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Jonathan Clements on Delaying Soc. Security and Annuties.............
Old 06-17-2007, 09:48 AM   #1
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Jonathan Clements on Delaying Soc. Security and Annuties.............

I found an article in today's paper where J. Clements expressed his reasoning on the topic of delaying S.S. and annuities. It it short and to the point. We all plan on 'worst case' scenarios and that is what he is expressing here.

To those of you that find great sport in arguing, he lists his e-mail at the bottom of the page, so that you can engage him.

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Old 06-17-2007, 10:08 AM   #2
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The full article: Getting Going - WSJ.com
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Old 06-17-2007, 10:31 AM   #3
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Readers only read what they want to hear. So articles like this are popular.

I wonder if these very same readers are the ones who constantly complain and worry about the financial health of SS. I wonder if they are also the ones who discount their future SS benefit in their retirement planning.
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Old 06-17-2007, 10:32 AM   #4
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I still can't convince myself that the annuity part isn't an unnecessary expense in a broadly diversified portfolio.

I personally plan to defer SS as long as I can afford to live without the income or age 70. That's the best use of a bad investment I was forced to make.
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Old 06-17-2007, 11:56 AM   #5
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An annuity can make sense. It all depends on your situation. There are benefits to it. It just depends on whether or not it works for you.

Heck if you do not know what you are doing and have a chunk of money, it can make a lot of sense to create a base income that covers your needs.

That said, the purchase of an annuity must be done in a thoughtful way. If you purchase it without understanding what it really means, and how it can be used to augment your overall plan... you could wind up disappointed.

Plus, there is the risk that you could die young and leave money on the table.

I have been considering this as an option:

Basic non-discretionary expense + minimal discretionary expense to be funded by SS (DW and Mine) + my pension + (small annuity)

We will still have a fairly large portfolio. I intend to spend it earlier in life. The annuity takes the pressure off. The plan is a little more sophisticated than what I stated... But When we FIRE... I know that we will never need to work again (unless we choose to for reasons other than income need).

We will not be riding the razor's edge. Short of the collapse of our financial markets (Chaos)... I am as confident as anyone can be that we will be secure till the end. We have been working on estate planning. The only part that I need to work out a bit more is a plan for managing our finances if we become unable to do so ourselves. I am intending to work that out with the lawyer in the estate plan somehow. I am thinking about a trust for this purpose. Although, I am not sure yet.
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Old 06-17-2007, 04:25 PM   #6
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Hmm...an investment that I have a 92-95% guarantee of making money on with full control of the investment...or one that I have a 5-8% chance of making money on with no control of the investment?

Tough choice.
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Old 06-18-2007, 11:27 AM   #7
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Hmm...an investment that I have a 92-95% guarantee of making money on with full control of the investment...or one that I have a 5-8% chance of making money on with no control of the investment?
Tough choice.
Quit throwing logic at things, it's quite annoying...................
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Old 06-18-2007, 11:53 AM   #8
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My bad.
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Old 06-18-2007, 01:19 PM   #9
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I definitely plan to delay assuming that the rules have not changed significantly by then and that my health is OK. Here is a paraphrase from Bill Bernstein from the recent Diehards VI investor get together:

Q: If returns are expected to be lower in the coming years is 4% still a safe withdrawal rate?

This question then led to a discussion of fixed immediate annuities. Bill Bernstein said that delaying Social Security is about the best fixed annuity you can find and he recommends spending other retirement accounts in an effort to delay Social Security.

Kramer
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Old 06-18-2007, 01:23 PM   #10
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This question then led to a discussion of fixed immediate annuities. Bill Bernstein said that delaying Social Security is about the best fixed annuity you can find and he recommends spending other retirement accounts in an effort to delay Social Security.
Kramer
Actually, SS doesn't have period certain if you die divorced without kids OR single.....................whereas an immediate annuity would.........just pointing out the obvious like CFB does............
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Old 06-18-2007, 01:35 PM   #11
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Quote:
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Here is a paraphrase from Bill Bernstein from the recent Diehards VI investor get together:
This question then led to a discussion of fixed immediate annuities.
Bill Bernstein said that delaying Social Security is about the best fixed annuity you can find and he recommends spending other retirement accounts in an effort to delay Social Security.
I tracked down the 4% thread. Take a look at responses #10 & #12.

Kramer, do you know if VictoriaF's 18-page summary of the meeting has been posted yet?

What we all really want to know is: did H0cus try to crash the party?
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Old 06-18-2007, 01:36 PM   #12
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delaying Social Security is about the best fixed annuity you can find
Faint praise.
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Old 06-18-2007, 01:52 PM   #13
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Faint praise.
Works well as long as you don't DIE..........
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Old 06-18-2007, 02:08 PM   #14
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I tracked down the 4% thread. Take a look at responses #10 & #12.

Kramer, do you know if VictoriaF's 18-page summary of the meeting has been posted yet?

What we all really want to know is: did H0cus try to crash the party?
Nords,

Mel should be posting the summary soon.

And, no H**** was not there. I was surprised at how many young people were there. I was expecting a bunch of old f*rts.

- Alec
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