I'm in the "annuity" camp, and I plan to use "Cut Thoat's Famous" method when I stop working at 66-ish.David Jay wrote: ↑Wed Jul 31, 2019 8:43 pm... It is not really about the math, it is about how you view the program:
View A (I call this the “ROI” view): I have been paying into SS my entire working life and I want to make every effort to recoup those funds. Since the date of my demise is unknown, the sooner I file the more likely it is that I can get most of my money back if I pass at a young age.
View B (I call this the “annuity” view): The date of my (“our”, if married) demise is unknown, I (one of us) may live to be 100. I want to assure the maximum income stream into my (our) golden years.
Again, neither view is “right”, but where you start determines where you end up.
One point I don't get is the emphasis on no inheritance with this method. I regard the method primarily as a "measuring device" to determine how much extra one would have to distribute from the portfolio to roughly equalize income before and after taking SS at 70.
In my case the total "Cut Throat distribution" when I stop working is around 10 percent of the portfolio (into a CD ladder or just a dodgy internet bank high yield savings account). My portfolio distribution plan at age 70 is a combination of fixed % of portfolio and Taylor's "withdraw more if your portfolio does well and less if it doesn't." I hope to leave enough at the end to fill family members with warm feelings but not necessarily change lives.
PS. My plan includes hefty Roth conversions in those waiting years. The bridge-fund money is coming out of taxable to make room under the next tax rate threshold.