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Annuity as plan A versus plan B...
Old 05-29-2012, 12:43 PM   #1
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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...

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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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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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Old 05-29-2012, 01:13 PM   #2
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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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Old 05-29-2012, 01:26 PM   #3
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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.
Better a road sign than road kill...

I miss my Jane Hirshfield avatar, but change is good too.
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Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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Old 05-29-2012, 01:28 PM   #4
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Better a road sign than road kill...
Exactly.
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Old 05-29-2012, 01:36 PM   #5
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Better a road sign than road kill...
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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Old 05-29-2012, 01:49 PM   #6
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Here's my road sign.
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Old 05-29-2012, 03:47 PM   #7
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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.
This is the one DW and my friends tell me I should've conceived and trademarked...
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Old 05-29-2012, 06:34 PM   #8
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Better a road sign than road kill...

I miss my Jane Hirshfield avatar, but change is good too.

Midpack will always be a beautiful dog to me....
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Old 05-29-2012, 06:40 PM   #9
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Midpack is a happenin' dude
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Old 05-29-2012, 07:20 PM   #10
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Midpack will always be a beautiful dog to me....
Huh?
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Old 05-29-2012, 08:31 PM   #11
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Huh?
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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Old 05-30-2012, 05:20 AM   #12
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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".
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Old 05-30-2012, 09:09 AM   #13
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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.
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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Target AA: 60% equity funds / 35% bond funds / 5% cash
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Old 05-30-2012, 12:52 PM   #14
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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.
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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Old 05-30-2012, 04:42 PM   #15
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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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Old 05-30-2012, 06:11 PM   #16
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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.
That is one handsome pooch (or pretty, if you prefer)
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Old 05-30-2012, 06:34 PM   #17
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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.
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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Old 05-30-2012, 06:41 PM   #18
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Originally Posted by obgyn65 View Post
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".
What do you think you're doing,interrupting a perfectly good conversation with completely on topic comments? How rude.
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Old 05-30-2012, 06:48 PM   #19
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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.
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Originally Posted by steelyman View Post
That is one handsome pooch (or pretty, if you prefer)
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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.
Thanks folks, she's certainly enriched our lives, like the other three dogs before her.
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Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
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