Retirement investing for those not needing to leave inheritance

[WhitePuma]

My question relates to financial strategies and recommended investments in retirement for those who:

1. Do not have kids
2. Have no need or desire to leave an inheritance to anyone or any charity
3. And therefore don’t want to die with a large egg, but rather, want to live it up while still having a secure retirement.

What investment approach makes the most sense for these folks? Stick entirely with a portfolio of equities/bonds/cash and just slowly spend it down, get a SPIA with x% of the retirement nest egg, other?

Please also assume the individual is married, both partners get SS, both have LTC, house is owned, and neither has a pension.

[Silverado]

That matches us. We have selected an asset allocation and have invested as much as we can over the decades. Retirement is looming in just a handful of years. We will adjust our allocation some and then just keep living our lives.

We don’t have any worry about if we die with a large portfolio, we will just do what we do. We consider what we do as “living it up” so not much deep analysis needed.

[Silverado]

Oh, and I don’t believe anyone “needs” to leave an inheritance. That’s weird to even consider as a requirement.

ETA: jebmke gave a great counter.

[squonk2]

The method I am using is to plot an ideal portfolio path that gradually decreases over time and dynamically adjust my withdrawals to try to follow the curve. I explained it in this post: Portfolio Tracking Withdrawal Method.

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[jebmke]

I think it might depend on how big the pile is relative to expenses. The closer to "the edge" one is, the more annuities make sense.

[WhitePuma]

Oh, and I don’t believe anyone “needs” to leave an inheritance. That’s weird to even consider as a requirement.

I also said “or desire”. Hopefully you understood what I meant.

[jebmke]

Oh, and I don’t believe anyone “needs” to leave an inheritance. That’s weird to even consider as a requirement.

Actually, it isn't. I would argue that parents of children with especially severe disabilities likely feel a need to provide for the continuing care and support after their deaths.

[Silverado]

Oh, and I don’t believe anyone “needs” to leave an inheritance. That’s weird to even consider as a requirement.

Actually, it isn't. I would argue that parents of children with especially severe disabilities likely feel a need to provide for the continuing care and support after their deaths.

I’ll give you that, good use case.

[gavinsiu]

I would think you would want to stick with a not too aggressive portfolio. A 80/20 may result in a crazy ride with a high withdraw. You can try to withdraw at a higher rate and play it by ear. When you are older convert a good chunk to an annuity so you don’t run out of money and allow a higher withdraw. You don’t want to buy an annuity too early because it will be costly and get erode by inflation. Buying one later means it’s cheaper because of life expectancy and you may die before inflation become an issue.

[marlin2023]

Please check out this website: https://ficalc.app/
you can play around with the scenarios of different withdraw strategies and how successful they were historically.

I think some more clarity on your goals might help.

1. Income now vs later? - spia helps bring the income in early, but fades as inflation takes its tool over the years. Equities will keep up with inflation long term. Find your mix to balance future spending with current spending.
2. How fixed do you want your income? - SPIA is better for fixed spending, but less spending over the long run, I'm assuming. equities can give you more of a spending boom if the market does well.
3. Along with #2, do you want max spending? or just a nice base level with less risk? - spia and fixed income can have less risk.

I do like the spia as it gives you payments until you drop, and you can't run out. which seems perfect for your situation. But I wouldn't go all in. Having some flexibility is important. Could you buy a spia every 10 years to boost income? Just some ideas for you.

[MathWizard]

I'd look at deferred SS, and SPIAs.

That said, I am not planning for is to leave an inheritance, but planning for a stable income over 30 to 35 years with a high probability of not running out of money means that unless I devote a large portion to annuities, we will end up with a large amount of money at the end.

Our strategy is to put aside some funds for expected expenses in early retirement, both maintenance and fun things like travel beyond what we expect for long term level of income.

[WhitePuma]

Thanks - these are all great things to think about. Keep ‘em coming!

[marlin2023]

I'd look at deferred SS, and SPIAs.

yes, please delay social security. greatest annuity money can buy. I forgot to mention that in my post. then the uncertainty time period is only till you are 70, which is easier to handle.