Hi, I'm Mike and I'm too old to retire early

[MikeTN]

Married, Age 68, working same job for past 35 years but now only half-time. Financially, I'm ready to retire, but I am fortunate to have a low-stress job I enjoy, a boss and co-workers I like, lots of vacation time. On the negative side, my DW has health problems and can't travel much, or take the stress of moving. My job gets me out of the house but also leaves me time to help DW and hike with my dog here in the hills of East Tennessee. I'm not preaching, but for me continuing to work half-time makes sense. I used some of the earnings to buy a fun car last week, a Porsche Boxster. I know that four cars is too many, and I plan to sell my '38 Ford coupe.

I have been visiting this forum for years as I find that it has members who are well informed and produce good debates and suggestions.

I've noticed that most are down on annuities. I'm not. I have access to low cost TIAA-CREF retirement annuities, and I think it makes sense for me to annuitize, say 25 to 40 percent of my assets.

I think that annuities aren't necessary if your assets are great, e.g., more than 25 times the income you want/need from those assets, but most Americans are not that well off when beginning retirement and thus should seriously consider purchasing annuities to supplement their government annuity (Social Security) as this will reduce the risk of running out of money if they live into their 90s.

 

[73ss454]

Hi Mike, if it were me I'd keep the 38 Ford and dump the Porsche.

 

[NW-Bound]

Hi Mike! Another part-time worker. All right!

Yes, you are too old to retire early, sir. How about late retirement, or do you just keep on goin'?

 

[panacea]

Hey Mike. Sounds like you're having fun. Regarding your annuity comment, yes, most of us aren't fans but that has a lot to do with the fact that they are usually sold not purchased, if you know what I mean. TIAA-CREF is one of the good ones- low cost and not sold. Sometimes annuities can serve a useful purpose and if so, better to find one that's suits your needs, not the needs of the "advisor" selling it to you. Also, you should trade the Boxster for a 911.

 

[Ed_The_Gypsy]

Remember Baldwin United. Remember Reading and Bates' pensions.

Annuities are not without risk. I.e., you could lose it all. The people who package them make money. They take risks with your money that you would not take that they hide from you.

However, the older you are when you buy one, the cheaper it is and the higher the return and your risk is reduced because you have fewer years to live and therefore a narrower window for them to go bust in.

I would suggest buying more than one from different places to spread your risk around.

Having said all that, I might consider one in the future to simplify our finances when we get infirm and too dotty to handle details.

 

[Aiming_4_55]

Hi Mike - welcome to the forum. As long as you are having fun, enjoy!

 

[MichaelB]

Hi Mike, welcome to the forum.

 

[Finance Dave]

Hi Mike, if it were me I'd keep the 38 Ford and dump the Porsche.

Agree! Just kidding Mike, it's yours...do what you want. I have a '69 Camaro and an '07 Mustang with 625 RWHP.

Welcome to posting on the board!

Sorry to hear of your wife's health issues, she is fortunate to have you to help with her care...and it's wonderful that you enjoy your work.

 

[eytonxav]

Agree! Just kidding Mike, it's yours...do what you want. I have a '69 Camaro and an '07 Mustang with 625 RWHP.

Welcome to posting on the board!

Sorry to hear of your wife's health issues, she is fortunate to have you to help with her care...and it's wonderful that you enjoy your work.

Dave, Good lord man, I hope thats not your daily driver Is that with a 250 nitrous shot

 

[friar1610]

I've noticed that most are down on annuities. I'm not. I have access to low cost TIAA-CREF retirement annuities, and I think it makes sense for me to annuitize, say 25 to 40 percent of my assets.

I think that annuities aren't necessary if your assets are great, e.g., more than 25 times the income you want/need from those assets, but most Americans are not that well off when beginning retirement and thus should seriously consider purchasing annuities to supplement their government annuity (Social Security) as this will reduce the risk of running out of money if they live into their 90s.

Hi Mike,

I got into a variable annuity with Fidelity years ago, mostly for the wrong reasons in retrospect. I subsequently transferred it to Vanguard and although I have often wished over the years that I could wave a magic wand and turn it into a taxable account, I am beginning to appreciate the fact that it can serve a valuable role in my/our portfolio.

Since I only worked about 6 years in a career other than the military, I had only limited access to 401K's. (I retired before the military became eligible for TSP.) Over the years, I have used the space within the annuity to rebalance my/our overall portfolio without tax consequences.

If I predecease my wife (which actuarially I am going to do), the annuity goes to her, she can annuitize it and it will provide her a stream of income to replace the portion of my pension she will lose. (I did take out a modest Survivor Benefit Plan so she will get only a portion of my retirement.)

If she predeceases me I can either annuitize it and go crazy on spending (unlikely since we don't really need the income for two of us, so why would I need it for one of me?) Or, I can tap it to do a few charitable things I'd like to do. Using this money for charitable endeavors will help negate the tax bite you get when you either withdraw from or annuitize.)

I'd still rather have the money in a taxable account because I'd have more flexibility. But, since I've had a good mix of VA investment choices over the years, it has grown nicely and I can certainly make it fit into my overall strategy.

 

[Midpack]

Financially, I'm ready to retire, but I am fortunate to have a low-stress job I enjoy, a boss and co-workers I like, lots of vacation time. On the negative side, my DW has health problems and can't travel much, or take the stress of moving. My job gets me out of the house but also leaves me time to help DW and hike with my dog here in the hills of East Tennessee. I'm not preaching, but for me continuing to work half-time makes sense.

Welcome to the forum. I think we all benefit from perspectives of other members, we all have different areas of expertise and experiences.

If you enjoy your work, there's nothing wrong with continuing to enjoy it and further enhancing your FI. We should all follow our own paths and respect others choices, but there is no right or best answer.

Lots already written about annuities. The Otar book was helpful to me for knowing when/if to annuitize some assets. Since annuities are a cost that may be avoidable and they have risks of their own, in general annuities should come as late as possible in life. And annuities are very expensive in the present low interest/return environment so delaying is all the more desirable if possible (anyone who's in Otar's red zone may not be able to delay).

 

[pb4uski]

Remember Baldwin United. Remember Reading and Bates' pensions.

Annuities are not without risk. I.e., you could lose it all. .....

Ed, I don't believe that there have ever been annuities in payout phase where the annuitants have not received the contractual payments. To the extent that the insurer's assets are insufficient, state guaranty funds would step into the void.

There have been accumulation phase annuities were policyholders have had to wait long times for their money and their interest rates have been reduced, but even for these policies, I believe the policyholders have ultimately received more than what they paid in.

 

[Ronstar]

Welcome Mike! Nice mid-life crisis you're having with the Porsche. I had the same symptoms when I bought my corvette.

 

[rescueme]

Concerning annuities, here's an article that was just posted this morning on M*:

Four Strategies for Combating Low Annuity Yields

BTW, DW/me do have an SPIA purchased upon my retirement in early 2007, primarily to allow us (me) to have a "pension" and delay SS till age 70, while taking advantage of SS rules that will allow me to draw against my DW's FRA SS at 50% for four years (we're the same age), but also give her the protection of getting my much higher SS benefit - assuming I pass first.

It has surved us well over the last 4+ years, and I could go into details on the how/why/etc. regardless of current interest rates, but I've done that before.

I'll just say that annuities (specifically an SPIA - the only one we would consider) can greatly aide in your retirement (decumulation phase) income, considering that it is not for everybody. You need to have the right reasons/conditions to consider such a move, IMHO.

BTW, welcome to the board...

 

[Andre1969]

Hey now, there's no such thing as "too many cars"! ;-)
Welcome to the forum!

 

[Ed_The_Gypsy]

Ed, I don't believe that there have ever been annuities in payout phase where the annuitants have not received the contractual payments. To the extent that the insurer's assets are insufficient, state guaranty funds would step into the void.

There have been accumulation phase annuities were policyholders have had to wait long times for their money and their interest rates have been reduced, but even for these policies, I believe the policyholders have ultimately received more than what they paid in.

a) I would be very interested if you have specific information on about happy outcomes for the two cases I remember, or if you can direct me to a source with more information. Those annuitants got stiffed at least in part, as I recall. I have never heard of state guarantee funds for banko annuities. It sounds like a fairy tale to me ("...and they lived happily ever after").

b) With respect to your second point, which is a best-case scenario, if annuities cannot be relied upon in extremis for the consistent distributions they promise, why would anyone even consider buying one? Only the gullible and those who have no choice (R&B retirees). (And maybe me when my brains have fallen out at last.)

 

[pb4uski]

a) I would be very interested if you have specific information on about happy outcomes for the two cases I remember, or if you can direct me to a source with more information. Those annuitants got stiffed at least in part, as I recall. I have never heard of state guarantee funds for banko annuities. It sounds like a fairy tale to me ("...and they lived happily ever after").

b) With respect to your second point, which is a best-case scenario, if annuities cannot be relied upon in extremis for the consistent distributions they promise, why would anyone even consider buying one? Only the gullible and those who have no choice (R&B retirees). (And maybe me when my brains have fallen out at last.)

A publication of the NY State Insurance Department indicates "No policyholder of a domestic life insurer has ever lost a penny because a company couldn't meet its obligations."

http://www.cmgniagara.com/docs/Life-Ins-Guarantee-Corp-NY.pdf

In the case of Baldwin United, policyholders eventually received their money back plus interest (albeit not at the high crediting rates that they expected and they had to wait and if they bailed out early they may have had to pay surrender penalties, but those who waited were eventually made whole). See LA Times article: Baldwin United Annuity | Baldwin-United Assets Transferred; Annuity Holders to Get Payoffs - Los Angeles Times

What's a banko annuity? In an earlier post you stated "you could lose it all" - what insolvencies were you referring to?

 

[Free To Canoe]

You'll get my 38 Ford coupe when you pry it from my cold, dead fingers.
Just kidding.
Welcome MikeTN and thanks for sharing your good ideas.

 

[Ed_The_Gypsy]

In the case of Baldwin United, policyholders eventually received their money back plus interest (albeit not at the high crediting rates that they expected and they had to wait and if they bailed out early they may have had to pay surrender penalties, but those who waited were eventually made whole).

Thank you. You have restored my faith in insurance companies. Please sell me an annuity.

 

[rescueme]

Thank you. You have restored my faith in insurance companies. Please sell me an annuity.

You sound like the bunny, on this subject.

Is that you, bunny? ...

 

[Ed_The_Gypsy]

rescueme, I am deeply flattered.

You have noticed that no-one has seen us together at the same time in the same room.

But I ain't him.

 

[pb4uski]

Thank you. You have restored my faith in insurance companies. Please sell me an annuity.

Actually, I'm not a fan of annuities.

But I am also not a fan of hysterical misinformation like "you could lose it all".