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?
Comment: 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.”
Comment: 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 
What software tools do you all use to track actual expenses vs. budget…
I liked your response about paper and pencil! I eventually migrated to tracking it on a spreadsheet-but really, a spreadsheet is just a digital version of paper and pencil. Smith Smallwood
P.S. I enjoy reading your pieces.
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The people in these posts sound awfully naive to be near 60. Especially since they are in the workforce. It doesn’t seem like they have read anything worthwhile or talked to anyone who knows anything.
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I live on SS and a pension, not that different from a salary. Each month my income -less tax withholding and deductions – are deposited in checking accounts. From those accounts all spending and saving happens. All routine bills, utilities, property taxes, HOA fees, etc. are taken from one account. Another is used to pay non routine bills, clothing, minor home spending and charitable contributions, The third account is for eating out, grandchildren, some travel. At the end of the month there may or may not be money left in two accounts. The routine bill account always has excess.
That is the extent of our budgeting and tracking. We simply can’t spend more than our income and have never paid a penny in credit card interest. No need to track anything because we can’t go over budget. I admit I do look at bank balances several times a a week and compare the balance with credit card balances.
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Sounds like the old envelope budgeting method, just using bank accounts instead of paper envelopes. So Mr Quinn does have an actual budget!
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The only budget is my net income. Which is all anyone needs. Save first, never pay credit card interest and spend what’s left anyway you desire.
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