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Annuity as plan A versus plan B...
05-29-2012, 11:43 AM
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#1
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: Chicagoland
Posts: 7,194
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Annuity as plan A versus plan B...
Inspired by this thread Wade Pfau looks at 4% WR, finds it unsafe, I wrote to Wade Pfau never expecting a response. But here it is, I'm truly grateful and honored he took the time. I'm looking forward to the subject post, thought others might be interested...
 Quote:
Like many others on ER.org, I'm an avid follower of your blog and the Early Retirement forum where I post as Midpack. Retired last summer at age 57, so I may have a long retirement window if I don't go back to work. I often see references on your blog to securing floor income seemingly as a top priority, what I'd call Plan A. I don't have a pension, just a modest Soc Sec income years from now but I've always viewed buying a SPIA as part of my plan B, especially with annuities relatively expensive given current interest rates/bond yields. This is the template that I plan to follow, you may have seen it
http://www.schulmerichandassoc.com/M...cumulation.pdf.
I am looking forward to seeing your summary article on floor income, unless you've already published it and we missed it (others on ER.org say they haven't seen it either).
Thanks for all the great work you do, your blog is frequently discussed on ER.org as you may know.
"Midpack"
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Quote:
Dear [Midpack]
Thanks for the message, it's good to hear from you. I think I confused you as female once based on your past avatar picture. Sorry about that.
I met Richard Fullmer earlier this month, he is the author of that article. Yes, I think that sort of approach is quite valid. Be ready to annuitize to lock in basic needs if markets start dropping.
About research on income floors, I'm trying to get an article finished by Friday. I don't think it is going to be much of a masterpiece as the way I've designed the figures it is hard to see the precise differences, but at least it will be a start. I will consider 6 outcome measures to evaluate 8 different retirement income strategies, one of which involves building a floor to meet essential needs. It will be my first article which includes variable withdrawal strategies and income floors. Actually, I haven't finished any new articles since December.
Have you been thinking about the optimal age to start Social Security?
Thanks for writing and Best wishes, Wade
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__________________
It's a pity to waste your life living the same tiny day over and over again. James Taylor
Retired Jun 2011 at age 57
Target AA: 55% equity funds / 40% bond funds / 5% cash
approx 20% SI (secure income, SS only)
Target WR: approx 2.5%
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05-29-2012, 12:13 PM
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#2
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Full time employment: Posting here.
Join Date: May 2011
Location: South Eastern USA
Posts: 650
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Midpack: Thanks for posting. He has some very interesting articles.
As a side note: I used to think of you as a beautiful blue eyed female poet. Something changed and now I can only visualize you as a road sign. 
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05-29-2012, 12:26 PM
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#3
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: Chicagoland
Posts: 7,194
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Better a road sign than road kill...
I miss my Jane Hirshfield avatar, but change is good too.
__________________
It's a pity to waste your life living the same tiny day over and over again. James Taylor
Retired Jun 2011 at age 57
Target AA: 55% equity funds / 40% bond funds / 5% cash
approx 20% SI (secure income, SS only)
Target WR: approx 2.5%
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05-29-2012, 12:28 PM
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#4
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Full time employment: Posting here.
Join Date: May 2011
Location: South Eastern USA
Posts: 650
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Quote:
Originally Posted by Midpack
Better a road sign than road kill...
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Exactly.
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My username has been changed to not include any part of my real name but the avatar is still the same.
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05-29-2012, 12:36 PM
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#5
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Moderator
Join Date: Jan 2008
Location: The northernmost tip of Latin America
Posts: 10,607
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Quote:
Originally Posted by Midpack
Better a road sign than road kill...
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You really should trademark that. Its catchy, has a certain feel, and lets people think it means whatever they want it to. All the ingredients of a world catch slogan. You can't go wrong.
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It's not the cards you're dealt in life but what you do with them that matters
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05-29-2012, 12:49 PM
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#6
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Full time employment: Posting here.
Join Date: Oct 2003
Posts: 891
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Here's my road sign.
__________________
We are, as I have said, one equation short. – Keynes
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05-29-2012, 02:47 PM
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#7
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: Chicagoland
Posts: 7,194
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Quote:
Originally Posted by MichaelB
You really should trademark that. Its catchy, has a certain feel, and lets people think it means whatever they want it to. All the ingredients of a world catch slogan. You can't go wrong.
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This is the one DW and my friends tell me I should've conceived and trademarked...
__________________
It's a pity to waste your life living the same tiny day over and over again. James Taylor
Retired Jun 2011 at age 57
Target AA: 55% equity funds / 40% bond funds / 5% cash
approx 20% SI (secure income, SS only)
Target WR: approx 2.5%
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05-29-2012, 05:34 PM
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#8
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Posts: 1,641
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Quote:
Originally Posted by Midpack
Better a road sign than road kill...
I miss my Jane Hirshfield avatar, but change is good too.
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Midpack will always be a beautiful dog to me....
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05-29-2012, 05:40 PM
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#9
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Full time employment: Posting here.
Join Date: Feb 2011
Posts: 976
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Midpack is a happenin' dude 
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Retired October 2012.
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05-29-2012, 06:20 PM
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#10
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: Chicagoland
Posts: 7,194
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Quote:
Originally Posted by Katsmeow
Midpack will always be a beautiful dog to me....
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Huh?
__________________
It's a pity to waste your life living the same tiny day over and over again. James Taylor
Retired Jun 2011 at age 57
Target AA: 55% equity funds / 40% bond funds / 5% cash
approx 20% SI (secure income, SS only)
Target WR: approx 2.5%
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05-29-2012, 07:31 PM
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#11
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Posts: 1,641
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Quote:
Originally Posted by Midpack
Huh?
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Didn't you use to have your dog as an avatar? If not then I can see I've confused your avatar with someone else.
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05-30-2012, 04:20 AM
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#12
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 3,502
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Thanks to this forum I joined two years ago, I have decided to include annuities as part of my FIRE plans. Using deferred annuities, discussed in other threads. I like to think of annuities as contributing to a "floor income".
__________________
Very conservative with investments. Not ER'd yet, 48 years old, about 98-99% in cash, CDs, munis, sizeable nest egg, WR < 3.5%, pensions, annuities, no debt, and 47-year planning horizon. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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05-30-2012, 08:09 AM
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#13
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: Chicagoland
Posts: 7,194
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Quote:
Originally Posted by Katsmeow
Didn't you use to have your dog as an avatar? If not then I can see I've confused your avatar with someone else.
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I did, but that was several avatars ago. She's (the dog) lying by my side right now, sound asleep as usual...it's tough being almost 16 years old.
__________________
It's a pity to waste your life living the same tiny day over and over again. James Taylor
Retired Jun 2011 at age 57
Target AA: 55% equity funds / 40% bond funds / 5% cash
approx 20% SI (secure income, SS only)
Target WR: approx 2.5%
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05-30-2012, 11:52 AM
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#14
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Administrator
Join Date: Jan 2007
Location: New Orleans
Posts: 24,584
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Quote:
Originally Posted by Midpack
I did, but that was several avatars ago. She's (the dog) lying by my side right now, sound asleep as usual...it's tough being almost 16 years old.
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What a sweetie pie! Yes, 16 years old in people years would be... um... I dunno, but probably even older than me. Methuselah.
__________________
"Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harborless immensities." - - H. Melville, 1851
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05-30-2012, 03:42 PM
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#15
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Recycles dryer sheets
Join Date: Jul 2011
Location: South Florida
Posts: 176
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BTW, on a related ER Annuity thread, there was a question about the 2% fee that Vanguard receives while using Income Solutions. I called, that 2% is included in the payout amount of the SPIA. I think they were trying to impress than their 2% is less than the industry 3%, (but still needs to be compared to other SPIAs).
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05-30-2012, 05:11 PM
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#16
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Full time employment: Posting here.
Join Date: Feb 2011
Posts: 976
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Quote:
Originally Posted by W2R
What a sweetie pie! Yes, 16 years old in people years would be... um... I dunno, but probably even older than me. Methuselah.
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That is one handsome pooch (or pretty, if you prefer) 
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Retired October 2012.
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05-30-2012, 05:34 PM
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#17
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Thinks s/he gets paid by the post
Join Date: Jul 2009
Posts: 1,641
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Quote:
Originally Posted by Midpack
I did, but that was several avatars ago. She's (the dog) lying by my side right now, sound asleep as usual...it's tough being almost 16 years old.
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Well you can see how memorable I found that Avatar I was always think of it when I see your name  She is quite fetching.
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05-30-2012, 05:41 PM
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#18
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Thinks s/he gets paid by the post
Join Date: May 2008
Location: MD's Eastern Shore
Posts: 3,567
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Quote:
Originally Posted by obgyn65
Thanks to this forum I joined two years ago, I have decided to include annuities as part of my FIRE plans. Using deferred annuities, discussed in other threads. I like to think of annuities as contributing to a "floor income".
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What do you think you're doing,interrupting a perfectly good conversation with completely on topic comments? How rude.
__________________
Always carry a flagon of whiskey in case of snakebite and furthermore always carry a small snake. - W. C. Fields.
DW and I - FIREd at 50 (7/06), living off assets
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05-30-2012, 05:48 PM
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#19
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2008
Location: Chicagoland
Posts: 7,194
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Quote:
Originally Posted by W2R
What a sweetie pie! Yes, 16 years old in people years would be... um... I dunno, but probably even older than me. Methuselah.
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Quote:
Originally Posted by Katsmeow
Well you can see how memorable I found that Avatar I was always think of it when I see your name She is quite fetching. |
Thanks folks, she's certainly enriched our lives, like the other three dogs before her. 
__________________
It's a pity to waste your life living the same tiny day over and over again. James Taylor
Retired Jun 2011 at age 57
Target AA: 55% equity funds / 40% bond funds / 5% cash
approx 20% SI (secure income, SS only)
Target WR: approx 2.5%
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