? present value of soc sec and pension

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

? present value of soc sec and pension

Post by duffer » Thu Feb 19, 2015 9:28 pm

I know there have been threads about whether social security and pensions should be valued as part of an asset allocation in the way that bonds are. I am not asking about that.

Rather, I would like to know the following:

How should one estimate the present cash value of the following three assets:

1. a joint life pension of 55k held by a couple now each aged 65 years, (with a COLA on first $18,000 of up to 3% based on 50% of the CPI).

2. social security entitlement of $30,000 annually beginning two years from now (female, age 67).

3. social security entitlement of $40,000 annually beginning 4 years from now (male, age 70).

Thanks for any help putting a present cash value on these.
Last edited by duffer on Thu Feb 19, 2015 9:36 pm, edited 1 time in total.

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Re: ? present value of soc sec and pension

Post by Rodc » Thu Feb 19, 2015 9:34 pm

Go to an insurance site. Find an insurance product that is close to each option. Get a quote.
with a COLA on first $18,000 of up to 3% based on 50% of the CPI
Are you in MA?
Last edited by Rodc on Thu Feb 19, 2015 9:35 pm, edited 1 time in total.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

stan1
Posts: 6008
Joined: Mon Oct 08, 2007 4:35 pm

Re: ? present value of soc sec and pension

Post by stan1 » Thu Feb 19, 2015 9:35 pm

What year are you each going to die in? To determine present value you need to know how many years you will get paid pension/SS benefits. Most people can't use actuarial tables because there's no such thing as an "average" person.

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Fri Feb 20, 2015 6:07 pm

stan1 wrote:What year are you each going to die in? To determine present value you need to know how many years you will get paid pension/SS benefits. Most people can't use actuarial tables because there's no such thing as an "average" person.

Assume age 92 for each.

The Wizard
Posts: 12359
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: ? present value of soc sec and pension

Post by The Wizard » Fri Feb 20, 2015 6:44 pm

stan1 wrote:What year are you each going to die in? To determine present value you need to know how many years you will get paid pension/SS benefits. Most people can't use actuarial tables because there's no such thing as an "average" person.
That's basically incorrect.
You DO use expected remaining lifespan from somewhere, either gender adjusted or not.
But yes you can play with the numbers, adjusting up or down by X years to see what happens to the Present Value...
Attempted new signature...

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Does this make sense?

Post by duffer » Fri Feb 20, 2015 7:46 pm

So, anyway, this is how far I have been able to get on my own, using the immediateannuities.com web site:

1. a 55k joint life annuity for a male and female age 65, beginning in one month, can be purchased for about $1,250,000. This is substantially equivalent to the 55k pension, except the pension has some limited COLA benefit (up to 3% on $18,000, based on 50% of the CPI each year).

2. a single life annuity paying 30k annually during the lifetime of a 65 year old female and beginning in two years can be purchased for $425,000. this is roughly equivalent to the 30k social security beginning in 2 years, except that the soc sec has substantial inflation protection).

3. a single life annuity paying 40k annually during the lifetime of a 65 year old male and beginning in five years can be purchased for $450,000. This is roughly equivalent to the 40k social security beginning in five years, except that the soc sec has substantial inflation protection).

Does this seem about right?

If so, we as a couple have approximately $2,225,000 "invested" in fixed income assets. With $2,750,000 invested in equities, that would give us a 55% equities/45% fixed income distribution.

Does this analysis make sense?

Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 8:41 pm
Location: Nowhere

Re: Does this make sense?

Post by Leeraar » Fri Feb 20, 2015 8:04 pm

duffer wrote:So, anyway, this is how far I have been able to get on my own, using the immediateannuities.com web site:

1. a 55k joint life annuity for a male and female age 65, beginning in one month, can be purchased for about $1,250,000. This is substantially equivalent to the 55k pension, except the pension has some limited COLA benefit (up to 3% on $18,000, based on 50% of the CPI each year).

2. a single life annuity paying 30k annually during the lifetime of a 65 year old female and beginning in two years can be purchased for $425,000. this is roughly equivalent to the 30k social security beginning in 2 years, except that the soc sec has substantial inflation protection).

3. a single life annuity paying 40k annually during the lifetime of a 65 year old male and beginning in five years can be purchased for $450,000. This is roughly equivalent to the 40k social security beginning in five years, except that the soc sec has substantial inflation protection).

Does this seem about right?

If so, we as a couple have approximately $2,225,000 "invested" in fixed income assets. With $2,750,000 invested in equities, that would give us a 55% equities/45% fixed income distribution.

Does this analysis make sense?
Yes, but what are you going to do about it? You can't sell your SS or pensions.

The better approach, in my opinion, is to decide whether you have enough income to provide for your minimum needs. If not, use that marginal income requirement to help decide your asset allocation. Or, even better, purchase annuities to cover that margin and do whatever you like with your remaining investable assets.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: Does this make sense?

Post by duffer » Fri Feb 20, 2015 9:50 pm

Leeraar wrote:
Yes, but what are you going to do about it? You can't sell your SS or pensions.

The better approach, in my opinion, is to decide whether you have enough income to provide for your minimum needs. If not, use that marginal income requirement to help decide your asset allocation. Or, even better, purchase annuities to cover that margin and do whatever you like with your remaining investable assets.

L.

Actually, I have already done that. The two social securities plus the joint life pension would cover necessary expenses nicely. That would leave about 2.75MM in equities. Thus, necessities would come from the "fixed income" portion of my assets and "extra spending" would come from the equities portion.

I plan to create a pool of about 200k of "extra spending money" in some stable, liquid form to draw down from in poor market years, so this is a kind of asset allocation restricted to the investable/equity portion of my portfolio (as you suggest, though it is not directed at serving necessities but at preserving principal). In this scenario, if stocks were to grow a lot, I would see no need to acquire more fixed income; if stocks entered a longish bear market, I would draw down on the 200k to avoid excessively depleting stocks during a recession or downturn while also limiting my "extra spending" in those years.

Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 8:41 pm
Location: Nowhere

Re: ? present value of soc sec and pension

Post by Leeraar » Sat Feb 21, 2015 12:17 am

I am more or less in the same position as you, with sufficient assured fixed income from SS and annuities. Except, the remainder (my investable assets) is invested 50/50.

I don't need the excitement, nor the potential return, of a 100% allocation to equities.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

LeeMKE
Posts: 1767
Joined: Mon Oct 14, 2013 9:40 pm

Re: ? present value of soc sec and pension

Post by LeeMKE » Sat Feb 21, 2015 12:28 am

I'm in a similar situation except that our pension has no COLA. I'm allocating the "investable" assets 80/20 stocks/bonds because 1) except for 4 years, the annuities cover living expenses, 2) I'm working on long term protection from inflation by staying heavy in stocks, and 3) I'm using pretty long life expectancies because at this point, we have no history that tells us otherwise so one or both of us might live into the late 90s.

Your plan sounds good to me!
The mightiest Oak is just a nut who stayed the course.

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Sat Feb 21, 2015 7:15 am

Leeraar wrote:I am more or less in the same position as you, with sufficient assured fixed income from SS and annuities. Except, the remainder (my investable assets) is invested 50/50.

I don't need the excitement, nor the potential return, of a 100% allocation to equities.

L.
I can see why you would do that, though, depending on the amount of your investable assets, you probably come out with a very conservative allocation overall, more so than 50/50.

I have strong bequeathal motivations, so I would like to see my principal continue to expand. If one or both of us lives into our nineties, as is likely, that gives the principal a long time to grow. It would be good to have the funds to enhance the choices and security of children and grandchildren along the way.

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Sat Feb 21, 2015 7:43 am

LeeMKE wrote:I'm in a similar situation except that our pension has no COLA. I'm allocating the "investable" assets 80/20 stocks/bonds because 1) except for 4 years, the annuities cover living expenses, 2) I'm working on long term protection from inflation by staying heavy in stocks, and 3) I'm using pretty long life expectancies because at this point, we have no history that tells us otherwise so one or both of us might live into the late 90s.

Your plan sounds good to me!
Yes, inflation is something that I am concerned about also, and I also have to wait a few years for the full social security payments to kick in if I want to maximize the benefits (I assume that is also why for you there are four years when you are not funded on necessities by your fixed assets). The COLA in our pension is pretty limited: Up to 3%, based on 50% of the CPI, on the first $18,000 only, and the adjustment not starting until four years from now. SS is inflation protected. We also have a pretty good shot at long life expectancies, and I want to help and bequeath to my children, AND I want to not give up anything from our present way of living, or possibly even spend more via travel, especially in the early years, which is exactly when we will be most subject to sequence of returns risk.

So, all of this makes me want to keep a lot in equities, as you do also, and to cultivate an attitude of flexibility on spending, especially in the early years. Expensive travel would be nice, but less expensive travel is very nice also.

All this also makes me hesitant to actually retire. I think about working an extra year or two, and I also think about cutting back to a three-day week with lots of long vacations rather than retiring outright.

I think there is a good chance that we are still in the early stages (the first quarter) of a secular bull market. Here is a link to Jurrien Timmer's discussion of this possibility https://familyoffice.fidelity.com/app/l ... onType=pdf. While there are obviously no guarantees on something like that, and secular bulls always include down or flat years, it is a very nice possibility to contemplate. Staying heavy in equities (in a responsible and thoughtful way), while still protecting the necessary expenditures both through SS and pension and through spending flexibility, takes advantage of the possibility of a secular bull.

It also makes me feel good to contemplate a long secular bull! From 1871 to 2013, their average length was 21 years.

Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 8:41 pm
Location: Nowhere

Re: ? present value of soc sec and pension

Post by Leeraar » Sat Feb 21, 2015 8:17 am

duffer,

You should look at delaying your claim on SS until age 70. It's a very good deal. It will provide inflation-protected income with very low risk.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Sat Feb 21, 2015 8:43 am

Leeraar wrote:duffer,

You should look at delaying your claim on SS until age 70. It's a very good deal. It will provide inflation-protected income with very low risk.

L.
Yes, that is my plan--thus the 4-5 year delay before SS in my original query. I actually have worked out a pretty good claiming strategy. I tried many of the software analyses and read a lot about claiming strategies. Financial Engines was the software that gave me what I think is the best analysis for our situation.

The cost of delaying, of course, is that I either have to work longer or, if I retire before then as i expect to, draw down from my equities to cover the window before SS fully kicks in. If those are good years in the market, all is fine. If those are bad years in equities, the calculation on starting SS gets a bit more nuanced.

I wish the market would just announce at the beginning of the year whether it is going to be a good year or a bad year. :wink:

User avatar
Doc
Posts: 8685
Joined: Sat Feb 24, 2007 1:10 pm
Location: Two left turns from Larry

Re: ? present value of soc sec and pension

Post by Doc » Sat Feb 21, 2015 9:54 am

duffer wrote:How should one estimate the present cash value of the following three assets:
The short answer is that you use the net present value equations.
The Wizard wrote:That's basically incorrect.
You DO use expected remaining lifespan from somewhere, either gender adjusted or not.
But yes you can play with the numbers, adjusting up or down by X years to see what happens to the Present Value...
For the long answer you don't change the length of the investment (the years) you instead change the discount rate (aka the hurdle rate). You typically would use a high hurdle rate - say 10%. This has the effect of discounting those far out terms in the equation so they don't have much weight and therefore you don't need to worry that much about how long you will live. This method is good for ranking alternative investments or industrial projects. It is not a good method for calculating exactly how much the net present value actually is because as the Wizard noted you don't know the number of years and none of us knows what the average "really truly" value we should use for the average discount rate over those indeterminate years.
A scientist looks for THE answer to a problem, an engineer looks for AN answer and lawyers ONLY have opinions. Investing is not a science.

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Re: ? present value of soc sec and pension

Post by Rodc » Sat Feb 21, 2015 10:25 am

The value of $X a year with and without COLA is substantial. So not sure your estimates above are very accurate.

I don't see the point of this at all.

You have your basics covered by SS and other fixed income sources.

You have some amount in investments to cover discretionary expenses. Set an allocation and withdrawal plan that matches your risk tolerance and desires that balance more potential income against the risk of achieving a lower income (benefit vs risk) vis-a-vis your desired discretionary income.

There is no need to estimate NPV and some pretend "allocation". Indeed I think there is no value in doing so. Solve the real problem.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

YDNAL
Posts: 13774
Joined: Tue Apr 10, 2007 4:04 pm
Location: Biscayne Bay

Re: ? present value of soc sec and pension

Post by YDNAL » Sat Feb 21, 2015 10:35 am

duffer wrote:I know there have been threads about whether social security and pensions should be valued as part of an asset allocation in the way that bonds are. I am not asking about that.

Rather, I would like to know the following:

How should one estimate the present cash value of the following three assets:

1. a joint life pension of 55k held by a couple now each aged 65 years, (with a COLA on first $18,000 of up to 3% based on 50% of the CPI).

2. social security entitlement of $30,000 annually beginning two years from now (female, age 67).

3. social security entitlement of $40,000 annually beginning 4 years from now (male, age 70).

Thanks for any help putting a present cash value on these.
You likely got answers to compute NPV.

That said, and recognizing "you are not asking about that," what you do with this information and do with savings is a personal choice based on personal circumstances. There is NO standard answer. What truly matters is to determine if $125K in pension/SS is sufficient for what you need to cover, and determine what your savings are meant to cover and how to develop a plan to get you there.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 8:41 pm
Location: Nowhere

Re: ? present value of soc sec and pension

Post by Leeraar » Sat Feb 21, 2015 11:44 am

I think this is ill-advised. You are planning to delay SS using funds that are 100% invested in equities.

Bill Bernstein said at the 2013 Bogleheds Conference, "Count SS as a bond or not, but if you get a different answer you have an accounting problem, not an investing problem." You can put the NPV on one side of the ledger, or the income on the other side, but not both.

Take $120,000, put it in a short-term bond fund, and use that to supplement your income while you delay SS.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Sat Feb 21, 2015 2:28 pm

Leeraar wrote:I think this is ill-advised. You are planning to delay SS using funds that are 100% invested in equities.

Bill Bernstein said at the 2013 Bogleheds Conference, "Count SS as a bond or not, but if you get a different answer you have an accounting problem, not an investing problem." You can put the NPV on one side of the ledger, or the income on the other side, but not both.

Take $120,000, put it in a short-term bond fund, and use that to supplement your income while you delay SS.

L.
Remember that the spending from the equity side is discretionary. Also, my situation is not quite as dichotomous as I may have suggested. I am probably not going to retire for 2 years (at age 67). I will begin taking spousal benefits in one year, at age 66. My wife will begin benefits in two years, at age 67. So, in two years, when retirement occurs, we will already be drawing her SS plus about a third of my eventual age-70 benefits. Combine that with the discretionary nature of the spending, which can be adjusted to avoid depleting equities during any bad years in this small window. And add in the possibility of my continuing to work a couple of days a week for about half the year. So the draw on equities would not be very great.

Caduceus
Posts: 1729
Joined: Mon Sep 17, 2012 1:47 am

Re: ? present value of soc sec and pension

Post by Caduceus » Sun Feb 22, 2015 5:11 am

No, you cannot just use the net present value formulas without incorporating the probability of what the actual cash flows will be. The easiest way is to look for commercial annuity calculations that would produce the kind of cash flows that you will be getting at, and if they are deferred annuities, to discount the NPV at time T = n to the present day.

Another way of looking at it is to consider the discounted payback period. If you have a discount rate in mind, say, 5%, you can easily calculate the length of time that you will need to stay alive before the NPV investment of the initial investments and the subsequent payouts is 0.

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Sun Feb 22, 2015 5:17 am

Caduceus wrote:No, you cannot just use the net present value formulas without incorporating the probability of what the actual cash flows will be. The easiest way is to look for commercial annuity calculations that would produce the kind of cash flows that you will be getting at, and if they are deferred annuities, to discount the NPV at time T = n to the present day.

Another way of looking at it is to consider the discounted payback period. If you have a discount rate in mind, say, 5%, you can easily calculate the length of time that you will need to stay alive before the NPV investment of the initial investments and the subsequent payouts is 0.
That's exactly what I did do to get my estimates--use annuity prices for the payouts I have in hand. I assume that the annuity price is simply the net present value with assumptions made about payout period on the basis of average life expectancy. I may be using the term NPV imprecisely, but the annuity prices/estimates are much closer to what I actually need here.

protagonist
Posts: 5437
Joined: Sun Dec 26, 2010 12:47 pm

Re: ? present value of soc sec and pension

Post by protagonist » Sun Feb 22, 2015 9:45 am

Rodc wrote:Go to an insurance site. Find an insurance product that is close to each option. Get a quote.
with a COLA on first $18,000 of up to 3% based on 50% of the CPI
Are you in MA?
I'm curious why you asked this, Rodc. Are MA residents in some sort of unique situation?

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Re: ? present value of soc sec and pension

Post by Rodc » Sun Feb 22, 2015 9:58 am

protagonist wrote:
Rodc wrote:Go to an insurance site. Find an insurance product that is close to each option. Get a quote.
with a COLA on first $18,000 of up to 3% based on 50% of the CPI
Are you in MA?
I'm curious why you asked this, Rodc. Are MA residents in some sort of unique situation?
MA state pensions behave this way (or close, I'd have to go double check to be sure it is precisely like this). I presume it is rare that pensions would have this particular condition specifically tied to the first $18,000. But perhaps not.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

vested1
Posts: 1600
Joined: Wed Jan 04, 2012 4:20 pm

Re: Does this make sense?

Post by vested1 » Sun Feb 22, 2015 10:23 am

Leeraar wrote:
duffer wrote:So, anyway, this is how far I have been able to get on my own, using the immediateannuities.com web site:

1. a 55k joint life annuity for a male and female age 65, beginning in one month, can be purchased for about $1,250,000. This is substantially equivalent to the 55k pension, except the pension has some limited COLA benefit (up to 3% on $18,000, based on 50% of the CPI each year).

2. a single life annuity paying 30k annually during the lifetime of a 65 year old female and beginning in two years can be purchased for $425,000. this is roughly equivalent to the 30k social security beginning in 2 years, except that the soc sec has substantial inflation protection).

3. a single life annuity paying 40k annually during the lifetime of a 65 year old male and beginning in five years can be purchased for $450,000. This is roughly equivalent to the 40k social security beginning in five years, except that the soc sec has substantial inflation protection).

Does this seem about right?

If so, we as a couple have approximately $2,225,000 "invested" in fixed income assets. With $2,750,000 invested in equities, that would give us a 55% equities/45% fixed income distribution.

Does this analysis make sense?
Yes, but what are you going to do about it? You can't sell your SS or pensions.

The better approach, in my opinion, is to decide whether you have enough income to provide for your minimum needs. If not, use that marginal income requirement to help decide your asset allocation. Or, even better, purchase annuities to cover that margin and do whatever you like with your remaining investable assets.

L.
These calculations may be fun to dabble with but serve little purpose in my opinion other than an amorphous assessment of net worth. Both my wife's parents and my own lived into their 90's, which influenced our decision to delay taking SS but certainly didn't lead us to take more risk while nearing retirement. In fact it's resulted in quite the opposite, although some would say our 60/40 is too risky. 100% in equities at age 65 takes "aggressive" to new heights in my opinion, but our retirement savings aren't as substantial as yours, although pensions and SS will be only slightly less, relative to our needs. I realize that the focus of this thread was not to explore the advisability of using SS and pensions to affect AA, but there is danger in doing so when assigning a cumulative value to an income stream that you have no way of liquidating. Leeraar said it in less words: "You can't sell your SS and pensions."

That being said your assets are such that your plan should work barring an unseen catastrophe, and thinking that you have twice as much as you have in savings is enjoyable, if not realistic. Why not add in home and car equity, term life insurance payouts, and the value of furnishings? I'm not trying to be snarky, just trying to understand the practical use of assigning a cumulative value to something which is illiquid.

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: Does this make sense?

Post by duffer » Sun Feb 22, 2015 4:28 pm

vested1 wrote:
These calculations may be fun to dabble with but serve little purpose in my opinion other than an amorphous assessment of net worth. Both my wife's parents and my own lived into their 90's, which influenced our decision to delay taking SS but certainly didn't lead us to take more risk while nearing retirement. In fact it's resulted in quite the opposite, although some would say our 60/40 is too risky. 100% in equities at age 65 takes "aggressive" to new heights in my opinion, but our retirement savings aren't as substantial as yours, although pensions and SS will be only slightly less, relative to our needs. I realize that the focus of this thread was not to explore the advisability of using SS and pensions to affect AA, but there is danger in doing so when assigning a cumulative value to an income stream that you have no way of liquidating. Leeraar said it in less words: "You can't sell your SS and pensions."

That being said your assets are such that your plan should work barring an unseen catastrophe, and thinking that you have twice as much as you have in savings is enjoyable, if not realistic. Why not add in home and car equity, term life insurance payouts, and the value of furnishings? I'm not trying to be snarky, just trying to understand the practical use of assigning a cumulative value to something which is illiquid.
There is nothing extreme about the model that I am embracing. John Bogle has gone on record a number of times as saying that social security and pensions should be given consideration as fixed income assets in making allocation decisions. The social security entitlements are essentially similar to (really superior to) a single-life annuity with excellent inflation protection; and the pension is similar to (actually is) a joint life annuity with modest inflation protection. Perhaps thinking of these as similar to annuities will make the reasonableness of this approach more apparent. Ignoring these "annuities" runs the risk of making allocation decisions too conservative, and the loss of possible accumulations becomes a real risk to longevity and lifestyle. And I do plan to hold about 8% of my equities portfolio in cash-like assets.

Assets like a car or furnishings are obviously completely different from income producing assets. The equity in one's home could be a kind of fixed income asset via a reverse mortgage, a home equity line of credit, or even via downsizing into a smaller home or apartment. But unless a real emergency were to occur in my finances (the end of social security?), I am not treating my home as such. I would use it in that way only in emergencies (though a home equity line of credit is one way to convert a fixed asset like a house into equities for re-balancing purposes during a equity downturn).

I wanted to know what was the "fixed income" value of my social security and pension so that I could see what my "real" asset allocation was. There are a lot of variables for any individual, well beyond what I have any competence to comment on. While soc sec and pensions as fixed assets have some limitations, they also have advantages--I am guaranteed not to lose money on them, which is more than one can say about bonds. And as long as I can be flexible in my spending from equities in down market years, which I am able to do, I am willing to not rebalance from the fixed side of my portfolio during those years.

What do I gain by allocting my assets in the way I am doing? A very high probability of an average real return in the 5-7% range in the equity portfolio over an adequately long period of years. If we are in a secular bull market, then the advantages are substantially greater. If we were to be in a secular bear market, the disadvantages, with my cutbacks in discretionary spending, would in most scenarios not be much greater than the relative cost of shifting more equities into fixed assets.

There are two kinds of mistakes one can make with asset allocations: being too risk-taking or being too risk-adverse. Where that line gets drawn is different for different people and circumstances.

I am glad to hear that you are close on having the necessary expenses covered by guaranteed income sources. That is worth a lot.

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Re: ? present value of soc sec and pension

Post by Rodc » Sun Feb 22, 2015 7:23 pm

Ignoring these "annuities" runs the risk of making allocation decisions too conservative, and the loss of possible accumulations becomes a real risk to longevity and lifestyle. And I do plan to hold about 8% of my equities portfolio in cash-like assets.
No one is suggesting you ignore them. The suggestion is to treat them as what they are rather than pretending they are what they are not.

As others have noted if you go the pretend route and do so carefully you can still get the "right answer", but seems much simpler to deal with them as what they are and get the right answer.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Sun Feb 22, 2015 7:27 pm

Rodc wrote:
Ignoring these "annuities" runs the risk of making allocation decisions too conservative, and the loss of possible accumulations becomes a real risk to longevity and lifestyle. And I do plan to hold about 8% of my equities portfolio in cash-like assets.
No one is suggesting you ignore them. The suggestion is to treat them as what they are rather than pretending they are what they are not.

As others have noted if you go the pretend route and do so carefully you can still get the "right answer", but seems much simpler to deal with them as what they are and get the right answer.

I am, of course, already treating them as what they are--guaranteed income for life that is mostly inflation protected and that covers my necessary expenses, thereby freeing up other assets.

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Re: ? present value of soc sec and pension

Post by Rodc » Sun Feb 22, 2015 7:43 pm

duffer wrote:
Rodc wrote:
Ignoring these "annuities" runs the risk of making allocation decisions too conservative, and the loss of possible accumulations becomes a real risk to longevity and lifestyle. And I do plan to hold about 8% of my equities portfolio in cash-like assets.
No one is suggesting you ignore them. The suggestion is to treat them as what they are rather than pretending they are what they are not.

As others have noted if you go the pretend route and do so carefully you can still get the "right answer", but seems much simpler to deal with them as what they are and get the right answer.

I am, of course, already treating them as what they are--guaranteed income for life that is mostly inflation protected and that covers my necessary expenses, thereby freeing up other assets.
If so, we as a couple have approximately $2,225,000 "invested" in fixed income assets. With $2,750,000 invested in equities, that would give us a 55% equities/45% fixed income distribution.
I suggest you don't have that value "invested" in reality or you would not need the quotes. And it sure looks like you are implying something akin to a typical 55/45 portfolio, which since you can't sell or trade on the fixed income side is not all that much like a 55/45 stock/bond portfolio.

But in the opening post you say:
I know there have been threads about whether social security and pensions should be valued as part of an asset allocation in the way that bonds are. I am not asking about that.
Then in the next you seem to do exactly that, so I am confused as to what you are doing.

You also miscalculated the the value since you ignored the COLA provision. So if you want to go this route and want a good solid answer you might want to try again on the estimates.

But more to the point, no one is suggesting you ignore them as you claim. That was a strawman and incorrect which was my main point.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Sun Feb 22, 2015 7:59 pm

Rodc wrote:
duffer wrote:
Rodc wrote:
Ignoring these "annuities" runs the risk of making allocation decisions too conservative, and the loss of possible accumulations becomes a real risk to longevity and lifestyle. And I do plan to hold about 8% of my equities portfolio in cash-like assets.
No one is suggesting you ignore them. The suggestion is to treat them as what they are rather than pretending they are what they are not.

As others have noted if you go the pretend route and do so carefully you can still get the "right answer", but seems much simpler to deal with them as what they are and get the right answer.

I am, of course, already treating them as what they are--guaranteed income for life that is mostly inflation protected and that covers my necessary expenses, thereby freeing up other assets.
If so, we as a couple have approximately $2,225,000 "invested" in fixed income assets. With $2,750,000 invested in equities, that would give us a 55% equities/45% fixed income distribution.
I suggest you don't have that value "invested" in reality or you would not need the quotes. And it sure looks like you are implying something akin to a typical 55/45 portfolio, which since you can't sell or trade on the fixed income side is not all that much like a 55/45 stock/bond portfolio.

But in the opening post you say:
I know there have been threads about whether social security and pensions should be valued as part of an asset allocation in the way that bonds are. I am not asking about that.
Then in the next you seem to do exactly that, so I am confused as to what you are doing.

You also miscalculated the the value since you ignored the COLA provision. So if you want to go this route and want a good solid answer you might want to try again on the estimates.

But more to the point, no one is suggesting you ignore them as you claim. That was a strawman and incorrect which was my main point.

Feel free to go with your analysis. But I'll go with John Bogle's recommendation to treat social security (and, of course, well-secured pensions) as an annuity or bond, i.e., as fixed income with a present value. So, I am not really interested in advice on that issue.

I originally just wanted some pointers on how to estimate the value as fixed income of the social security and the pension, beyond just going to immediateannuities.com. Bu there really doesn't seem to be much that is helpful beyond simply doing exactly that.

YDNAL
Posts: 13774
Joined: Tue Apr 10, 2007 4:04 pm
Location: Biscayne Bay

Re: ? present value of soc sec and pension

Post by YDNAL » Mon Feb 23, 2015 10:17 am

duffer wrote:Feel free to go with your analysis. But I'll go with John Bogle's recommendation to treat social security (and, of course, well-secured pensions) as an annuity or bond, i.e., as fixed income with a present value. So, I am not really interested in advice on that issue.
Using the "John Bogle" card can lead to contradictory strategies. Jack Bogle also proposes Age = Bond guideline in asset allocation decisions. :confused

That said, at the end of the day, AA decisions regarding INVESTABLE assets should be based on ability & need for risk (personal). We take the risk with these assets that we deem necessary to take -- and then the chips will fall where they fall.
Landy | Be yourself, everyone else is already taken -- Oscar Wilde

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Mon Feb 23, 2015 10:52 pm

YDNAL wrote:
duffer wrote:Feel free to go with your analysis. But I'll go with John Bogle's recommendation to treat social security (and, of course, well-secured pensions) as an annuity or bond, i.e., as fixed income with a present value. So, I am not really interested in advice on that issue.
Using the "John Bogle" card can lead to contradictory strategies. Jack Bogle also proposes Age = Bond guideline in asset allocation decisions. :confused

That said, at the end of the day, AA decisions regarding INVESTABLE assets should be based on ability & need for risk (personal). We take the risk with these assets that we deem necessary to take -- and then the chips will fall where they fall.
Yes, fair enough. But "age in bonds" is, of course, a different issue than counting soc sec & pensions as fixed assets. Also, his age in bonds recommendation, as I think you recognize, was stated as an "average" position for the average situation. And I am actually pretty close to 65/35, especially once 200k of the investable portion is put in something like cash. In my particular case and for my goals, subtracting from equities (and making it go poof, so to speak) an amount sufficient to make the allocation 65/35 would not affect my lifestyle much. But keeping an equities leaning allocation helps my bequeathal goals (many years from now, we hope).

TradingPlaces
Posts: 1245
Joined: Sun Nov 09, 2014 1:19 pm
Location: 30.286029, -97.530011

Re: ? present value of soc sec and pension

Post by TradingPlaces » Mon Feb 23, 2015 11:46 pm

stan1 wrote:What year are you each going to die in? To determine present value you need to know how many years you will get paid pension/SS benefits. Most people can't use actuarial tables because there's no such thing as an "average" person.
Well, that's not the utility of the actuarial tables.

The utility of actuarial death tables is that if you start with a sample of 10,000 people, the age at death distribution of the sample will be very close to that of the table.

If you can identify features specific to yourself, then you can adjust the tables accordingly.

E.g., life expectancy is much shorter for African American males.

wilked
Posts: 1325
Joined: Thu Mar 24, 2011 1:50 pm

Re: ? present value of soc sec and pension

Post by wilked » Mon Feb 23, 2015 11:53 pm

Rodc wrote:
protagonist wrote:
Rodc wrote:Go to an insurance site. Find an insurance product that is close to each option. Get a quote.
with a COLA on first $18,000 of up to 3% based on 50% of the CPI
Are you in MA?
I'm curious why you asked this, Rodc. Are MA residents in some sort of unique situation?
MA state pensions behave this way (or close, I'd have to go double check to be sure it is precisely like this). I presume it is rare that pensions would have this particular condition specifically tied to the first $18,000. But perhaps not.
Doesn't some of the math in this depend upon whether OP is going to stay in MA?

LeeMKE
Posts: 1767
Joined: Mon Oct 14, 2013 9:40 pm

Re: ? present value of soc sec and pension

Post by LeeMKE » Tue Feb 24, 2015 12:44 am

I didn't realize this thread was still underway, or I would have returned earlier.

I use two approaches to confirm I have the correct AA for my situation:

I run PV on the cash flows (SS and Pensions), add that to the liquid portfolio, and then look at the AA of the whole, using Bonds as the definition for the cash flows. My AA allocation of the whole is 54/46.

I also have two expense levels worked out: Necessary expenses and Extra expenses (optional travel, extras) I look at how much of these expenses are covered by the cash flows and am satisfied seeing that for all but four years the necessary expenses are covered by cash flows, and most of the time the extra expenses are also covered. I do not have plans for a legacy. So, this allows me to be pretty aggressive with the liquid portfolio, buying myself some extra insurance against inflation. The AA of the liquid portfolio is 80/20.

The four years not covered are exactly where your gap is, before age 70, when I'd like to start Social Security. I am figuring out how I want to bridge that gap.

Here are my options, some of which might give you some ideas for your own situation:

1) I have 3 years before DH retires, so the market might continue to move with me, and close this gap a bit more. (Same as your option to work longer)
2) I will liquidate some of the portfolio to have the gap covered by cash deposits, just don't know yet how much I'll liquidate.
3) We plan (health provided) to leave and travel unencumbered by the expense of a home base, for a few years. I will be working up these plans in the next 18 months. What I think will work is to research the cost of living in the long list of places we might visit. Then I can lay them out on a spreadsheet to start an itinerary. If the portfolio is stressed, we'll focus on the lower cost destinations (Asia, Latin America) and spend less time in more expensive locales (Paris for a week). If the market is lush, we can spend a few months in Paris, and shorter time in less expensive locales.
4) From what I can see from here, I can comfortably cover the necessary expense level, and just need to be flexible about the extra expenses, ready to cut back during that first 4 years if the market takes a tumble. We would rather cut back by altering our itinerary (stay in Bangkok another few weeks and only one week in Paris) than by staying home and not traveling while we still have the energy to travel. By the time we reach age 70, we are in clover no matter what the market does.

Hope something here helps with your deliberations!
The mightiest Oak is just a nut who stayed the course.

vested1
Posts: 1600
Joined: Wed Jan 04, 2012 4:20 pm

Re: Does this make sense?

Post by vested1 » Tue Feb 24, 2015 8:50 am

duffer wrote:
vested1 wrote:
These calculations may be fun to dabble with but serve little purpose in my opinion other than an amorphous assessment of net worth. Both my wife's parents and my own lived into their 90's, which influenced our decision to delay taking SS but certainly didn't lead us to take more risk while nearing retirement. In fact it's resulted in quite the opposite, although some would say our 60/40 is too risky. 100% in equities at age 65 takes "aggressive" to new heights in my opinion, but our retirement savings aren't as substantial as yours, although pensions and SS will be only slightly less, relative to our needs. I realize that the focus of this thread was not to explore the advisability of using SS and pensions to affect AA, but there is danger in doing so when assigning a cumulative value to an income stream that you have no way of liquidating. Leeraar said it in less words: "You can't sell your SS and pensions."

That being said your assets are such that your plan should work barring an unseen catastrophe, and thinking that you have twice as much as you have in savings is enjoyable, if not realistic. Why not add in home and car equity, term life insurance payouts, and the value of furnishings? I'm not trying to be snarky, just trying to understand the practical use of assigning a cumulative value to something which is illiquid.
There is nothing extreme about the model that I am embracing. John Bogle has gone on record a number of times as saying that social security and pensions should be given consideration as fixed income assets in making allocation decisions. The social security entitlements are essentially similar to (really superior to) a single-life annuity with excellent inflation protection; and the pension is similar to (actually is) a joint life annuity with modest inflation protection. Perhaps thinking of these as similar to annuities will make the reasonableness of this approach more apparent. Ignoring these "annuities" runs the risk of making allocation decisions too conservative, and the loss of possible accumulations becomes a real risk to longevity and lifestyle. And I do plan to hold about 8% of my equities portfolio in cash-like assets.

Assets like a car or furnishings are obviously completely different from income producing assets. The equity in one's home could be a kind of fixed income asset via a reverse mortgage, a home equity line of credit, or even via downsizing into a smaller home or apartment. But unless a real emergency were to occur in my finances (the end of social security?), I am not treating my home as such. I would use it in that way only in emergencies (though a home equity line of credit is one way to convert a fixed asset like a house into equities for re-balancing purposes during a equity downturn).

I wanted to know what was the "fixed income" value of my social security and pension so that I could see what my "real" asset allocation was. There are a lot of variables for any individual, well beyond what I have any competence to comment on. While soc sec and pensions as fixed assets have some limitations, they also have advantages--I am guaranteed not to lose money on them, which is more than one can say about bonds. And as long as I can be flexible in my spending from equities in down market years, which I am able to do, I am willing to not rebalance from the fixed side of my portfolio during those years.

What do I gain by allocting my assets in the way I am doing? A very high probability of an average real return in the 5-7% range in the equity portfolio over an adequately long period of years. If we are in a secular bull market, then the advantages are substantially greater. If we were to be in a secular bear market, the disadvantages, with my cutbacks in discretionary spending, would in most scenarios not be much greater than the relative cost of shifting more equities into fixed assets.

There are two kinds of mistakes one can make with asset allocations: being too risk-taking or being too risk-adverse. Where that line gets drawn is different for different people and circumstances.

I am glad to hear that you are close on having the necessary expenses covered by guaranteed income sources. That is worth a lot.
I've been thinking about my reply since making it and came back to apologize for saying there is no harm in assigning a dollar value to an annuity because it's a fun exercise, then proceeding to contribute in spoiling your fun. Of course I was being facetious by mentioning the inclusion of home equity and furnishings, but only in an attempt to take it to the extreme.

In my opinion, John Bogle has the ability to consider SS and pensions in AA, because if he's wrong it won't really matter that much since his assets are more than sufficient even if he takes a 50% hit. You may be in the same boat, but perhaps to a lesser degree. As for myself, I don't have that luxury being on the cusp of retirement, and will continue to treat guaranteed income as a separate consideration than AA. An accounting of needed income to cover my desired lifestyle is the first on my checklist. The shortfall in that amount is what I need to guarantee through other means until my wife and I expire. Endangering the ability to meet that shortfall by being overly aggressive and having to dig deeply into principal during a downturn is not an option.

While I don't think that my wife's pension or SS are in danger of disappearing, that possibility is not out of the realm of possibility. Maintaining an appropriate AA to ensure success is a hedge on a very safe bet.

Rodc
Posts: 13601
Joined: Tue Jun 26, 2007 9:46 am

Re: ? present value of soc sec and pension

Post by Rodc » Tue Feb 24, 2015 11:25 am

wilked wrote:
Rodc wrote:
protagonist wrote:
Rodc wrote:Go to an insurance site. Find an insurance product that is close to each option. Get a quote.
with a COLA on first $18,000 of up to 3% based on 50% of the CPI
Are you in MA?
I'm curious why you asked this, Rodc. Are MA residents in some sort of unique situation?
MA state pensions behave this way (or close, I'd have to go double check to be sure it is precisely like this). I presume it is rare that pensions would have this particular condition specifically tied to the first $18,000. But perhaps not.
Doesn't some of the math in this depend upon whether OP is going to stay in MA?
No, assuming as I was asking if this is an MA state pension. If you have a pension being paid by the State of MA they don't just change the terms because you move out of state.
We live a world with knowledge of the future markets has less than one significant figure. And people will still and always demand answers to three significant digits.

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: ? present value of soc sec and pension

Post by duffer » Tue Feb 24, 2015 11:41 pm

LeeMKE wrote:I didn't realize this thread was still underway, or I would have returned earlier.

I use two approaches to confirm I have the correct AA for my situation:

I run PV on the cash flows (SS and Pensions), add that to the liquid portfolio, and then look at the AA of the whole, using Bonds as the definition for the cash flows. My AA allocation of the whole is 54/46.

I also have two expense levels worked out: Necessary expenses and Extra expenses (optional travel, extras) I look at how much of these expenses are covered by the cash flows and am satisfied seeing that for all but four years the necessary expenses are covered by cash flows, and most of the time the extra expenses are also covered. I do not have plans for a legacy. So, this allows me to be pretty aggressive with the liquid portfolio, buying myself some extra insurance against inflation. The AA of the liquid portfolio is 80/20.

The four years not covered are exactly where your gap is, before age 70, when I'd like to start Social Security. I am figuring out how I want to bridge that gap.

Here are my options, some of which might give you some ideas for your own situation:

1) I have 3 years before DH retires, so the market might continue to move with me, and close this gap a bit more. (Same as your option to work longer)
2) I will liquidate some of the portfolio to have the gap covered by cash deposits, just don't know yet how much I'll liquidate.
3) We plan (health provided) to leave and travel unencumbered by the expense of a home base, for a few years. I will be working up these plans in the next 18 months. What I think will work is to research the cost of living in the long list of places we might visit. Then I can lay them out on a spreadsheet to start an itinerary. If the portfolio is stressed, we'll focus on the lower cost destinations (Asia, Latin America) and spend less time in more expensive locales (Paris for a week). If the market is lush, we can spend a few months in Paris, and shorter time in less expensive locales.
4) From what I can see from here, I can comfortably cover the necessary expense level, and just need to be flexible about the extra expenses, ready to cut back during that first 4 years if the market takes a tumble. We would rather cut back by altering our itinerary (stay in Bangkok another few weeks and only one week in Paris) than by staying home and not traveling while we still have the energy to travel. By the time we reach age 70, we are in clover no matter what the market does.

Hope something here helps with your deliberations!
Yes, this is quite similar to my situation. Because we have reasons to maintain home base, traveling intermittently and possibly working a bit intermittently during the four years before social.

I totally agree that traveling is best when you have the energy to do it, which means younger. It is hard to know how one will age. Exercise, exercise, exercise. I know some people in their late 70s who can play singles in the sun for a couple of hours.

The issue o fhaving more when you are younger so that you are in better shape to use and enjoy it is not discussed much in articles on when to take your social security, I think the break-even on taking SS at 70 instead of 66 does not occur until the early to mid-80s. By that time, if you have already had enough discretionary income to do things like traveling a lot, the lower level of social security income (from taking it earlier to do things like traveling while younger) might not actually mean much because you are spending less on discretionary activities. But if it is a bigger part of your basic necessities nest egg, then waiting till 70 may be much more important.

The financial engines social security calculator is one of the few that factors in different life expectancies. Because of the difference in male and female life expectancies, it has recommended that my wife take her SS at 67 or 68 and that I take it at 70. I think the calculus is that we will have her money earlier and that by the time there would be a net loss in total income from not waiting to 70, I may well be dead (!!!!!) and she is bumped up to my age-70 SS anyway. This actually makes sense to me, so we may take hers at 67 or 68 and mine at 70. With my taking spousal benefits, this would knok a chunk off the 4 years before 70. In part, this works because she and I are the same age. (Actually she is a few months older--I always had a thing for older women. :wink:

duffer
Posts: 237
Joined: Tue Sep 09, 2014 8:18 pm

Re: Does this make sense?

Post by duffer » Tue Feb 24, 2015 11:43 pm

vested1 wrote:
duffer wrote:
vested1 wrote:
These calculations may be fun to dabble with but serve little purpose in my opinion other than an amorphous assessment of net worth. Both my wife's parents and my own lived into their 90's, which influenced our decision to delay taking SS but certainly didn't lead us to take more risk while nearing retirement. In fact it's resulted in quite the opposite, although some would say our 60/40 is too risky. 100% in equities at age 65 takes "aggressive" to new heights in my opinion, but our retirement savings aren't as substantial as yours, although pensions and SS will be only slightly less, relative to our needs. I realize that the focus of this thread was not to explore the advisability of using SS and pensions to affect AA, but there is danger in doing so when assigning a cumulative value to an income stream that you have no way of liquidating. Leeraar said it in less words: "You can't sell your SS and pensions."

That being said your assets are such that your plan should work barring an unseen catastrophe, and thinking that you have twice as much as you have in savings is enjoyable, if not realistic. Why not add in home and car equity, term life insurance payouts, and the value of furnishings? I'm not trying to be snarky, just trying to understand the practical use of assigning a cumulative value to something which is illiquid.
There is nothing extreme about the model that I am embracing. John Bogle has gone on record a number of times as saying that social security and pensions should be given consideration as fixed income assets in making allocation decisions. The social security entitlements are essentially similar to (really superior to) a single-life annuity with excellent inflation protection; and the pension is similar to (actually is) a joint life annuity with modest inflation protection. Perhaps thinking of these as similar to annuities will make the reasonableness of this approach more apparent. Ignoring these "annuities" runs the risk of making allocation decisions too conservative, and the loss of possible accumulations becomes a real risk to longevity and lifestyle. And I do plan to hold about 8% of my equities portfolio in cash-like assets.

Assets like a car or furnishings are obviously completely different from income producing assets. The equity in one's home could be a kind of fixed income asset via a reverse mortgage, a home equity line of credit, or even via downsizing into a smaller home or apartment. But unless a real emergency were to occur in my finances (the end of social security?), I am not treating my home as such. I would use it in that way only in emergencies (though a home equity line of credit is one way to convert a fixed asset like a house into equities for re-balancing purposes during a equity downturn).

I wanted to know what was the "fixed income" value of my social security and pension so that I could see what my "real" asset allocation was. There are a lot of variables for any individual, well beyond what I have any competence to comment on. While soc sec and pensions as fixed assets have some limitations, they also have advantages--I am guaranteed not to lose money on them, which is more than one can say about bonds. And as long as I can be flexible in my spending from equities in down market years, which I am able to do, I am willing to not rebalance from the fixed side of my portfolio during those years.

What do I gain by allocting my assets in the way I am doing? A very high probability of an average real return in the 5-7% range in the equity portfolio over an adequately long period of years. If we are in a secular bull market, then the advantages are substantially greater. If we were to be in a secular bear market, the disadvantages, with my cutbacks in discretionary spending, would in most scenarios not be much greater than the relative cost of shifting more equities into fixed assets.

There are two kinds of mistakes one can make with asset allocations: being too risk-taking or being too risk-adverse. Where that line gets drawn is different for different people and circumstances.

I am glad to hear that you are close on having the necessary expenses covered by guaranteed income sources. That is worth a lot.
I've been thinking about my reply since making it and came back to apologize for saying there is no harm in assigning a dollar value to an annuity because it's a fun exercise, then proceeding to contribute in spoiling your fun. Of course I was being facetious by mentioning the inclusion of home equity and furnishings, but only in an attempt to take it to the extreme.

In my opinion, John Bogle has the ability to consider SS and pensions in AA, because if he's wrong it won't really matter that much since his assets are more than sufficient even if he takes a 50% hit. You may be in the same boat, but perhaps to a lesser degree. As for myself, I don't have that luxury being on the cusp of retirement, and will continue to treat guaranteed income as a separate consideration than AA. An accounting of needed income to cover my desired lifestyle is the first on my checklist. The shortfall in that amount is what I need to guarantee through other means until my wife and I expire. Endangering the ability to meet that shortfall by being overly aggressive and having to dig deeply into principal during a downturn is not an option.

While I don't think that my wife's pension or SS are in danger of disappearing, that possibility is not out of the realm of possibility. Maintaining an appropriate AA to ensure success is a hedge on a very safe bet.
no offense taken. just different ways of looking at things. but thanks for the apology anyway.

Post Reply