Retired Actuary Comments on Proposed Changes to Actuarial Standard of Practice No.32 (ASOP 32) Applicable to Social Security

Because Social Security benefits are, for most people in the U.S., a major component involved in determining how much they can afford to spend in retirement, we periodically focus on Social Security financing issues in this blog (with apologies to our non-U.S. readers).  Most recently, we addressed some of these issues in our post of June 27, 2018, “A Slightly Different Actuarial Perspective on the 2018 Social Security Trustees’ Report”.

It is not “Absurd” to Express Expected Future Healthcare Costs as a Lump Sum Present Value

In his October 17 post, “Getting Real About (Annual) Health Care Costs in Retirement”, Michael Kitces discusses that, while the lump sum present value of expected healthcare costs in retirement may be “scary”, expected healthcare costs can become more manageable (or “plannable”) and less scary, to the average person, when expressed as a stream of annual costs with an equivalent present value.  He states “recognizing that health care costs may be ‘just’ about $5,000/year per person (or $10,000/year for a couple) for 20+ years of retirement is not necessarily as daunting as a $273,000+ lump sum obligation for retiree health care costs!”

ALRIE is a Better Nest Egg to Lifetime Income “Translator”

In his October 10, 2018 article, “Retirement savings:  How to translate your nest egg into monthly income,” Robert Powell suggests two possible ways of expressing accumulated savings as lifetime income.  According to Mr. Powell, the easiest way to do this is to obtain a quote for a single premium immediate annuity (SPIA) as, “Doing so will give you a sense of how much monthly income you would receive for life from an annuity based on the value of your retirement nest egg.”