$1700 X 12= $20,400 $20,4000 X 4 years = $81,600 $81,600 divided by $1300 (the difference if he waited until full retirement) = 62.76 So it would take nearly 63 years to gain back what he would have earned had he taken it 'early'. Will insurance or the cost of it be an issue? Do you think you will have the right proportion of after retirement income to live as you would like to in your retirement years? What I have seen of many who retire early, is that once they hit social security age, their 'pension' is reduced by the amount they start receiving from SS, thus their income never really goes up. I would think you would need an appropriate amount of additional retirement savings that you can invest and watch 'grow' as it will be needed when your income does not grow to meet inflation. It was a bit scary when I retired, but with the help of a good financial planner, I felt confident in that I would be secure and went ahead and retired at 48 with 30 years of service. I have never regretted it as I have a life filled with loved ones, and enjoy everyday being a 'vacation' day, filled with whatever I choose to do, (or not do) that day. Sue

"To be picky, I doubt that we're all on a fixed income, which is: "An income from a pension or investment that is set at a particular figure and does not vary (as a dividend) or rise with the rate of inflation." Of course, people don't have unlimited income, but that is not the opposite of fixed income. " Well, in the US, nobody is on a "fixed income" by that definition. SS etc is all indexed, so not even retirees are truly fixed. In terms of budgeting though, most people have a fixed income for any reasonable budget period - months, a year etc. It is a lot simpler to budget on that type of income than for people with sales jobs etc that work on varying commissions. I think there is a big difference between asking "How do I budget?" and "How do I spend less?" If you've planned properly for retirement, then you still need to budget but don't necessarily need to cut spending. Example - you need to put emergency purchases on a credit card, but you have the cash flow to pay that card off during the year. In that case, you actually have enough money to save/spend, you just need a more organized way to do it so you save BEFORE the expense, not AFTER.

Usually the owner of the money gives a pot of money now, or makes regular payments over a period of time, to usually an insurance company, in exchange for a benefit that the insurance company offers. The insurance company agrees to begin paying a specified amount to that person, beginning at a certain date and, often, continuing for the rest of the person's life. Or, at a lower rate of regular payout, to include a surviving spouse. However ... some people found that the original owner of the money often died within a few months of beginning to receive the annuity ... and that was the end of the contract: the full amount paid was kept by the insurance company (except for the small amounts paid out). One financial advisor that I knew had a client over 80, with no dependents, that considered buying an annuity (i.e. was in the process of being sold an annuity by an agent). He, cancelling another appointment, travelled some distance to meet with the two, and when he asked how much of a benefit there would be if the lady died in a couple of months, was told that there was no such provision in the proposed agreement. Many people who were much younger than that lady, when considering a proposed contract, didn't like that idea, so there's an option available for the original purchaser to have a provision in the contract where the payout period will be for his/her life but, should s/he not live long after the payout begins, the annuity will continue (at a reduced rate) for a 10, or 15 year, or other length, period. The rates that insurance companies offer regarding annuity payout lebvels usually bear some connection with current interest rates. When rates are high, often the rates of payout offered by annuities are higher than average, but usually not comparable. When rates are low, as they have been lately, payout rates offered are usually low. The reason being that the insurance company has guaranteed to make payouts at predetermined levels, but don't have certainty as to how much they can earn on the invested assets in the meantime. The insurance company doesn't give a guarantee to make a level of payout that is going to hurt them in the end. In the case of life insurance, the owner of the policy bets that s/he's going to die prematurely, when some non-employable dependents require an income for them to live on for a number of years, but leaving no one to provide it. The insurance company bets that the buyer of the life insurance is going to live to an advanced age, paying premiums throughout. The insurance companies are the ones with the actuaries. In the case of an annuity, the buyer is betting that s/he is going to live for a long time ... collecting that annuity payment regularly through to, say, 104. And the insurance company bet that s/he's going to die before they've paid out a bucket of money in total to that person. And if they're covering a spouse, as well, or have given a guarantee that they'll continue paying for, say 10 years, even if the owner dies a month after payout begins ... the amounts of the regular payout the the company is willing to offer is lower. As their risk is greater. I confess to a bias against insurance companies' practices, largely because they marketed whole life insurance policies for ages, telling ofthe great value in having some value build up in the policy over the years. But, in order to collect that "extra value" ... ... the owner of the policy pretty well had to arrange to be alive and dead at the same time. For many, who want to spend some time learning how money works, and are not going to get all bent out of shape if the value of theri assets drops for a while when there are corrections in the equity markets, I think that they can likely do better investing on their own, if they do it skilfully. For quite a long time, I said that no one cares as much about your money as you, so it's wise to learn how to manage it well. But in recent years I've changed the tune somewhat, to ... no one cares as much about your money as you ... except some folks that would like to shift some (most? all?) of it from your pocket ... ... into theirs. Your job is to keep that from happening ... unless you get good value in return. Enough for now. Good wishes for making themost effective coices, given your circumstances. ole joyful

As a banker, I know that in the industry there are certain groups of high-earning professionals that have a reputation for being very poor money managers. There are lots of banker insider jokes about this particular pool of professionals. I know they are not unintelligent people. They couldn't be as judged by their education level & career successes. Many, fortunately, turn their money over to a financial manager. Those who do not are a banker's worst nightmare (well, that's not true...but close enough). Honestly, the reputation is so bad that if bankers could reject people without feeling they were discriminating soley on career...they would. So, I know from experience that IQ level does not guarantee understanding of finances. It seems to be rather that these people have been so involved with the education process in their chosen career that other areas of knowledge are short-changed. They 'could' understand but don't bother to learn. I've found myself in situations that required IQ testing several times. My scores have ranged from 131 to 136 with the higher score coming on a day I was completly stoned on Roxicet (recovering from major surgery & the test day couldn't be changed) & could hardly read the questions. The breakdown of my test scores tell a much different story though than one might assume from just the overall score. I'm just on the positive side of the moron level spatially. Well, not quite but didn't score very well at all. However, my language score was 187. So, when the other test parts like math (I think there was another part also?) were averaged, I came out OK. Since this was a private test situation with no privacy concerns, the administrator of my test said that they rarely saw such a divergence in scores & asked about my background. I was sick as a kid & missed 5th, 6th, 7th, & almost all of 8th grade. During those years, I had a home teacher who came for one hour/day. We mostly focused on maintaining the dexterity in my hands (I play piano) & history. I clearly remember going through my 6th grade history book in two week's time. I did A LOT of reading during those years. But, I was mostly bedridden so had few experiences out in the world. At 14, I was given IQ tests & some type of highschool equivilency exam (this was in CA mid-60s). The school determined I didn't need to attend highschool. What to do with a kid that young who's not in school? In conjunction with my parents, we decided that I would attend school for 3 periods a day in the morning taking classes of my choosing. I took ONLY foreign language & literature plus one lonely history class. I took zero math or science classes. When I was old enough to work, the school got me a job in the Mayor's office & that, in essence, became my 'school'. I held that job for 3 years. The school gave me a diploma when I was seventeen. I went on to art school. I don't think my IQ score has played any significant role in my life other than frustrating me because I was always lost until GPS became available in cars! Did I mention that I love my GPS?! So, it's no surprise that my language skills developed at a higher level than my spatial abilities. It's not ALL in the DNA. Life experiences do contribute to our IQ scores. My father only had an 8th grade education & didn't learn English until he was thirteen; yet he became a very successful business owner (Russian immigrant family). He was a math whiz but not exceptional at reading/language. Yet, he was extremely adept at understanding the finances of his business & banking relationships. I believe he was successful because he deemed understanding his finances as critical to the success of his business and, therefore, devoted energy to learning how money works. My father was a musician & that's how he earned his living & supported his family until purchasing his first business at around age forty. Music taught him math skills (as it did me) as well as personal discipline. I believe it was those skills as opposed to his IQ (don't know what it was?) that contributed the most to his success. So, anyway...I'd be very hesitant to place any responsiblity for the country's mortgage debacle on IQ. I do, however, feel we are seriously lacking in even the most basic financial education in our school systems. My own son is a classic example. He received no financial education in highschool. In college, he was a double science major. In order to get through in four years he didn't have time to take any finance, business, etc. type of classes. So, were it not for DH & I being bankers he wouldn't have nearly the financial understanding he does today. I've always heard that IQ represents only 20% of a person's potential. The remaining 80% is determination & ingenuity. /tricia