Patzer wrote: ↑Fri Mar 24, 2023 1:04 pm
I may retire as early as 46.
Many would say I have to worry about living 50-60 years, but I don't really need to worry past 80, because at 70 I can take social security and at 80 I can take a reverse mortgage and buy a SPIA with it, which sets me up with income for life as shown below.
My Income needs from age 46 to 100:
From 2014-2021, I spent an average of 22,726 per year.
From 2022 until I retire I gave myself a raise and plan to spend an average of 37K/yr.
In retirement, I plan to spend 48.6K/yr with a surplus of 5.4K/yr (to cover unexpected expenses) for a total of 54K/yr.
Retiring at 46, my social security benefit at 70 will be 35K, which covers 65% of my spending.
At 80, I could get a reverse mortgage, buy a SPIA (Single Premium Immediate Annuity) with the proceeds. That SPIA would pay 14.7K/yr, for a total of 49.7K/yr with Social Security. Most likely, I will still have investments to cover the remaining 4.3K, but even if I don't that won't matter, because I will easily be able to live on 49.7K/yr (Inflation Adjusted).
This is for a modest 234K house. For someone with a more expensive house this would be an even bigger supplemental income.
Below is the combined proceeds from Social Security and a SPIA for me, and 80 is about the point where it starts to make sense, but if my investments are doing well, I could/would delay it further.
Reverse Mortgage/SPIA + Soc Sec at different ages:
70: 43.8K/yr (Too early)
80: 49.7K/yr (About right)
81: 51K/yr
82: 52.3K/yr
83: 53.6K/yr
84: 55K/yr (More than I can spend)
For those of us with moderate spending, who had short careers with strong earnings, which would be the case for many early retirees, it can be quite easy to hedge against longevity with social security and a SPIA derived from earnings a reverse mortgage on our homes in old age.
Even with a simple Asset Allocation of 70% Stocks / 30% 10 year Treasuries, 24.5X worked all the way to age 100 even if you were unlucky enough to retire in Sept 1929, if you had the Social Security and Reverse Mortgage/SPIA amounts that I am referencing.
If your luck was just a bit better and you retired just 3 months earlier or later then 21.5X and 19.4X would have worked.
I will use a more diversified asset allocation that would have survived with 22.4X in Sept 1929 and 19.8X and 17.7X if I retired 3 months earlier or later.
So, even retiring with just 23X at 46, I don't have to worry about how long I live.
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About me:
No heirs, no plans to have heirs. Not married, won't get married.
I do have a long-term romantic partner, but her financials are completely separate from mine and she is materially older than me, so no inheritance worries past me being 80.