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Old 11-17-2015, 01:48 PM   #21
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I think after a while, it becomes a question of 4%, 3.8%, 3.753216% and so on.

After you get zeroed in on the premise there's not much more to discuss.
Well put, but no, the exact number is given here:
https://archive.org/stream/Pi_to_100..._places/pi.txt

I am just having a hard time entering it all into my spreadsheet.
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Old 11-17-2015, 02:28 PM   #22
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Pfau does get some funding from the insurance industry and he is upfront about that. Some if his work has recommended annuities instead if bond allocations, but I wonder how much is influenced by industry payments and how much by assumed low bond returns using current rather than historical data to calculate returns. Without firm proof I think it's irresponsible to throw out unsubstantiated accusations of academic fraud.

There is a tendency to reject anything that mentions annuities with less than total condemnation. Hence, some people have consigned Pfau and his papers to the junk heap. Read them and you will see the reasons for his results. You might not agree with them but it would be silly to dismiss them.
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Old 11-17-2015, 02:52 PM   #23
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Today's Pfau post says you shouldn't take SS early and buy an annuity. "Buy" the SS annuity first by delaying to age 70, then fill in with an annuity if needed. So a tiny bit of moderation. And he's mostly annuity as bond replacement, which is fine by me. Though he does like a safe floor of income.

He's very accessible and fairly prolific (lots to talk about), retirement focused, and not a Wall Street insider. I'll take what we can get, though as with anything, I'll go my own way.
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Old 11-17-2015, 03:02 PM   #24
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The real question for me is - how do you pronounce these names? Is it just coincidence that neither are obvious pronunciations?

Pfau? Silent "p" I assume? Fow (rhymes with How?)? Or Foe (rhymes with Toe?)?

Kitces? "C" like an "S"? "Kit" as in "Kitten", or as in "Kite"? End in "-esss" or "ezzz" or "issss"?

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In my head they are always "Faw" (rhymes with saw) and "Kit says" (rhymes with hit- fez)

I believe I have at one time or another heard them interviewed and heard their names pronounced either by themselves or the interviewer.


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Old 11-17-2015, 03:05 PM   #25
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fyi dashboard was updated

As this forum was my intro to this topic in last couple of years, I've learned a lot from Pfua. I appreciate he makes his work accessible to the "masses". Yes, he seems to be in favor of annuities these days but it makes some sense to me. I like to think of him and his projections as a good "floor". His dashboard was updated for november 2015. I usually add about 0.3% to his projected safe withdrawal to account for his assumption of 0.5% fees...
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Old 11-17-2015, 03:26 PM   #26
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In my head they are always "Faw" (rhymes with saw) and "Kit says" (rhymes with hit- fez)

I believe I have at one time or another heard them interviewed and heard their names pronounced either by themselves or the interviewer.


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Funny, in my head Pfau is pronounced "Fraud."
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Old 11-17-2015, 04:00 PM   #27
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Just remember nobody knows nothin'. You really need to figure it out for yourself. Beyond the failure of Dr Bernstein to keep his clients invested, John Bogle even stated that when you can't lose any more you've got to get out (paraphased), in March of '09. Talk about poor timing. Thankfully I did NOT follow his advice. Love the Vanguard model, but I realize the future is uncertain at best.
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Old 11-17-2015, 06:25 PM   #28
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I think there's a limit to how much truly novel work one can do around SWR strategies and much of the low hanging fruit has already been picked. We talk an incredible amount about AA and withdrawal rules but these have a minimal impact compared to just lowering your withdrawal percentage.
+1. I am not sure one more study of the past will discern anything brand spanking new about future results. As Elroy Dimson phrased it, while a country has only one past, it has many possible futures. My personal focus has been on optimizing our retirement expenses, as we can control those, but we can't control future interest rates or stock market returns.
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Old 11-17-2015, 08:14 PM   #29
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He is an annuity salesman with an increasingly thin veneer of academic respectability.
I think this is too harsh. Academics in finance have a long history of finding annuities the best solution to the retirement funding problem. Pfau is another in this line. I understand the field has a good bit of research looking into why annuities aren't as popular as the theory suggests they should be.

As I see it, an annuity is approximately like a bond, earning bond interest rates, but with mortality credits being added and insurance company fees being subtracted. If you buy them late enough in life and live long enough, the mortality credits are more important than the fees, so better than bonds. The approximation breaks down when the bond matures or the annuitant dies. In the first case, the heirs get the inflation-depleted principle (coupons having been spent), in the second, nada. If there are no heirs, annuity wins. If you beat the mortality tables by a wide enough margin, you could still be spending your annuity proceeds well after you would have cashed in your last bond.
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Old 11-17-2015, 09:19 PM   #30
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I think this is too harsh. Academics in finance have a long history of finding annuities the best solution to the retirement funding problem. Pfau is another in this line. I understand the field has a good bit of research looking into why annuities aren't as popular as the theory suggests they should be.

As I see it, an annuity is approximately like a bond, earning bond interest rates, but with mortality credits being added and insurance company fees being subtracted. If you buy them late enough in life and live long enough, the mortality credits are more important than the fees, so better than bonds. The approximation breaks down when the bond matures or the annuitant dies. In the first case, the heirs get the inflation-depleted principle (coupons having been spent), in the second, nada. If there are no heirs, annuity wins. If you beat the mortality tables by a wide enough margin, you could still be spending your annuity proceeds well after you would have cashed in your last bond.

The problem is that Dr. Pfraud starts out with the premise that the answer is an annuity of some kind. What was the question again?
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Old 11-17-2015, 09:32 PM   #31
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He is an annuity salesman with an increasingly thin veneer of academic respectability.
+1

The "college" is owned and operated for the investment industry.
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Old 11-17-2015, 10:16 PM   #32
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I am not sure why the Evil Dr. Pfau is taken seriously as an academic. He is free to say or publish whatever he likes, but to regard him as a scholar? Please. Annuity salesman who isn't smart enough to make sure he gets commissions on any sale.

Not sure about that. In fact on one of the Bogleheads threads when asked what he would wish for in retirement he mentioned Tontines because they would omit the insurance companies as middlemen. Also, if we see something in his work that shows that he is skewing then we should all point it out. But I haven't seen anyone do that yet. He seems to show all his work. He only recommends SPIAs. Not the evil variable annuities. Silly reason to dog him if you ask me.


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Old 11-17-2015, 10:22 PM   #33
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Don't know who Pfau is either. Rely on my own brain.
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Ok, don't kill the newbie for the stupid question but who is Wade Pfau?
Old 11-17-2015, 10:23 PM   #34
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Ok, don't kill the newbie for the stupid question but who is Wade Pfau?

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The problem is that Dr. Pfraud starts out with the premise that the answer is an annuity of some kind. What was the question again?

Actually no. Its really only an annuity of one kind, an S/DPIA, not some kind. Kitces also recommends them. So does Milevsky. They all show their work, so it's up to us to show their fraudulence. If we can. He post frequently on Bogleheads so I'm sure that anyone that considers him fraudulent can prove that to his face. If they can. He responds anytime his name is mentioned, it seems.


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Old 11-17-2015, 10:26 PM   #35
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Actually no. Its really only an annuity of one kind, an S/DPIA, not some kind. Kitces also recommends them. So does Milevsky. They all show their work, so it's up to us to show their fraudulence. If we can.


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Old 11-17-2015, 10:28 PM   #36
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If you want to follow the Pfied Pfiper, knock yourself out.

Seems Ike you can call him a fraud but don't seem to have the wherewithal to go anywhere after that.


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Old 11-17-2015, 10:34 PM   #37
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Seems Ike you can call him a fraud but don't seem to have the wherewithal to go anywhere after that.


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If Pfau's ramblings went anywhere other than to annuities (even some of the time), I might be inclined to give him a listen. But he is a shill for the industry, so that is where he lands.

I'd hardly be the one to argue that annuitization is never a good idea. I will likely annuitize a chunk of my assets at some point if it makes sense. But they are not the Holy Grail, especially when we are at a historically low level of interest rates. YMMV.
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Ok, don't kill the newbie for the stupid question but who is Wade Pfau?
Old 11-17-2015, 10:47 PM   #38
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Ok, don't kill the newbie for the stupid question but who is Wade Pfau?

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If Pfau's ramblings went anywhere other than to annuities (even some of the time), I might be inclined to give him a listen. But he is a shill for the industry, so that is where he lands.

I'd hardly be the one to argue that annuitization is never a good idea. I will likely annuitize a chunk of my assets at some point if it makes sense. But they are not the Holy Grail, especially when we are at a historically low level of interest rates. YMMV.

I think he never recommends more than a chunk for annuities.

So to sum up your position, he's a fraud but you agree with his conclusions 😀


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Old 11-17-2015, 10:49 PM   #39
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I think he never recommends more than a chunk for annuities.

So to sum up your position, he's a fraud but you agree with his conclusions ��


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Nope. I think he is a fraud as an academic. Full stop.

What is the signature line I have seen here? "I either want less corruption or more opportunity to participate in it."
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Old 11-18-2015, 08:07 AM   #40
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Theres a lot of opinion being cast as claims of fraudulence and I think we should be careful. Fraud in research is a serious matter and should be backed up with evidence, not just a predisposition against a result.

Pfau, and a series of other professionals, have recommended that SPIAs might be better than a bond allocation allocation and have published their assumptions about returns and the results. The thing to do is to argue with the assumptions and methodology rather than making accusations of fraud.
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