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Old 04-06-2008, 08:17 PM   #41
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The Slate article should have said something that's common on this board.

If you have an interest in buying an SPIA, first look at deferring SS to 66, or even 70. The "annuity purchase price" for SS is usually better than you can get from a private insurer.

I doubt that annuity salespeople normally point that out.
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Old 04-06-2008, 08:25 PM   #42
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Now that's an interesting behavioral finance idea - that taking a sub-optimal path may be a good idea if it prevents you from taking a worse path.

So, an annuity may be worse than holding a well-diversified stock/bond portfolio - but it may be better than investing, panicing and selling investments at low prices.

My biggest worry remains the solvency of the annuity writer.
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Old 04-06-2008, 08:48 PM   #43
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The Slate article should have said something that's common on this board.

If you have an interest in buying an SPIA, first look at deferring SS to 66, or even 70. The "annuity purchase price" for SS is usually better than you can get from a private insurer.

I doubt that annuity salespeople normally point that out.
I'm being ugly about annuities again but I'll point out that the appeal of annuities is in the looooooogn term instead of the time between 62 or 65 and 70. If you look for the IRR for the short term, you will never buy an annuity if you can do simple math. The sales pitch is always about the long term of 30 or 40 years when you have lived beyond your assets. They never point out that the annuity payment that looked so good today is a mere pittance in 40 years with a trivial inflation rate. Haven't you seen the commercial about the 100 year old trumpet player? He needs an annuity because he is so vibrant, etc......

My mother died at 65. That was about 20 years short of her mortality table life. My father died at 79 which was just a few years short. My MIL died at 86 which was pretty close to mortality. My FIL is in full blown Alzheimers at 87. He may break my 10 year bridge for the mortality table where the SPIA would have paid off. Based on what I see on the quality of his life, I hope he doesn't make it. My father's and FI'Ls VAs still suck. That's a financial term that means it would have been better if they never bought them.
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Old 04-06-2008, 09:05 PM   #44
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If you have an interest in buying an SPIA, first look at deferring SS to 66, or even 70. The "annuity purchase price" for SS is usually better than you can get from a private insurer.
Why defer taking SS? If you want a bigger annuity at 66 or 70, just repay your SS and receive the bigger amount. The incremental increase is still cheaper (and safer) than what you could buy from an insurance company.
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Old 04-06-2008, 09:11 PM   #45
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OK, but its really, really simple.
That's what Wade Cook said..........
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Old 04-06-2008, 09:35 PM   #46
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That's what Wade Cook said..........
You don't like Wade Cook either? I'm shocked, what's up with this site. Just who do the ER'ers get their advice from?

I'd like to see the Brewer idea also, I've tried in the past to look at a few ways to insure away the downside of the stock market w/options but it turned out to be very expensive insurance.
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Old 04-07-2008, 02:42 AM   #47
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I'd like to see the Brewer idea also, I've tried in the past to look at a few ways to insure away the downside of the stock market w/options but it turned out to be very expensive insurance.
I know Buffett wrote some long term puts on the US and European stock markets for some institutional investor. Perhaps we can all pool our money and see if Berkshire well sell us the same thing
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Old 04-07-2008, 03:06 AM   #48
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I notice the FAQs don't have an annuity section. Any interest in trying to develop ER.org wisdom on annuities?

I'll start with this rule.

Rule 1. In some cases it makes sense to buy annuity. However, you should NEVER buy an annuity that somebody is selling you.

Explanation: Most annuities in the US are sold by insurance salesman, brokers, financial advisor and other people operating on commissions. These commission are typically very high, over the life of annuity as much as 1/4 to 1/3 (what is the total lifetime cost of a bad annuity) of your money will end up in the pockets of the salesman and the annuity firm. You almost always can save significant amount of money by buying an annuity directly from a firm like Vanguard or ?.

Annuity salesman are just like dope dealers just say NO
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Old 04-07-2008, 08:12 AM   #49
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OK, I will post a write-up on a simplified version of how to relicate an EIA. Probably today or tomorrow. Maybe as a group effort we can refine or improve on the basic idea without making it too complicated.
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Old 04-07-2008, 08:19 AM   #50
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OK, I will post a write-up on a simplified version of how to relicate an EIA. Probably today or tomorrow. Maybe as a group effort we can refine or improve on the basic idea without making it too complicated.
If you are replicating an EIA, you are capping the upside, right??
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Old 04-07-2008, 08:22 AM   #51
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These commission are typically very high, over the life of annuity as much as 1/4 to 1/3 (what is the total lifetime cost of a bad annuity) of your money will end up in the pockets of the salesman and the annuity firm.
How did you figure that? Based on that premise, if you give John Hancock $100,000, they will only give you $66,666 to $75,000 back? They are laws against that..............
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Old 04-07-2008, 08:31 AM   #52
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How did you figure that? Based on that premise, if you give John Hancock $100,000, they will only give you $66,666 to $75,000 back? They are laws against that..............
I'm not quite ready to post a response on this subject (please see my post from yesterday), but I needed to address this statement.

As part of my answer, I'll comment that I/wife (and my estate) will receive a guaranteed "at least" 2x amount of $ initially assets given to an SPIA (and that's in the annuity contract). There's a lot of questionable info being posted here, and I have yet to hear from somebody who actually has an annuity (and I'm not counting those who "know somebody who has one").

Come on - let's hear from somebody who has the "facts" (sorry - I'm not ready to comment, yet...)

- Ron
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Old 04-07-2008, 08:37 AM   #53
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As part of my answer, I'll comment that I/wife (and my estate) will receive a guaranteed "at least" 2x amount of $ initially assets given to an SPIA (and that's in the annuity contract). - Ron
Tell you what: I will give you/your estate 5X what you give me today. But you won't get it for 100 years. Still want to talk about how many times your initial investment got you from the SPIA?
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Old 04-07-2008, 08:39 AM   #54
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If you are replicating an EIA, you are capping the upside, right??
I will show two ways to do this: one with capped upside and the other with uncapped.
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Old 04-07-2008, 08:58 AM   #55
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I'm not quite ready to post a response on this subject (please see my post from yesterday), but I needed to address this statement.

As part of my answer, I'll comment that I/wife (and my estate) will receive a guaranteed "at least" 2x amount of $ initially assets given to an SPIA (and that's in the annuity contract). There's a lot of questionable info being posted here, and I have yet to hear from somebody who actually has an annuity (and I'm not counting those who "know somebody who has one").

Come on - let's hear from somebody who has the "facts" (sorry - I'm not ready to comment, yet...)

- Ron
Maybe we could get everyone posting here that doesn't own an annuity to preface their statements with "hypothetically speaking"............

I have an annuity through ING that was from an old 401K. So, I guess I own one of those "dreaded VA's"...........I'll wait for the scolding to begin.......
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Old 04-07-2008, 09:03 AM   #56
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I have an annuity through ING that was from an old 401K. So, I guess I own one of those "dreaded VA's"...........I'll wait for the cuckolding to begin.......
:confused:

Let me get this straight: you admit you own a VA so you are waiting for someone to start, um, diddling your wife?
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Old 04-07-2008, 10:20 AM   #57
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:confused:

Let me get this straight: you admit you own a VA so you are waiting for someone to start, um, diddling your wife?
Oops..........why was I thinking about chickens?
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Old 04-07-2008, 12:51 PM   #58
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... There's a lot of questionable info being posted here, and I have yet to hear from somebody who actually has an annuity (and I'm not counting those who "know somebody who has one").
....
Ron, I posted my info today on another thread I started Friday, titled, "in case you're curious about annunities...." I'm happy to post the actual numbers as they will give no clue as to my net worth.
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Old 04-07-2008, 01:07 PM   #59
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I will show two ways to do this: one with capped upside and the other with uncapped.
Brew, ever look at Merrill's equity participation notes? I've read that they sometimes trade at a discount, but I never looked closely enough to try to value them, so I can't tell when they're trading at a discount.

Random article:

Merrill Lynch MITTS - What are they and should you use them in your portfolio? - Seeking Alpha
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Old 04-07-2008, 01:17 PM   #60
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Ron, I posted my info today on another thread I started Friday, titled, "in case you're curious about annunities...." I'm happy to post the actual numbers as they will give no clue as to my net worth.
Nor mine; if you can, either copy/paste here or link to the other site. Let's get some "valid" info to discuss (either positive or negative) - we're here to discuss facts, not "feelings".

Thanks!

- Ron
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