I’m 58 and was hoping to retire at 60. My wife has already semi-retired. However I’ve been doing some more sums, and it looks like I’ll have to keep working for another few years to build up savings for the lifestyle and rainy-day funds that I would like. My lump sums should only just afford an annuity to keep me going till 67 when the state pension kicks in.
Is there a rule-of-thumb as to how much you can expect from an annuity given a certain amount of investment? I’m aware there are many different types of annuities, like those that give you more income in the earlier years when you are more able to travel compared with later on.
Sorry for the newbie question –
A Facebook post
His assessment of his financial acumen is quite accurate. I see this as falling under the “what are they thinking?” category. Two years from early retirement and still thinking about building up savings. What I really don’t understand is thinking about retirement at age 60.
Question: The question was is there value in using an immediate annuity as part of your retirement income stream? Don’t you think that is safer for most people than investing during retirement?
No. I don’t. I can get better returns, which in the end reduces risk. Fear is the enemy of sound judgement and careful planning. But everything is situational. Do the math. Or if you aren’t comfortable doing the math find a trusted friend who will help. I am a computer engineer and product manager.
Don’t you like the confidence? “I can get better returns that reduce risk.” Really? Do the math ! An annuity is a steady income stream for life. That’s pretty good math.
“The income stream you create along with Social Security should equal your base pay/salary while employed.”
I won’t come close to that. But funny enough we can still sustain the same lifestyle after retirement as before. Without making any changes to expenses, location etc.. But then I was socking away a good chunk every paycheck and don’t have a big pension. Sustaining one’s lifestyle is a worthy general goal is pretty good advice and a good goal for many. Using one’s one personal situation to generalize about others is bad advice. Everyone’s situation is personal and different.
Yup, everyone is different, but starting retirement replacing 60%, 70% even 80% of your working base income and thinking you can sustain your lifestyle for thirty years is risky business.
Question: Am approaching retirement, and have put proper effort into developing a credible budget to plan for. Would like to start actively tracking expenses vs. that budget (to confirm and calibrate). What software tools do you all use to track actual expenses vs. budget…
Software? How about a pad and pencil? How many expenses are there to track? Certainly there is no need to track every penny being spent. Aren’t your expenses also your budget? And if you are thinking of projecting it decades into the future, forget it.
QUINNSCOMMENTARY 
let’s say you have 30-years in retirement, and you take the advice and buy an annuity–a fixed dollar amount for 30-years is what you collect (you could easily live to age 90)–would you advise your son or daughter to accept a job for 30-years with no pay increase.?
Inflation is your enemy–don’t forget the maxim; every year everything I buy costs more. Every senior living facility needs to have an embroidered pillow in every room with those 7 words.
You better have money growing in retirement just as you did when you were working. Social Security is annuity with a COLA–if you have a few good mutual funds the 4% + 3% method has worked exceptionally well at the beginning of every bear market since 1937.
If we have another bear market implosion like we did from 1929-1933 don’t think some high rated insurance companies won’t go belly-up–the Hartford saved itself in 2008-2009 by buying a Florida bank and then collecting federal subsidies. The Hartford had a history the pre-dated the Civil War and insured Grant and Lee.
LikeLike