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Old 01-20-2018, 07:33 PM   #101
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Originally Posted by Lawrence of Suburbia View Post
I already have a reasonable amount in Wellesley, DODBX, etc. I'll just shift a little cash over to some sort of SPIA; a diversification move for me, really. And I'm in no hurry to make the move -- it's possible interest rates (and SPIA payouts) may have moved upwards by later this year or early next.
Not only may interest rates increase, the actuarial number of years the they have to pay out will be less. Both would increase your monthly income. Delaying is your friend, I think.
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Old 01-20-2018, 07:41 PM   #102
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I'm not understanding why it would/should be a dilemma.. . .


If you have the guarantee that makes the numbers work, why even entertain the Vanguard fund which would expose you to market risk?
Because there's a way to get even less risk and higher return? Put the money "fenced" for the SPIA into a CD or CD ladder. Unless interest rates go down (anybody think that will happen??), he'll get a better rate next year, and the cash will be safe. If in a CD ladder, he can buy a small SPIA every year from a different company (as the adverts say, "annuities depends on the claims paying ability of the insurer.". Sure, the risk is small, but it isn't zero). And if the OP gets hit by a bus while the dough is in CDs, somebody he knows gets his money, it doesn't go to an insurer.
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Old 01-21-2018, 12:12 AM   #103
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I'd like to thank everyone who chipped in ideas based on post, it's been a big help to me -- challenging/sharpening up my ideas re: immediate annuity or not, etc.

I'll barely make FIRE'd, by a year (65 vs. 66, whew!); and I'll live cheerfully on what I like to call ... sufficient.
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Old 01-21-2018, 04:53 AM   #104
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Because there's a way to get even less risk and higher return? Put the money "fenced" for the SPIA into a CD or CD ladder. Unless interest rates go down (anybody think that will happen??), he'll get a better rate next year, and the cash will be safe. If in a CD ladder, he can buy a small SPIA every year from a different company (as the adverts say, "annuities depends on the claims paying ability of the insurer.". Sure, the risk is small, but it isn't zero). And if the OP gets hit by a bus while the dough is in CDs, somebody he knows gets his money, it doesn't go to an insurer.
I don't disagree with you, as I am a big fan of CDs at this time and as rates are rising. However, that was not one of the alternatives he indicated he was considering based on the posts. Further, if he is comfortable with the SPIA and the insurer backing it, there's no particular reason it wouldn't work out just fine for him. Whether he lives long enough to make out well on the SPIA is a wager on his longevity, little different than life insurance in general. It is possible he lives to be 95 and collects more than enough to make it worth it based on his needs and calculations today. He is getting the guarantee today, we have no idea where interest rates will be 5, 10, or 20 years from now. CDs could be the better option longer term, but we just don't know that today. He could begin laddering the CDs, moving over some amount to SPIA periodically. If the economy goes into recession, and it will at some point, the Fed will chop rates right back down again.

My guess is that unless interest rates move significantly higher over a compressed time frame, applying a CD laddering approach and buying smaller SPIAs periodically will not yield results much different either higher or lower in returns as opposed to buying in one lump sum today. I have to believe the insurance companies price the SPIA so that this is the case.
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Old 01-21-2018, 09:57 AM   #105
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Maybe off topic, Maybe not.

I see some of you saying that SPIA's 6.2% is different that Rate of Return due to the payback of principle. I get that. When comparing that against "the 4% rule", which also consumes the original investment in 30 years, how exactly isn't that a fair comparison? Excluding the COLA bit , and the 100% transfer or remaining to your beneficiary of course. I think those can be accommodated in a SPIA, albeit not at the 6.2% rate quoted earlier.

BTW, Immediateannuitites.com has the CPI option to check, but it appears to not be an on-line quote. You must fill out the form and someone will get back to you. I don't want solicitations.
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Because the 4% return from the Trinity Study does not consume the original investment in 30 years in most instances.
+1 Putting aside COLA increases, which are a big deal, in many scenarios of the Trinity Study there were significant balances after the time horizon... in many cases much more than the $1,000 initial balance.

See Table 4 in this link:

https://incomeclub.co/wp-content/upl...ustainable.pdf

You can also see that if you do a FIRECalc run with 4% WR..... many of the lines are much higher than the initial balance after paying COLA adjusted withdrawals for 30 years and only a hand-full fail.
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Old 01-21-2018, 12:32 PM   #106
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BTW, Immediateannuitites.com has the CPI option to check, but it appears to not be an on-line quote. You must fill out the form and someone will get back to you. I don't want solicitations.
Go here:
https://annuities.blueprintincome.co...annuity-quotes

It will give a popup to enter name/email/password but you can just enter bogus info if you like - it will still give you the quotes and let you play with the inputs including inflation protection and death benefit.
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