courtjustshan
Dryer sheet aficionado
Hi folks, I am 50 years old, retiring at 55.
I decided to take about 1/4 of my IRA portfolio and invest in a deferred income annuity. I will start taking payments in 10 years, have enough cash to bridge the gap between 55 and 60.
I plugged the annuity into FIRE as a non-inflation based pension starting in 10 years and my success percentage was still 100% after changing my portfolio. In fact, there was a very slight positive shift in the scenarios.
Although the annuity does not include inflation provisions, I decided that I wanted to pay myself monthly for life in a pension type format. I went with lifetime for both myself and my wife. If both of die before we are 90, my kids will get the balance of the 30 year payments.
I am not a fan at all of annuities in general, and the DIA is not new, but I had not thought of it until my fee based FA brought it up. At first I laughed at him, but then after looking at it and running the numbers, it actually did make some sense. Could I have done better over the course of 10 years and then moving the new balance into a bond or CD ladder? Potentially, yes. However, I was finding myself stressing too much over market volatility and decided that creating a pension to ensure that the basic bills are paid seemed like an OK idea.
So, my logic was that if I can reduce some risk, and still achieve 100% in FIRE, then it seemed logical.
Would like to know if anyone else in the 50-60 range is looking at these.
I decided to take about 1/4 of my IRA portfolio and invest in a deferred income annuity. I will start taking payments in 10 years, have enough cash to bridge the gap between 55 and 60.
I plugged the annuity into FIRE as a non-inflation based pension starting in 10 years and my success percentage was still 100% after changing my portfolio. In fact, there was a very slight positive shift in the scenarios.
Although the annuity does not include inflation provisions, I decided that I wanted to pay myself monthly for life in a pension type format. I went with lifetime for both myself and my wife. If both of die before we are 90, my kids will get the balance of the 30 year payments.
I am not a fan at all of annuities in general, and the DIA is not new, but I had not thought of it until my fee based FA brought it up. At first I laughed at him, but then after looking at it and running the numbers, it actually did make some sense. Could I have done better over the course of 10 years and then moving the new balance into a bond or CD ladder? Potentially, yes. However, I was finding myself stressing too much over market volatility and decided that creating a pension to ensure that the basic bills are paid seemed like an OK idea.
So, my logic was that if I can reduce some risk, and still achieve 100% in FIRE, then it seemed logical.
Would like to know if anyone else in the 50-60 range is looking at these.