Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 10-09-2011, 06:41 AM   #21
Moderator Emeritus
Nords's Avatar
Join Date: Dec 2002
Location: Oahu
Posts: 26,636
Originally Posted by clifp View Post
Insurance companies are financial institution much like banks. We don't even need a black swan to severely hurt the whole sector just a decade or so of sub-par par investment performance. I have no confidence that state regulators do a better job watching them than the Feds did with banks, and brokerages. Which is why I think SPIA should be treated as a fixed income, annuities should purchased from multiple companies and the total should not exceed the 25-35% of assets.
Thanks-- I'm pretty sure I never would have gotten this far in my ponderings!

One out of 42. Even five out of 42 would have been a lot lower than I expected.

Looks like buying SPIAs from as few as two different companies would be enough diversification. Or keeping their total from any one company under $100K.


The book written on, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-10-2011, 01:55 PM   #22
Recycles dryer sheets
Join Date: Sep 2009
Posts: 353
Thanks a lot for the info and interesting read clifp. One question I have relates to following two statements:

Originally Posted by clifp View Post
... only one companies failure resulted in loss to annuity holders and that was only for policy above 100K (which is the minimum for state guaranty associations.)

... it does appear that most Exec Life annuity holders, and structured settlement beneficiary saw a 30-50% reduction in their monthly payments after all of the lawsuits were done.
So, for those that had under 100k, did they also see 30-50% reduction or did any reductions only apply to amounts over 100k?

(P.S. I assume 100k would become 300k for states with those higher limits...)

smjsl is offline   Reply With Quote
Old 10-10-2011, 04:45 PM   #23
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
Join Date: Oct 2006
Posts: 7,455
Originally Posted by smjsl View Post
Thanks a lot for the info and interesting read clifp. One question I have relates to following two statements:

So, for those that had under 100k, did they also see 30-50% reduction or did any reductions only apply to amounts over 100k?

(P.S. I assume 100k would become 300k for states with those higher limits...)

I am not sure. Most of the specifics I found by skimming a couple hundred pages of Congressional testimony, lead by Congressmen Waxman. Congressional testimony tends to be long on anecdotes and short on actual data. One of the anecdotes was person who's disability payment was reduced from $2,000 to $1,300/month. Making some interest rate and life expectancy assumptions (both of which could be way off) this is equivalent to a annuity in the 200K range more than 100K but less than the CA limit of 250K. The Exec life situation was unusual (but then I think all failure of financial institutions are unusual) in that the State guaranty step it to make the policy holders whole, but then 1/2 dozen years latter the settlement started to fall apart.

One huge difference between the state insurance guaranty associations and the FDIC is that the FDIC collects a portion (~.5% to 1%) of all deposits so when a bank fails the FDIC has money to make depositor whole. The association assess its member after an insurance companies fail, so think about them the same way as the EU is funding the Greek bailout a lot of pleading, cajoling, and threatening.
clifp is offline   Reply With Quote
Old 10-10-2011, 04:57 PM   #24
Thinks s/he gets paid by the post
obgyn65's Avatar
Join Date: Sep 2010
Location: midwestern city
Posts: 4,061
I also look at annuities as a fixed bucket, but I have not decided yet on the % of my assets I am going to annuitize. At the moment I am thinking in the 25%-50% range since annuities are not FIDC insured...
Originally Posted by chinaco View Post
I look at it as part of a fixed bucket.

Very conservative with investments. Not ER'd yet, 48 years old. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
obgyn65 is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Managing retirement assets in today's environment mickeyd FIRE and Money 2 09-22-2011 05:46 PM
GAO Report on Retirement Income Purron FIRE and Money 5 07-17-2011 02:27 PM
Mid 40's looking for soft retirement in 8yrs, 9 months and 23 days sspribyl Hi, I am... 0 07-17-2011 12:34 PM


All times are GMT -6. The time now is 07:12 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.