Re: how to compare living standards


"William F Hummel" <wfhummel@xxxxxxxxxxx> wrote in message
news:dbca42tlmovlc8dciek3mjjbkn19tvemp5@xxxxxxxxxx
On Tue, 18 Apr 2006 12:58:45 -0500, "Jim Blair" <jeb@xxxxxxxx> wrote:

I plan to take the minimum distribution required by the IRS (since I will
soon be 70.5) and was suprised to see that the total value will continue
to
increase for many years, as will my annual payments. (but maybe not in
real
dollars) My annual nominal distribution won't decline until I am about
95,
so I better get my wild partying out of my system before then.

I suspect you mean the balance in the IRA (rather than the annual
distribution) won't decline until then.

Hi,

Looking at the table they gave me of my projected payments, based on an
assumed 6% annual rate of return, my annual MDO will increase until age 96
and then decline slowly. The balance in the IRA will increase, reaching a
maximum at age 83 and falling to its starting (i.e. current) value at age
92. (All in non-inflation corrected dollars). The reason that it falls
after reaching its current value while it increased before, is that now my
annual payments are larger.

....The percentage you have to
distribute grows each year. By age 95 it is over 50%. That's far
more than the IRA balance will earn in a year.

No, the factor is "only" 8.6 for age 95, but that is still much more payout
than is expected to be gained. Payouts are projected to be larger than
gains starting at age 84.


My IRA has been growing too since I am withdrawing the minimum
required each year. It is 100% in equities, so I have no way of
figuring when the balance will decline. It all depends on how the
stock market fares down the line.


I am impressed! You are much more aggressive than I am--a real gambler.

Looking back, I was too conservative. I should have started my TIAA/CREF
account (I was age 33) with 100% in the stock fund (CREF) and not put any
into bonds (TIAA) until I as 55 or 60. The advice given in those days was
to split the imput 50/50 between stocks and bonds. And I didn't know any
better :-(

I was worried about the fall in the stock market during the mid-1970's when
my CREF account had less money than I had put into it. I was even on my way
to the business office to switch my entire contribution over to TIAA. Put
the money where it is growing, not where it is falling, I thought. But
fortunately on my way I passed the office of the econ prof. When I told him
my intent, he said "smart people buy stocks when the are low, and sell when
they are high."

I said that by that logic, I should put all of my contributions into CREF.
He smiled and said "that is what I am doing".

While that sounded too radical to me, I decided to keep the 50/50 split.
Had I followed his advice I would be a multimillionaire now. But at my age,
keeping a 50/50 balance seems reasonable.



,,,,,,,
_______________ooo___(_O O_)___ooo_______________
(_)
jim blair (jeblair@xxxxxxxx) Madison Wisconsin USA.
This message was brought to you using biodegradable
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.

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