Love the title! There's definitely underspending of personal savings in retirement (Will my money last until I die? What if there's a market crash?). And annuities don't run out, no matter how long you live, no matter what the stock market is doing. The sweet spot is deciding what percentage of your savings should go into annuities, accepting the fact that it won't appreciate as much as the other savings. But with annuities, the peace of mind that your slow-go and no-go years are covered, that's priceless.
Remember, most SPIAs are fixed payments, with no adjustment for inflation. If inflation was just 4%, the value of the payments would be cut in half in 18 years. Also, should the issuer go out of business, you probably lost your money. There is no FDIC here. There may be some state associations that might step in to help
Your SS is inflation adjusted and you are only using a percentage of the portfolio for the SPIA and using the other part of the portfolio for the inflation and other things in life. Also, I don't know of anyone in the last 30 years that have lost the payout of their SPIA due to the boogie man insurance company going out of business. You would be wise to stay away from small lowly rated insurers.
@@larriveeman Most cola riders on annuites cost too much. We deal with inflation by laddering payout start dates and/or leaving the bulk of their money in the portfolio and drawing it out as needed for inflation. Most retirees spend less as they age except healthcare
Why wouldn't the people keep their own money invested safely and withdraw their own money at 7.42% or 7.92% or whatever percent as they need it? Why hand over life time commitment to an insurance company ?
One reason is that the income is guaranteed for life. Not many investments guarantee you will receive income for life. Many investments fluctuate going up and down. Many retirees don't want the stress of normal investments.
Towards the end of the presentation, Hans mentioned that some people are more inclined to actually spend some of the money they saved if it is given to them in smaller amounts month by month than if they must withdraw funds themselves from the 'total' amount. I agree with this. If I had a million $$ (I wish!), I wouldn't want to withdraw funds to spend because that Million is such a nice number to let sit and 'admire'! However, if I got a little allowance of $500-1000 every month then it would be like I'm getting it 'free'. It may seem weird to some, but that's they way my brain works at this point. Also, my spouse would be more in favor of getting 'bonus' money and letting the larger amount stay 'large'! Probably some funds in annuity and some not in annuity is best plan for some of us old 'savers'!
You sound like Dave Ramsey. Statistically using historical data what would be the success rate of your suggestion. Your suggestion is more market risk than many people want
I'm dealing with the flip from earn to spend. I retired 22 years ago at 45 not with a pile of money. I slow flip my house to fund retirement, a hobby that earns. But now at 67 I'm planning to sell house #4 next year and move to SE Asia. That will start retirement 2.0. The common idea I see online is $1500-2000/mo USD to live "well" there. Plus the medical issue because no Medicare benefits outside the US. I should clear $530k selling my house. That will earn about $2000/mo and be my medical insurance in combo with actual insurance. Then in 2 years take SS estimated today at $3800/mo so income about $5800/mo at that point. For the past 21 months my total spend has averaged $592.04/mo. So I'll have 10x more income than I currently spend. I get many will think "good problem to have". True. But I think I still have to be careful. People have no problem over spending and getting into trouble. Do I get a big house just because my income allows even if I prefer a small house? Do I eat out more even though I prefer my own cooking and it's healthier?
I have absolutely known people who were happier and healthier living within a reasonable budget… I suspect you’ll be fine because you’re already aware that spending more money isn’t necessarily better for you 😊
Honestly, I don't see much of anything I want to spend more on. I spend less than half my after-tax retirement income which is mostly dividends from stocks, and some fixed income interest. I haven't come near touching the principle, which has been growing quite a lot in my first three years of retirement. I just turned 62 but probably will not take SS till 67 - 70. I'm trying to decrease the stuff I've accumulated so need very little new stuff. Also, most of my things last a long time before needing replacement (computers and cell phones, dishes, clothes, etc.) My hobbies are painting, cooking, guitar playing, walking, reading which all are relatively inexpensive to pursue. I don't care about cars or golfing or boats or even pickleball. When I travel, I prefer to live close to the people by staying in one place for about two weeks renting a room in a pension (French guest hotel) or b&b instead of a 5 star or corporate hotel or cruise ship, I use public transportation or foot power, and I eat where the locals eat, so I do not spend a lot traveling. I don't think my spending would go up if I had some annuities, as the dividends come in every month much like an annuity payment or a paycheck, and, as I said, I don't see anything more to spend on.
Your story reminds me of looking through estate sales this week. In each sale there was so much junk. I think the owners must have been semi-hoarders. Dolls, tools, ceramics, toys, etc. Maybe that brought them happiness? Just seems like a lot of clutter to me. I'm not retired yet, but the first thing I want to do is try to de-clutter and make it so that my heirs won't have to have a large estate sale to get rid of my junk. Best wishes.
Love the title! There's definitely underspending of personal savings in retirement (Will my money last until I die? What if there's a market crash?). And annuities don't run out, no matter how long you live, no matter what the stock market is doing. The sweet spot is deciding what percentage of your savings should go into annuities, accepting the fact that it won't appreciate as much as the other savings. But with annuities, the peace of mind that your slow-go and no-go years are covered, that's priceless.
"fixin' to retire". Hans is a good Southern boy!
Love the channel
@@michaelh2798 thanks
Another very good presentation. Thank you, gentlemen!
Remember, most SPIAs are fixed payments, with no adjustment for inflation. If inflation was just 4%, the value of the payments would be cut in half in 18 years. Also, should the issuer go out of business, you probably lost your money. There is no FDIC here. There may be some state associations that might step in to help
No counter party risk holding gold and long term inflation protection. Simple.
Your SS is inflation adjusted and you are only using a percentage of the portfolio for the SPIA and using the other part of the portfolio for the inflation and other things in life.
Also, I don't know of anyone in the last 30 years that have lost the payout of their SPIA due to the boogie man insurance company going out of business.
You would be wise to stay away from small lowly rated insurers.
how many annuities have a cola rider?
@@larriveeman Most cola riders on annuites cost too much. We deal with inflation by laddering payout start dates and/or leaving the bulk of their money in the portfolio and drawing it out as needed for inflation. Most retirees spend less as they age except healthcare
Can you name the product and company in your illustration?
Do you also recommend fixed indexed annuities with an income rider? As an alternative to what you presented?
@@g.ajemian4968 Yes we do
Why wouldn't the people keep their own money invested safely and withdraw their own money at 7.42% or 7.92% or whatever percent as they need it? Why hand over life time commitment to an insurance company ?
One reason is that the income is guaranteed for life. Not many investments guarantee you will receive income for life. Many investments fluctuate going up and down. Many retirees don't want the stress of normal investments.
The poor insurance company won’t be able to screw people over.
Towards the end of the presentation, Hans mentioned that some people are more inclined to actually spend some of the money they saved if it is given to them in smaller amounts month by month than if they must withdraw funds themselves from the 'total' amount. I agree with this. If I had a million $$ (I wish!), I wouldn't want to withdraw funds to spend because that Million is such a nice number to let sit and 'admire'! However, if I got a little allowance of $500-1000 every month then it would be like I'm getting it 'free'. It may seem weird to some, but that's they way my brain works at this point. Also, my spouse would be more in favor of getting 'bonus' money and letting the larger amount stay 'large'! Probably some funds in annuity and some not in annuity is best plan for some of us old 'savers'!
You sound like Dave Ramsey. Statistically using historical data what would be the success rate of your suggestion.
Your suggestion is more market risk than many people want
I'm dealing with the flip from earn to spend. I retired 22 years ago at 45 not with a pile of money. I slow flip my house to fund retirement, a hobby that earns. But now at 67 I'm planning to sell house #4 next year and move to SE Asia. That will start retirement 2.0. The common idea I see online is $1500-2000/mo USD to live "well" there. Plus the medical issue because no Medicare benefits outside the US. I should clear $530k selling my house. That will earn about $2000/mo and be my medical insurance in combo with actual insurance. Then in 2 years take SS estimated today at $3800/mo so income about $5800/mo at that point.
For the past 21 months my total spend has averaged $592.04/mo. So I'll have 10x more income than I currently spend. I get many will think "good problem to have". True. But I think I still have to be careful. People have no problem over spending and getting into trouble. Do I get a big house just because my income allows even if I prefer a small house? Do I eat out more even though I prefer my own cooking and it's healthier?
I have absolutely known people who were happier and healthier living within a reasonable budget… I suspect you’ll be fine because you’re already aware that spending more money isn’t necessarily better for you 😊
Honestly, I don't see much of anything I want to spend more on. I spend less than half my after-tax retirement income which is mostly dividends from stocks, and some fixed income interest. I haven't come near touching the principle, which has been growing quite a lot in my first three years of retirement. I just turned 62 but probably will not take SS till 67 - 70. I'm trying to decrease the stuff I've accumulated so need very little new stuff. Also, most of my things last a long time before needing replacement (computers and cell phones, dishes, clothes, etc.) My hobbies are painting, cooking, guitar playing, walking, reading which all are relatively inexpensive to pursue. I don't care about cars or golfing or boats or even pickleball. When I travel, I prefer to live close to the people by staying in one place for about two weeks renting a room in a pension (French guest hotel) or b&b instead of a 5 star or corporate hotel or cruise ship, I use public transportation or foot power, and I eat where the locals eat, so I do not spend a lot traveling. I don't think my spending would go up if I had some annuities, as the dividends come in every month much like an annuity payment or a paycheck, and, as I said, I don't see anything more to spend on.
Your story reminds me of looking through estate sales this week. In each sale there was so much junk. I think the owners must have been semi-hoarders. Dolls, tools, ceramics, toys, etc. Maybe that brought them happiness? Just seems like a lot of clutter to me. I'm not retired yet, but the first thing I want to do is try to de-clutter and make it so that my heirs won't have to have a large estate sale to get rid of my junk. Best wishes.
I’m sorry but misspelling the word ‘principal’ as ‘principle’ (which is a completely different word) makes you lose a lot of credibility…
Sometimes it’s better to 🤐it.