote:
Sat May 25, 2019 7:50 pm
One could make the assumption that after age 70, they only live off Social Security and pension if they have one. Then, retire when their portfolio is big enough to hit zero right when they start SS when it will be the max.

For my own situation, I only need my securities portfolio to supply the delta between current positive cash flow from rentals and my lifestyle needs until the time when my first three rentals are paid off. So, I only need my portfolio to last 25 years from now. Then, I can live pretty well just on the rental income. Then, a few years later, SS kicks in.
Relative to the OP's proposition though, if you're paying off the rentals you will have stored value in them that could have been tapped for earlier retirement.
I'm not saying you should sell them and spend down those assets before or after your other securities, but they are part of your wealth that could just as easily be spent and drawn down on to finance earlier retirement (or a higher level of spending for your remaining years).
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by Xrayman69 » Sat May 25, 2019 9:17 pm

yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
What occurs to debt if an individual dies with no assets. For example an individual has retirement “savings” and spends it down and liquidates all assets meaningful assets (real-estate, cars, jewelry etc) to pay for living expenses and is renting and using credit cards to pay for nursing home or medical expenses. The indvidual dies with credit card bills to creditors and was used for justifiable expenses that directly was for the individuals needs (as opposed to borrowing money from relatives).

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by whodidntante » Sat May 25, 2019 9:20 pm

Xrayman69 wrote:
Sat May 25, 2019 9:17 pm
yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
What occurs to debt if an individual dies with no assets. For example an individual has retirement “savings” and spends it down and liquidates all assets meaningful assets (real-estate, cars, jewelry etc) to pay for living expenses and is renting and using credit cards to pay for nursing home or medical expenses. The indvidual dies with credit card bills to creditors and was used for justifiable expenses that directly was for the individuals needs (as opposed to borrowing money from relatives).
The creditors lose their money.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by Turbo29 » Sat May 25, 2019 9:24 pm

Too bad that one couldn't will their debts to someone else.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by JoMoney » Sat May 25, 2019 9:43 pm

Xrayman69 wrote:
Sat May 25, 2019 9:17 pm
yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
What occurs to debt if an individual dies with no assets. For example an individual has retirement “savings” and spends it down and liquidates all assets meaningful assets (real-estate, cars, jewelry etc) to pay for living expenses and is renting and using credit cards to pay for nursing home or medical expenses. The indvidual dies with credit card bills to creditors and was used for justifiable expenses that directly was for the individuals needs (as opposed to borrowing money from relatives).
Nobody else would be responsible for unsecured debts like a credit card. Presumably in your example all the debts would have to be "unsecured" because in your scenario there are no assets like a car or a house that might have a lien against it.
It would be difficult for a person with no income and no assets to borrow money.
If there are assets, those assets would be part of the estate left behind and the estate would have to settle those debts before there's anything left to go to other beneficiaries.

Some "Retirement Accounts" may not be part of an estate, and might transfer to the beneficiary outside of probate, bypassing creditors
https://www.thebalance.com/does-an-ira- ... ls-3505413

In some states, a relative might be responsible for paying the burial/cremation/etc.. costs of a dead person. I've heard of scenarios where this bit someone after their long estranged parent passed away.
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by SevenBridgesRoad » Sat May 25, 2019 10:15 pm

Let’s be clear on the difference between the words “die broke” and the same words with initial caps, “ Die Broke”, alluded to by RJ342, which is the title of a book and a philosophy promoted by the authors Levine and Pollan. There are lots of ways to die broke, none of them pleasant for Bogleheads or other people for that matter. The philosophy of Die Broke, however, has many desirable features of Bogleheadism.
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by bhsince87 » Sat May 25, 2019 10:55 pm

It's ridiculously simple to die broke.

But as they say with weight loss and other things, it's not easy.
Retirement: When you reach a point where you have enough. Or when you've had enough.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by ResearchMed » Sat May 25, 2019 11:01 pm

yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
Well, only sort of.

The real trick would be NOT to "go broke" a bit too soon...
That could be catastrophic.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by yousha » Sun May 26, 2019 7:30 am

SevenBridgesRoad wrote:
Sat May 25, 2019 10:15 pm
Let’s be clear on the difference between the words “die broke” and the same words with initial caps, “ Die Broke”, alluded to by RJ342, which is the title of a book and a philosophy promoted by the authors Levine and Pollan. There are lots of ways to die broke, none of them pleasant for Bogleheads or other people for that matter. The philosophy of Die Broke, however, has many desirable features of Bogleheadism.
Yes, I was thinking of that Book.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by scottinmet » Sun May 26, 2019 7:50 am

AerialWombat wrote:
Sat May 25, 2019 7:50 pm
One could make the assumption that after age 70, they only live off Social Security and pension if they have one. Then, retire when their portfolio is big enough to hit zero right when they start SS when it will be the max.

For my own situation, I only need my securities portfolio to supply the delta between current positive cash flow from rentals and my lifestyle needs until the time when my first three rentals are paid off. So, I only need my portfolio to last 25 years from now. Then, I can live pretty well just on the rental income. Then, a few years later, SS kicks in.
To do this the safest way to ensure a $0 end of life balance would be to put all assets into cd's or short term treasuries and then withdraw using something like an RMD table. If Social Security and pensions alone weren't enough to cover expenses at age 70 and beyond, you would have to also invest in a deferred annuity to make up the difference.

Then you would only have to worry about pesky inheritances that you didn't foresee in the planning stages.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by willthrill81 » Sun May 26, 2019 9:34 am

If you definitely want to be broke at the end of your life, there is only method that doesn't involve suicide which I'm aware of: place all of your assets into a lifetime annuity.

However, no one I've heard of actually recommends that anyone actually do that, for several reasons. First, you might have spending needs which require more immediate cash flow than you're getting from your annuity. Second, unless your annuity is linked with inflation, and only one company still offers such an annuity, the longer you live, the bigger the cut you're taking on in the form inflation reducing your spending power. Third, an annuity is not quite the 'sure thing' that many believe it to be; if your annuity provider goes bankrupt, your state's guaranty association will step in to cover the annuity's payments to you, but there are limits to how much they will cover, and the limits are often relatively small. Also, there is a chance that your state's guaranty association might become insolvent itself and incapable of covering your annuity payments.

In the past, Vanguard has recommended that retirees use no more than about 20% of their portfolio to buy an annuity.
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by snackdog » Sun May 26, 2019 10:09 am

Best approach is to minimize expenses to match SS income, then you can spend your savings by the time you reach 70. Anything left over is gravy.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by yousha » Sun May 26, 2019 10:12 am

willthrill81 wrote:
Sun May 26, 2019 9:34 am
If you definitely want to be broke at the end of your life, there is only method that doesn't involve suicide which I'm aware of: place all of your assets into a lifetime annuity.

However, no one I've heard of actually recommends that anyone actually do that, for several reasons. First, you might have spending needs which require more immediate cash flow than you're getting from your annuity. Second, unless your annuity is linked with inflation, and only one company still offers such an annuity, the longer you live, the bigger the cut you're taking on in the form inflation reducing your spending power. Third, an annuity is not quite the 'sure thing' that many believe it to be; if your annuity provider goes bankrupt, your state's guaranty association will step in to cover the annuity's payments to you, but there are limits to how much they will cover, and the limits are often relatively small. Also, there is a chance that your state's guaranty association might become insolvent itself and incapable of covering your annuity payments.

In the past, Vanguard has recommended that retirees use no more than about 20% of their portfolio to buy an annuity.
Which Company sells an annuity that is linked to inflation

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by willthrill81 » Sun May 26, 2019 10:22 am

yousha wrote:
Sun May 26, 2019 10:12 am
willthrill81 wrote:
Sun May 26, 2019 9:34 am
If you definitely want to be broke at the end of your life, there is only method that doesn't involve suicide which I'm aware of: place all of your assets into a lifetime annuity.

However, no one I've heard of actually recommends that anyone actually do that, for several reasons. First, you might have spending needs which require more immediate cash flow than you're getting from your annuity. Second, unless your annuity is linked with inflation, and only one company still offers such an annuity, the longer you live, the bigger the cut you're taking on in the form inflation reducing your spending power. Third, an annuity is not quite the 'sure thing' that many believe it to be; if your annuity provider goes bankrupt, your state's guaranty association will step in to cover the annuity's payments to you, but there are limits to how much they will cover, and the limits are often relatively small. Also, there is a chance that your state's guaranty association might become insolvent itself and incapable of covering your annuity payments.

In the past, Vanguard has recommended that retirees use no more than about 20% of their portfolio to buy an annuity.
Which Company sells an annuity that is linked to inflation
I believe that Principal is the only one left who does.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by yousha » Sun May 26, 2019 10:49 am

willthrill81 wrote:
Sun May 26, 2019 10:22 am
yousha wrote:
Sun May 26, 2019 10:12 am
willthrill81 wrote:
Sun May 26, 2019 9:34 am
If you definitely want to be broke at the end of your life, there is only method that doesn't involve suicide which I'm aware of: place all of your assets into a lifetime annuity.

However, no one I've heard of actually recommends that anyone actually do that, for several reasons. First, you might have spending needs which require more immediate cash flow than you're getting from your annuity. Second, unless your annuity is linked with inflation, and only one company still offers such an annuity, the longer you live, the bigger the cut you're taking on in the form inflation reducing your spending power. Third, an annuity is not quite the 'sure thing' that many believe it to be; if your annuity provider goes bankrupt, your state's guaranty association will step in to cover the annuity's payments to you, but there are limits to how much they will cover, and the limits are often relatively small. Also, there is a chance that your state's guaranty association might become insolvent itself and incapable of covering your annuity payments.

In the past, Vanguard has recommended that retirees use no more than about 20% of their portfolio to buy an annuity.
Which Company sells an annuity that is linked to inflation
I believe that Principal is the only one left who does.
Thanks.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by SevenBridgesRoad » Sun May 26, 2019 11:05 am

yousha wrote:
Sun May 26, 2019 10:49 am
willthrill81 wrote:
Sun May 26, 2019 10:22 am
yousha wrote:
Sun May 26, 2019 10:12 am
willthrill81 wrote:
Sun May 26, 2019 9:34 am
If you definitely want to be broke at the end of your life, there is only method that doesn't involve suicide which I'm aware of: place all of your assets into a lifetime annuity.

However, no one I've heard of actually recommends that anyone actually do that, for several reasons. First, you might have spending needs which require more immediate cash flow than you're getting from your annuity. Second, unless your annuity is linked with inflation, and only one company still offers such an annuity, the longer you live, the bigger the cut you're taking on in the form inflation reducing your spending power. Third, an annuity is not quite the 'sure thing' that many believe it to be; if your annuity provider goes bankrupt, your state's guaranty association will step in to cover the annuity's payments to you, but there are limits to how much they will cover, and the limits are often relatively small. Also, there is a chance that your state's guaranty association might become insolvent itself and incapable of covering your annuity payments.

In the past, Vanguard has recommended that retirees use no more than about 20% of their portfolio to buy an annuity.
Which Company sells an annuity that is linked to inflation
I believe that Principal is the only one left who does.
Thanks.
New York Life and The Guardian both offer an inflation adjustment option.
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by GerryL » Sun May 26, 2019 2:43 pm

whodidntante wrote:
Sat May 25, 2019 9:20 pm
Xrayman69 wrote:
Sat May 25, 2019 9:17 pm
yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
What occurs to debt if an individual dies with no assets. For example an individual has retirement “savings” and spends it down and liquidates all assets meaningful assets (real-estate, cars, jewelry etc) to pay for living expenses and is renting and using credit cards to pay for nursing home or medical expenses. The indvidual dies with credit card bills to creditors and was used for justifiable expenses that directly was for the individuals needs (as opposed to borrowing money from relatives).
The creditors lose their money.
Don't forget that getting into a rental (if you need to move) or into a nursing home could very well involve a credit check. Wouldn't be much fun to get to the point where you have been spending down and taking on debt only to find that your housing/care options are very limited.

EnjoyIt
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by EnjoyIt » Sun May 26, 2019 5:02 pm

randomguy wrote:
Sat May 25, 2019 6:55 pm
yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
I would rather spend 10 million and die with 10 million than spend 5 million and die with 0. Dying broke isn't a goal to seek out. It might happen as a side effect of your plan.
I would not want to work long enough to reach $10 million. I would find that a waste of my life.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by Earl Lemongrab » Sun May 26, 2019 6:29 pm

Life is too indeterminate. I don't know if I will need long-term care or not. If I do, I don't like the plan of "run out the assets and go on Medicaid". I'd prefer to have the assets to go into a top facility.

If I have assets left when I go, my family gets the money. I like them, so it's okay by me.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by randomguy » Sun May 26, 2019 6:44 pm

EnjoyIt wrote:
Sun May 26, 2019 5:02 pm
randomguy wrote:
Sat May 25, 2019 6:55 pm
yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
I would rather spend 10 million and die with 10 million than spend 5 million and die with 0. Dying broke isn't a goal to seek out. It might happen as a side effect of your plan.
I would not want to work long enough to reach $10 million. I would find that a waste of my life.
The people in this example worked the same amount of time and saved the same amount. They just made different choices during retirement.

But feel free to cut the numbers in 1/10th if you want. It doesn't change point.

EnjoyIt
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by EnjoyIt » Sun May 26, 2019 7:54 pm

randomguy wrote:
Sun May 26, 2019 6:44 pm
EnjoyIt wrote:
Sun May 26, 2019 5:02 pm
randomguy wrote:
Sat May 25, 2019 6:55 pm
yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
I would rather spend 10 million and die with 10 million than spend 5 million and die with 0. Dying broke isn't a goal to seek out. It might happen as a side effect of your plan.
I would not want to work long enough to reach $10 million. I would find that a waste of my life.
The people in this example worked the same amount of time and saved the same amount. They just made different choices during retirement.

But feel free to cut the numbers in 1/10th if you want. It doesn't change point.
Huh, I think your math is off, or my brain is off. But something is definitely off. But I think I get the gist of what you are trying to say.

Luckily in life this does not have to be binary outcome. One can spend $9 million and die with $1 million. Personally I think we did it right if we die with maybe half of what we started with. I attribute this decrease with the cost of assistance during the last few years of life which I expect to be very expensive.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by randomguy » Sun May 26, 2019 9:24 pm

EnjoyIt wrote:
Sun May 26, 2019 7:54 pm
randomguy wrote:
Sun May 26, 2019 6:44 pm
EnjoyIt wrote:
Sun May 26, 2019 5:02 pm
randomguy wrote:
Sat May 25, 2019 6:55 pm
yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
I would rather spend 10 million and die with 10 million than spend 5 million and die with 0. Dying broke isn't a goal to seek out. It might happen as a side effect of your plan.
I would not want to work long enough to reach $10 million. I would find that a waste of my life.
The people in this example worked the same amount of time and saved the same amount. They just made different choices during retirement.

But feel free to cut the numbers in 1/10th if you want. It doesn't change point.
Huh, I think your math is off, or my brain is off. But something is definitely off. But I think I get the gist of what you are trying to say.

Luckily in life this does not have to be binary outcome. One can spend $9 million and die with $1 million. Personally I think we did it right if we die with maybe half of what we started with. I attribute this decrease with the cost of assistance during the last few years of life which I expect to be very expensive.
What math? I just gave the end values. Compare something like retiring a 50 (i.e. who wants to waste their life workings) and doing
a) investing 60/40, getting 8% returns (i.e. average returns), and ramping up the portfolio spending
b) buying an annuity that pays out 3% (your 50).

Over your 40-50 year time frame you will end up with numbers on the order I gave.

Again why do you care if you die broke? It is easy to die broke. What is hard is spending more money in a meaningful way (i.e. not writing a 5 million check the day before you die:)).

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Sandtrap
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by Sandtrap » Sun May 26, 2019 9:29 pm

duplicate
Wiki Bogleheads Wiki: Everything You Need to Know

EnjoyIt
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Re: How to retire early by targeting a low/zero balance at the end of life?ill

Post by EnjoyIt » Sun May 26, 2019 10:40 pm

randomguy wrote:
Sun May 26, 2019 9:24 pm
EnjoyIt wrote:
Sun May 26, 2019 7:54 pm
randomguy wrote:
Sun May 26, 2019 6:44 pm
EnjoyIt wrote:
Sun May 26, 2019 5:02 pm
randomguy wrote:
Sat May 25, 2019 6:55 pm


I would rather spend 10 million and die with 10 million than spend 5 million and die with 0. Dying broke isn't a goal to seek out. It might happen as a side effect of your plan.
I would not want to work long enough to reach $10 million. I would find that a waste of my life.
The people in this example worked the same amount of time and saved the same amount. They just made different choices during retirement.

But feel free to cut the numbers in 1/10th if you want. It doesn't change point.
Huh, I think your math is off, or my brain is off. But something is definitely off. But I think I get the gist of what you are trying to say.

Luckily in life this does not have to be binary outcome. One can spend $9 million and die with $1 million. Personally I think we did it right if we die with maybe half of what we started with. I attribute this decrease with the cost of assistance during the last few years of life which I expect to be very expensive.
What math? I just gave the end values. Compare something like retiring a 50 (i.e. who wants to waste their life workings) and doing
a) investing 60/40, getting 8% returns (i.e. average returns), and ramping up the portfolio spending
b) buying an annuity that pays out 3% (your 50).

Over your 40-50 year time frame you will end up with numbers on the order I gave.

Again why do you care if you die broke? It is easy to die broke. What is hard is spending more money in a meaningful way (i.e. not writing a 5 million check the day before you die:)).
Ahh, I see. I did not realize you were talking about an annuity.

I’m not worried about dying broke, but I am worried living another year while broke which is why I think success would be still having some money left over. Not a lot, just some.

Since I can’t predict our time of death, 50% of starting portfolio I think would be a reasonable success.

But yes, I agree that an annuity on everything is not my idea of a good plan though I can appreciate the desire to annuities some.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by Ron » Mon May 27, 2019 7:48 am

ResearchMed wrote:
Sat May 25, 2019 11:01 pm
yousha wrote:
Sat May 25, 2019 2:45 pm
Wouldn't it be great if you could die broke!
Well, only sort of.

The real trick would be NOT to "go broke" a bit too soon...
That could be catastrophic.

RM
I've always said that I would rather die with money than live without it.

- Ron

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willthrill81
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Re: How to retire early by targeting a low/zero balance at the end of life?ill

Post by willthrill81 » Mon May 27, 2019 10:06 am

EnjoyIt wrote:
Sun May 26, 2019 10:40 pm
randomguy wrote:
Sun May 26, 2019 9:24 pm
EnjoyIt wrote:
Sun May 26, 2019 7:54 pm
randomguy wrote:
Sun May 26, 2019 6:44 pm
EnjoyIt wrote:
Sun May 26, 2019 5:02 pm


I would not want to work long enough to reach $10 million. I would find that a waste of my life.
The people in this example worked the same amount of time and saved the same amount. They just made different choices during retirement.

But feel free to cut the numbers in 1/10th if you want. It doesn't change point.
Huh, I think your math is off, or my brain is off. But something is definitely off. But I think I get the gist of what you are trying to say.

Luckily in life this does not have to be binary outcome. One can spend $9 million and die with $1 million. Personally I think we did it right if we die with maybe half of what we started with. I attribute this decrease with the cost of assistance during the last few years of life which I expect to be very expensive.
What math? I just gave the end values. Compare something like retiring a 50 (i.e. who wants to waste their life workings) and doing
a) investing 60/40, getting 8% returns (i.e. average returns), and ramping up the portfolio spending
b) buying an annuity that pays out 3% (your 50).

Over your 40-50 year time frame you will end up with numbers on the order I gave.

Again why do you care if you die broke? It is easy to die broke. What is hard is spending more money in a meaningful way (i.e. not writing a 5 million check the day before you die:)).
Ahh, I see. I did not realize you were talking about an annuity.

I’m not worried about dying broke, but I am worried living another year while broke which is why I think success would be still having some money left over. Not a lot, just some.

Since I can’t predict our time of death, 50% of starting portfolio I think would be a reasonable success.

But yes, I agree that an annuity on everything is not my idea of a good plan though I can appreciate the desire to annuities some.
You might be interested in using the time value of money formula to determine withdrawals. You can change the remaining years of withdrawals to whatever you want at any time (e.g. you might start at age 95 but then reduce it to 85 based on your health), and you can easily factor in how much, if anything, you want to leave behind at the end of the period.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

EnjoyIt
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by EnjoyIt » Mon May 27, 2019 2:41 pm

Thanks for the link
When I am in the actual withdrawal phase we will be using some kind of variable strategy. I will look at that link to make myself familiar.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by The Wizard » Mon May 27, 2019 4:23 pm

willthrill81 wrote:
Sun May 26, 2019 9:34 am
If you definitely want to be broke at the end of your life, there is only method that doesn't involve suicide which I'm aware of: place all of your assets into a lifetime annuity... Look
Actually, there's more to it than that.
You need to SPEND all that income each year, not reinvest any of it in your taxable account.
If your annual expenses are $80k per year and your income from annuities and SS are $150k per year, then what to do?
Increased charitable contributions will work for sure...
Attempted new signature...

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by The Wizard » Mon May 27, 2019 4:34 pm

willthrill81 wrote:
Sun May 26, 2019 9:34 am
...In the past, Vanguard has recommended that retirees use no more than about 20% of their portfolio to buy an annuity.
Good for Vanguard, but I don't agree.
Annuitization amounts should be based more on your Basic Expenses. If they are $60k per year, then annuitize enough to get to that, SS included.

Note: I am not a poster child for my own advice. I annuitized a chunk more than that formula, to get net income similar to what I had in working years...
Attempted new signature...

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by rj342 » Mon May 27, 2019 4:37 pm

Turbo29 wrote:
Sat May 25, 2019 9:24 pm
Too bad that one couldn't will their debts to someone else.
Thank God my father who passed in 2017 couldn't! He left a mess as it was.

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willthrill81
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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by willthrill81 » Mon May 27, 2019 5:24 pm

The Wizard wrote:
Mon May 27, 2019 4:34 pm
willthrill81 wrote:
Sun May 26, 2019 9:34 am
...In the past, Vanguard has recommended that retirees use no more than about 20% of their portfolio to buy an annuity.
Good for Vanguard, but I don't agree.
Annuitization amounts should be based more on your Basic Expenses. If they are $60k per year, then annuitize enough to get to that, SS included.

Note: I am not a poster child for my own advice. I annuitized a chunk more than that formula, to get net income similar to what I had in working years...
As long as you have adequate liquidity after buying the annuity, that's a reasonable approach.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by MnD » Tue May 28, 2019 10:23 am

K8ya wrote:
Sat May 25, 2019 1:37 am
The next best thing I can think of is slowly letting the investment's value run out. Say one has a target to retire on $50,000/yr. He could choose to retire when achieving $60k but at a 5% withdrawal rate instead of the traditional 3-4%. Each year a paycut follows, creating some risk of it getting too low, but also allowing for retirement to come sooner since you're withdrawing 25+% more each year.
Where are you getting the idea that 5% withdrawal rate is going to result in "paycuts" and run out a portfolio? Since you are assuming a variable withdrawal rate, 5% of portfolio balance has a worst -case portfolio depletion characteristic of around a 3% inflation-adjusted SWR.

Also 3-4% is not the "traditional" range if you are looking at the 3% end of it. That's primarily an extremely pessimistic "worst and ever seen worst case" that's gotten traction here. 3% has a terrible utility of converting wealth to retirement income and there's almost no point in investing anything in the stock market if 3% is your aspirational retirement income and/or pessimistic viewpoint for sustainable withdrawals in retirement. It's good for richest person in the graveyard contests and that's about it. Investing in the broad styles that are promoted here (balanced portfolio of equities and investment grade bonds) is a waste of time and unnecessary risk if you think 3% is an appropriate SWR.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by K8ya » Wed May 29, 2019 12:16 am

MnD wrote:
Tue May 28, 2019 10:23 am

Where are you getting the idea that 5% withdrawal rate is going to result in "paycuts" and run out a portfolio? Since you are assuming a variable withdrawal rate, 5% of portfolio balance has a worst -case portfolio depletion characteristic of around a 3% inflation-adjusted SWR.

Also 3-4% is not the "traditional" range if you are looking at the 3% end of it. That's primarily an extremely pessimistic "worst and ever seen worst case" that's gotten traction here. 3% has a terrible utility of converting wealth to retirement income and there's almost no point in investing anything in the stock market if 3% is your aspirational retirement income and/or pessimistic viewpoint for sustainable withdrawals in retirement. It's good for richest person in the graveyard contests and that's about it. Investing in the broad styles that are promoted here (balanced portfolio of equities and investment grade bonds) is a waste of time and unnecessary risk if you think 3% is an appropriate SWR.
I sort of agree that a 3% withdrawal rate is probably overly conservative. But with estimates better conservative than aggressive.

I was refering to a constant withdrawal rate. I believe an 80/20 portfolio would return about 7.2% long term annual average. So if the portfolio is 60/40 or even heavier in bonds it should dip below a 7% return. If inflation deducts 3% then 4% or a little less, is left. Withdrawing 5% should deduct about 1% of the account value per year, thereafter.

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Re: How to retire early by targeting a low/zero balance at the end of life?

Post by randomguy » Wed May 29, 2019 12:59 am

K8ya wrote:
Wed May 29, 2019 12:16 am
MnD wrote:
Tue May 28, 2019 10:23 am

Where are you getting the idea that 5% withdrawal rate is going to result in "paycuts" and run out a portfolio? Since you are assuming a variable withdrawal rate, 5% of portfolio balance has a worst -case portfolio depletion characteristic of around a 3% inflation-adjusted SWR.

Also 3-4% is not the "traditional" range if you are looking at the 3% end of it. That's primarily an extremely pessimistic "worst and ever seen worst case" that's gotten traction here. 3% has a terrible utility of converting wealth to retirement income and there's almost no point in investing anything in the stock market if 3% is your aspirational retirement income and/or pessimistic viewpoint for sustainable withdrawals in retirement. It's good for richest person in the graveyard contests and that's about it. Investing in the broad styles that are promoted here (balanced portfolio of equities and investment grade bonds) is a waste of time and unnecessary risk if you think 3% is an appropriate SWR.
I sort of agree that a 3% withdrawal rate is probably overly conservative. But with estimates better conservative than aggressive.

I was refering to a constant withdrawal rate. I believe an 80/20 portfolio would return about 7.2% long term annual average. So if the portfolio is 60/40 or even heavier in bonds it should dip below a 7% return. If inflation deducts 3% then 4% or a little less, is left. Withdrawing 5% should deduct about 1% of the account value per year, thereafter.
https://personal.vanguard.com/us/insigh ... ns?lang=en

60/40 has returned 8.8% historically since 1926. Obviously you are also looking at some huge income swings as your portfolio going down 20% or up 15%+ aren't exactly uncommon events.

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