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11-10-2014, 04:28 PM
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#61
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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 Quote:
Originally Posted by pb4uski
Tomorrow doesn't matter because they would receive your SPIA premium today and have to invest it today so the pricing of today's SPIAs reflect today's interest rate environment.
I agree they don't think in terms of individuals, they think in terms of cohorts or PYA (plan, year of issue, age) blocks of business. My earlier point was that if one person lives to 120 then that is no big deal, as long as the cohort mortality is consistent with mortality pricing assumptions which means that over lives in the cohort would need to die earlier than expected.
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I don't think we are in disagreement here......actuarial calculations have been working since the 17th century and I predict they will continue to work...
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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11-10-2014, 05:09 PM
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#62
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Thinks s/he gets paid by the post
Join Date: Aug 2013
Posts: 1,660
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Ok I can see what you are saying. The annuity is priced based on what the insurance company invests in (bonds).
I guess I thought insurance companies would want to make more money by investing in stocks but maybe not. Thanks for education!
Sent from my iPhone using Early Retirement Forum
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11-10-2014, 05:26 PM
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#63
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by RetireAge50
Ok I can see what you are saying. The annuity is priced based on what the insurance company invests in (bonds).
I guess I thought insurance companies would want to make more money by investing in stocks but maybe not. Thanks for education!
Sent from my iPhone using Early Retirement Forum
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The advantage of my state defined benefit plan buy in is that the state pension fund doesn't limit itself to bonds and, of course, it has the back up of taxation. Last year the MA state pension plan had an investment return of 17%...so maybe an interest rate of 7% on their pension when I do the annuity calculation is a bit mean. 
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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11-10-2014, 05:31 PM
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#64
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Thinks s/he gets paid by the post
Join Date: Aug 2011
Posts: 3,602
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I wish there was more of that meanness to go around!
-gauss
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11-10-2014, 07:37 PM
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#65
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,343
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Quote:
Originally Posted by RetireAge50
.........I guess I thought insurance companies would want to make more money by investing in stocks ...
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Since equities are so much more volatile they have a capital requirement that is probably 15 times or more than the capital required for investment grade corporate bonds so insurers have significantly dialed back their general account equity holdings.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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11-10-2014, 09:26 PM
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#66
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gone traveling
Join Date: Oct 2007
Posts: 1,135
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Op here.
All. Thank you for taking the time to reply and discuss this topic. Really nice to engage in this discussion and learn from you all. My humble appreciation.
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