Table of Contents for
Retirement Life Insurance

Retirement Life Insurance by Steve Heller Retirement Life Insurance

Cover
Title Page
Copyright
Acknowledgments
Contents
Preface
Chapter 1: The Retirement Crisis in Brief
- A Tale of Two Widows
Chapter 2: A New Use for Life Insurance
- Retirement Income Security and Life Insurance
- Prerequisites for Calculating Sustainable After-Tax Spending
- Calculating Sustainable After-Tax Spending
Chapter 3: A Visit with the Financial Planner
- Back to Our Two Sisters…
- What is Sustainable Spending?
  - Life Insurance is a Perfect Match for the Risk of Dying Early in Retirement
  - How Spending Money on Life Insurance Premiums Can Increase Sustainable Spending
- Another Look at the Comparative Results with and without Life Insurance
Chapter 4: Another Visit with the Financial Planner
- Year Numbers
- Cash
- Nominal vs. Real Return
- The Need for an Annual Review
- Traditional Retirement Account Assets
- Withdrawal Strategies to Optimize Taxes
- Four Different Withdrawal Strategies
- Other Ways to Improve Sustainable Spending
- Significant Improvements in Sustainable Spending by Adding Insurance
- Roth Assets
- Taxable Assets
- Taxable Assets Basis
- Estimating Taxes vs. Precise Tax Calculations
Chapter 5: The Withdrawal Source Section of the Spreadsheet
- Cash Delta
- Why it’s Not Important to Calculate Future Results Precisely
- Traditional Retirement Account Delta
- Roth Delta
- Sale Basis
- Long Term Capital Gains
- Taxable Bought
- Qualified Dividends
- Social Security
- Taxable Income
- Nontaxable Income
Chapter 6: Cash, Taxes, and Insurance Premiums The Next Day…
- Cash before Taxes and Insurance
- Estimated Federal Income Tax
- Insurance Premiums
- Cash after Taxes and Insurance
Chapter 7: Calculating Sustainable Retirement Spending
- A Very Simplified Example of the Sustainable Income Calculation
  - A Well-Known Solution to the Problem of Level Payments When there is Interest being Paid
- Chapter 8: Adding an Annuity
- Chapter 9: Can an Annuity Improve Sustainable Retirement Spending?
Appendix A: Reference Manual for the Gui Interface of the Rhino Retirement Analyzer V1.0, Basic Mode
- The Opening Screen
- The Personal Data Tab
- The Assets Tab
- The Income Tab
- Salary
- The Annuities or Pensions Tab
- The Expected Additional Expenses Tab
- The Existing Life Insurance Tab
- The Assumptions Tab
- The Suggested Insurance Tab
- The Suggested Annuities Tab
- Other Features of the GUI Main Screen
- Saving, Reloading, and Clearing Data
Appendix B: Reference Manual for the GUI for the Rhino Retirement Analyzer v1.0, Expert Mode
- The Expert Mode Checkbox
Appendix C: Tutorial for the Scripting Language and Command-Line Interface of the Rhino Retirement Analyzer v1.0
- Why does the Rhino Retirement Analyzer Need a Command-Line Interface and a Scripting Language?
- The rra File Type: Initializing the Program with Previously Saved Data
Appendix D: The Market for Retirement Spending Optimization
- Does the Public Know that Retirement Spending Optimization is a Problem?
Appendix E: The Genesis of the Rhino Retirement Analyzer (and this Book)
- A General Description of the Current Version of the Program
Appendix F: What is Included, What is Excluded, and Known Limitations of the Program
- Factors that are Included in the Rhino Retirement Analyzer Calculations
- Factors that are Not Included in the Rhino Retirement Analyzer Calculations
- Known Limitations of the Program
- Disclaimer and Caveats
Index

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As with the return of premium feature, some of an existing annuity’s basis may have already been returned by the time the simulation begins. The program takes account of this when calculating the remaining non-taxable amounts.

Note that we haven’t set an inflation assumption yet, so checking the checkbox won’t affect the results at present. However, it will when we set the inflation adjustment.

Of course it is possible for a client to have more than one existing life insurance policy, but most clients who have multiple life insurance policies have probably been extensively counseled on their need for life insurance and are less likely to need more. For this reason, the free version of the program handles only one existing policy per client. However, it would be quite feasible to add the ability to handle multiple policies to the program as a customization, if desired.

If the policy is a whole life policy, you can enter “99” for the term, so that the program will assume that the policy will remain in force during the entire simulation.

Of course the client can keep the policy in force after the spouse dies, assuming that the term has not expired. However, the program’s goal is to maximize sustainable spending, and once the spouse dies the policy is no longer needed to mitigate the loss of income to the spouse. Thus, the program assumes that the policy will be dropped at that point.

Note that not all terms, ages, and face amounts can be estimated using this button. It is provided only as a convenience.

Insurance payouts are always shown in the year after the event that caused the payout, because the death is (arbitrarily) projected to happen at the end of the year.

Note that for existing inflation-adjusted annuities, the same inflation rate is applied to payments starting from the beginning of the annuity.

See https://portfoliosolutions.com/latest-learnings/blog/30-year-risk-and-return-forecast-2016.

The program will estimate the taxable amount so that it will have something to work with if that information is not available from the initial annuity quotation. Of course, the actual taxable amount should be known before purchasing the annuity, but an approximate taxable amount generally doesn’t affect the sustainable spending significantly.

Obviously, tech support for the free version of the program will be limited by available resources. Paid versions include enhanced support, and enhanced support for the free version can be purchased on the program’s web site, rhino-retirement-analyzers.com.

The Tax Test tab shows the filing year for which the taxes should be compared. Use of a tax preparation program for a different filing year will probably not produce the same results.

See https://infogalactic.com/info/Software_rot

There may be slight differences in the GUI window you will see if you execute this command, due to changes in the program between the time this book was written and the version that you have downloaded from the web site.

See the online documentation for a definition of the meanings of all of the different command type letters. In this document we will see how A, F, M, R, and S are used.

This number will always be 0 in an rra file, and will be ignored when processing the file. It is present for compatibility with the rrr file type, to be discussed later.

With the current version of the program, the file type does not affect decoding, but this line must be present to validate the script file.

See the online documentation for the complete list of variables that can be assigned in a script file for the current version of the program, the format for each variable type, and the corresponding GUI entity for each variable.

All user-accessible floating point variables in the current version of the program are floats rather than doubles, which is why there are 7 significant digits in the value.

It would be very inconvenient to be required to include the day of the week when entering a date in a script file. However, that isn’t necessary because I have included the ability for the program to read dates with just the month, day and year. So in this example of the date of birth, you could change the assignment statement to “A0,Self_DOB,Jun 1 1959“, and it would still work in the same way. In other words, the day is included in the output but isn’t required for input.

The distinction between the A and M command letters is not meaningful in the current version of the program. However, it is recorded so that the program could change the timing of the replay to be faster if we are modifying the same variable several times in a row, e.g., when typing in a value of 100000, the same variable might take on values 1, 10, 100, 1000, 10000, and 100000 consecutively.

“Perspective of Future Social Security Beneficiaries Ages 45-64: Detailed Findings”, downloaded from http://www.aarp.org/content/dam/aarp/research/surveys_statistics/econ/2015/perspectives-future-beneficiaries-res-econ.pdf

Of course not everyone in the AARP survey is technically a Baby Boomer, as that encompasses people born from 1946 through 1965, meaning that age 50 was the cutoff when that survey was done in 2015. But most of them are, and the results are unlikely to be affected too much by including a few people under 50.

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Table of Contents for Retirement Life Insurance

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Table of Contents for
Retirement Life Insurance