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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 09:47 AM   #21
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Re: Pensioners v Do-it Yourself'ers

Quote:
Originally Posted by kcowan
So my question is that:
If a COLAd pension covers your necessities does that make you more or less risk tolerant with your portfolio?
kcowan,

For me the answer to this question is that I tolerate more risk in my portfolio. As I have posted elsewhere, I treat my COLA'd pension as the income stream from a very substantial allocation to Treasury Bonds. My actual portfolio is 77% equities, which many would consider high risk. But calculated with those "phantom bonds" included it is only 38% equities. Volitility of the equity portion of the portfolio is easy to ignore when I know that all non-discretionary expenses are covered by the pension.

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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 12:16 PM   #22
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Re: Pensioners v Do-it Yourself'ers

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Originally Posted by kcowan
So my question is that:
If a COLAd pension covers your necessities does that make you more or less risk tolerant with your portfolio?
It definitely made me more risk tolerant up until now. For many years DW and I were in the Nords camp (100% equities). I have lately moved over into about a 80/20 mix as I have moved multiple years to a cash bucket with some aditional in bonds (per recommendations here). I also paid off the primary mortgage and have a cash equivalent earmarked for the remaining mortgage on the weekend place. And as DW approaches ER in a year or two I am toying with heading toward a more traditional 60/40 split. My outlook has switched more to preservation than growth now that we are clearly "there." Also, the whole issue of planning on a withdrawal strategy changes your perspective. You don't want to be pulling a years worth of expenses from equities right after a 20% drop. A decent sized bucket of cash equivalents helps with that. For me the cash cushion is more important than bonds.
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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 12:47 PM   #23
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Re: Pensioners v Do-it Yourself'ers

I have a survivor annuity with a cola .Plus I was able to start social security at 60.These two items cover most of my expenses so my investments are used for extras including a pretty big travel budget. This hasn't realy affected my 80 stocks /20 bonds mix.I've found over years that is the mix I can sleep well with.
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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 05:15 PM   #24
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Re: Pensioners v Do-it Yourself'ers

Quote:
Originally Posted by grumpy
My actual portfolio is 77% equities, which many would consider high risk. But calculated with those "phantom bonds" included it is only 38% equities.
I am the same generally. My split is 60% equities 4 years into retirement (because my Ex got half the pension) but if I exclude pensions from the mix then equities is 78%. I am on the high risk side but after 4 years I have gained a measure of comfort and so I am considering keeping at it and maybe creating a charitable trust to pass along to my two sons.

OTOH it would be easier to just go with high fixed and relax. I am undecided. My altruism is working against that.

Quote:
Originally Posted by donheff
You don't want to be pulling a years worth of expenses from equities right after a 20% drop.
But my rebalancing always seems to leave some cash around in money market funds. There is plenty of opportunity to draw living expenses out of the 40% as long as I stay away from slavish adherence to the split.
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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 05:18 PM   #25
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Re: Pensioners v Do-it Yourself'ers

It seems like that for the majority of posters on this thread, pensions are an important part of RE plans. And having a significant pension certainly should impact portfolio management and RE decisions.

I've been reading this board for quite a while now and frequently know the circumstances of many of the posters based on information they've given previously. That is, whether they are predominantly DIY types, have working spouses, have generous pensions, etc., etc. But I wonder how many newbies read our posts not knowing our personal circumstances and walk away misunderstanding the logic behind various points of view?

I guess the concept of knowing who you're listening to before you accept the advise would certainly apply!

My other comment would be that if this board still exists in a decade, I'm betting the number of DIY types increase and the number of big pension types decreases as seems to be the trend.

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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 06:05 PM   #26
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Re: Pensioners v Do-it Yourself'ers

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Originally Posted by Empty Pockets
I'm not here to sell anyone on a variable annuity, and if you don't like them fine. I just ask that you give the rest of us the benefit of the doubt that they are a good option for providing accumulating & distributing retirement funds.
I'd like to thank you for helping my eventual retirement. The profits my insurance companies (in my index funds) make off idiots people like you help my overall returns.

My father and FIL bought variable annuities. They are full of fees and expenses that crush any return. You obviously met a good salesman financial advisor. I have never seen any credible reason that variable annuities make a better investment than index funds (very tax efficient) in an after tax account. Everything you get out of a VA is "ordinary income" but the capital gains get a much lower tax rate. The fees are also an order of magnitude (or more) lower.

You may have drunk the "kool aide" but I hope to give future victems pause before venturing into the quick sand.
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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 08:52 PM   #27
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Re: Pensioners v Do-it Yourself'ers

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Originally Posted by 2B
I'd like to thank you for helping my eventual retirement. The profits my insurance companies (in my index funds) make off idiots people like you help my overall returns.

I'm surprised it took this long to get the "idiot" reference to anyone considering annuities. Yes, there are high fees and like Rich I would probably have a hard time writing a large check to an insurance company when it come right down to it. But I don't think it is a terrible idea in some situations. My sis-in-law bought a small one to supplement her salary when my brother died. An easy way to set up some additional lifetime income.
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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 09:07 PM   #28
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Re: Pensioners v Do-it Yourself'ers

Dog, while I certainly do not condone the name calling and the unfortunate use if the "i" word, I think there is a huge difference between an immediate annuity as you are referring to and the variable annuity product mentioned in the OP. I can see no reason any informed person would choose a VA over a number of much better alternatives.

Are you still working?

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Re: Pensioners v Do-it Yourself'ers
Old 03-22-2007, 10:58 PM   #29
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Re: Pensioners v Do-it Yourself'ers

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Originally Posted by REWahoo!
Dog, while I certainly do not condone the name calling and the unfortunate use if the "i" word, I think there is a huge difference between an immediate annuity as you are referring to and the variable annuity product mentioned in the OP. I can see no reason any informed person would choose a VA over a number of much better alternatives.


Rain, sleet, snow, will not keep the Moderators from their appointed rounds.

In the Dark ages, 60's and 70's, when we had much, much higher tax rates and no sponsored way, (IRA, 401's etc.) to defer taxes, Variable Annuities were actually pretty popular for the gentrified crowd.

As you mentioned, they make no sense at this juncture.

But if you personally need a write-off, you might consider sponsoring me in the next tournament event, (We can call it "Catholic Charities")

Good Job

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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 07:34 AM   #30
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Re: Pensioners v Do-it Yourself'ers

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But if you personally need a write-off, you might consider sponsoring me in the next tournament event, (We can call it "Catholic Charities")
I thought the whole-wheat division of Wonder Bread was your sponsor? Did you do something to let them down?

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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 07:43 AM   #31
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Re: Pensioners v Do-it Yourself'ers

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Originally Posted by REWahoo!
I thought the whole-wheat division of Wonder Bread was your sponsor? Did you do something to let them down?
It had something to do with his putts.
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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 08:38 AM   #32
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Re: Pensioners v Do-it Yourself'ers

Quote:
Originally Posted by REWahoo!
Dog, while I certainly do not condone the name calling and the unfortunate use if the "i" word, I think there is a huge difference between an immediate annuity as you are referring to and the variable annuity product mentioned in the OP. I can see no reason any informed person would choose a VA over a number of much better alternatives.

Are you still working?

I understand that but I also see the same bashing towards immediate annuities. But so be it.

Yes I am still working. Not long to go though.
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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 09:07 AM   #33
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Re: Pensioners v Do-it Yourself'ers

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Originally Posted by DOG52
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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 09:15 AM   #34
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Re: Pensioners v Do-it Yourself'ers


I thought I made it somewhat clear that I wasn't trying to sell anybody on an annuity. I don't want this thread to become an annuity bashing-defending thread, that's been done enough.

I thought I might have something to add to this thread since I have a Variable Annuity and I have a portfolio of after tax index funds. And yes, I work with a financial planner. I wanted to put more in the annuity and he talked me out of it. He said I should have a portion in the taxable funds.

There are a lot of good people here, but I'll be leaving this forum now. I can get called an idiot anywhere. I'm just a working stiff with a High School education, but if the S& P averages 9% for the next 18 years I'll have about $5,000,000 when I turn 59.5 Let me be an idiot and I'll leave the rest of you alone now. Good bye.
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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 09:30 AM   #35
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Re: Pensioners v Do-it Yourself'ers

Quote:
Originally Posted by DOG52
I understand that but I also see the same bashing towards immediate annuities. But so be it.

Yes I am still working. Not long to go though.
Dog: I've been doing this high wire act for 20 years now, without a safety net.

I can totally understand the appeal of putting a small percentage in an immediate annuity.

What has always stopped me from doing so, is that I have children, and would like to leave them a little something, so that has been enough of an incentive to not do so.

You're single, and if you have no restrictions as above, and it makes you feel better why not? (In fact, my personal opinion is that it makes perfectly good sense for you to do so).





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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 09:32 AM   #36
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Re: Pensioners v Do-it Yourself'ers

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Originally Posted by Rich_in_Tampa
It had something to do with his putts.
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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 09:33 AM   #37
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Re: Pensioners v Do-it Yourself'ers

Quote:
Originally Posted by Empty Pockets
There are a lot of good people here, but I'll be leaving this forum now. I can get called an idiot anywhere. I'm just a working stiff with a High School education, but if the S& P averages 9% for the next 18 years I'll have about $5,000,000 when I turn 59.5 Let me be an idiot and I'll leave the rest of you alone now. Good bye.
Don't take it personally...........some people are just mean...........
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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 09:51 AM   #38
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Re: Pensioners v Do-it Yourself'ers

Quote:
Originally Posted by Rich_in_Tampa
It had something to do with his putts.
Rich, and ReWahoo:

"I'm the gift that keeps giving", by supplying you guys with material.
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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 10:26 AM   #39
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Re: Pensioners v Do-it Yourself'ers

Hey, from what I hear, Jarhead plays the entire hole with his driver.

Ha
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Re: Pensioners v Do-it Yourself'ers
Old 03-23-2007, 10:59 AM   #40
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Re: Pensioners v Do-it Yourself'ers

Quote:
Originally Posted by 2B
I'd like to thank you for helping my eventual retirement. The profits my insurance companies (in my index funds) make off idiots people like you help my overall returns.

My father and FIL bought variable annuities. They are full of fees and expenses that crush any return. You obviously met a good salesman financial advisor. I have never seen any credible reason that variable annuities make a better investment than index funds (very tax efficient) in an after tax account. Everything you get out of a VA is "ordinary income" but the capital gains get a much lower tax rate. The fees are also an order of magnitude (or more) lower.

You may have drunk the "kool aide" but I hope to give future victems pause before venturing into the quick sand.
Now THAT was professional..................... :P :P :P :P

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