See also multiple blogposts on windfall^current_Income
Most people are unprepared for their cash flow in retirement… are they? Today I will challenge this conventional wisdom.
https://tanbinvest.dreamhosters.com/2017/02/06/cashflow-during-retirement/ has more details on income and expenses during my semi-retirement.
Not sure about wife’s opinion, but we will have monthly passive income at least 3k/m, possibly 5k/m, inflation-proof. Likely more than enough.
Kids are already grown-up and houses paid up by that time.
Lump sum payout at that age is probably not needed. My dad upgraded his home at age 74. If I need any lump sum after 65, I could downgrade my home.
I heard that many insurance customers at this age don’t know what to do with the lump sum payout. For most people (myself included) that would be a real temptation to /splurge/.
Instead, I feel it’s better to receive the payout when I need it most — before retirement, like age 45. Consider the SAIL plan, which pays out all the asset value during the 20Y payout phase, so terminal surrender value is $0. I now feel this is better than the annuity products since the payout rate is higher and wait is shorter.
From this standpoint, it’s unwise to lock away 50k now to produce a deferred payout at 65 :
- After 65 I probably don’t need that payout
- From now till the payout age, I don’t have access to this 50k
This is a commitment-phobic view, but also a liquidity-focused view. It casts doubt on any annuity products like
- Allianz IncomeProtector — Allianz IncomeProtector
- Tri-generation VIP from Tokyo Marine