Otar: Unveiling the Retirement Myth

[Moemg]

His book clarifies the 8% withdrawal as a classic don't do example and he repeats it several times so he clearly advocates a 3.5% to 4% withdrawal rate . Again I have to say his book is interesting reading and a bargain at $4.99 . Maybe a little repetitive but interesting .

 

[Zathras]

wow i am sooooo surprised. so many people on here are willing to not read a persons ideas on how to put together a sucessfull retirement withdraw plan just cus he doesnt have a clue about customer relations. well it is your retirement, more power to you

Customer service to me is very important and I will NOT give money to a company or individual that treats customers THAT poorly (it really was beyond the pale).
However, that doesn't mean I am not willing to read or hear his ideas. It just means I won't give him money. Rather, I will take his own advice of waiting for it to appear in the library and get it there at no cost.

 

[bosco]

I've tried to stay off here because I had my say and wanted to stop hijacking the thread.

But I do feel compelled to state that I am not uninterested in Mr. Otar's ideas. I am just uninterested in dealing with him and his attitude. I feel that $3.99, while not a princely sum, entitles me to not have my intelligence questioned. So I'll bide my time and get the information in other ways, or like he suggested, from the library.

 

[LOL!]

OK, so Otar is both insightful and inciteful. We all agree on that.

Do you want me to buy you a copy and e-mail it to you?

 

[bosco]

Do you want me to buy you a copy and e-mail it to you?

depends.....do I have to use paypal to pay you back?

 

[Nords]

depends.....do I have to use paypal to pay you back?

No, you just have to keep it or give it to someone else when you're done with it, same as a hardcopy book.

 

[kyounge1956]

(snip) However, 2/3 of my RE income will be coming from a defined benefit pension so I have a very large part of my risk exported to the equivalent of an annuity.(snip)

You DEFINITELY do not need an annuity: you've got one, or the equivalent!

More than half of my retirement income will also be coming from a defined benefit (City employees') pension. However, one of the options in our pension system is to get a reduced monthly payment plus a lump sum equal to either half or all of your accumulated contributions. If I felt uncomfortable having so many of my eggs in the City Retirement System's basket, next year I could receive 83% of my full benefit and the smaller lump sum, or get 2/3 of the normal benefit with the larger lump sum, and buy an annuity from someone else with the lump sum. Whether this would be brainy or boneheaded depends I suppose on whether an annuity that will (at least) make up the difference in monthly income is available for the amount I'd get in the lump sum payment, and on whether the risk of default is greater with the private annuity or the City Retirement System.

 

[Stevewc]

kyounge1956--

Check to see if your employer (pension fund) buys an annuity for you when you retire. If so you may be better off staying with the normal life time pension offered by the city.
I think some pensions work with and buy annuities as each individual retires,
Steve

 

[Bikerdude]

Whether this would be brainy or boneheaded depends I suppose on whether an annuity that will (at least) make up the difference in monthly income is available for the amount I'd get in the lump sum payment, and on whether the risk of default is greater with the private annuity or the City Retirement System.

You should check, but I would assume your state guarantee's the city pension and the insurance annuity is probably covered up to 100K. If the state fails to cover the city pension the Fed's would step in. However, if you have a large pension you probably will not be fully covered.

 

[rescueme]

kyounge1956--

Check to see if your employer (pension fund) buys an annuity for you when you retire. If so you may be better off staying with the normal life time pension offered by the city.
I think some pensions work with and buy annuities as each individual retires,
Steve

Oh-oh...

Don't you understand that folks on this forum do not like annuties (regardless of understanding the various types, and how they can be intergrated into a successful retirement income/cash flow plan?) ...

 

[REWahoo]

Don't you understand that folks on this forum do not like annuties (regardless of understanding the various types, and how they can be intergrated into a successful retirement income/cash flow plan?) ...

I'd have to characterize this statement as a bit of an exaggeration.

 

[rescueme]

I'd have to characterize this statement as a bit of an exaggeration.

Why is that?

Going back on this thread, it looks like you have already dismissed the idea. Not to start a fight at all, but I just want to understand the several anti-annuity comments on this thread.

Disclaimer: Yes I have an annuity (SPIA), purchased at my retirement (just under 3 years ago). I wll say that it has met/exceeded my expectations as to it's function within my ER (before the age of 60)....

 

[REWahoo]

Go back and look at all the threads on annuities and you will see that most of us agree there may be a case where immediate annuities make sense in certain situations. When it comes to variable annuities, I think your statement holds true.

 

[rescueme]

Go back and look at all the threads on annuities and you will see that most of us agree there may be a case where immediate annuities make sense in certain situations. When it comes to variable annuities, I think your statement holds true.

Therefore, we agree ..

I wish folks would explain what they actually mean when they use the term of "annuity" (of course, they would have to know a bit about the options available).

Peace...

 

[Nords]

Oh-oh...
Don't you understand that folks on this forum do not like annuties (regardless of understanding the various types, and how they can be intergrated into a successful retirement income/cash flow plan?) ...

Why is that?

You're putting words in our mouths.

My ER, and that of many other military veterans, is founded on a government annuity.

Milevsky's 1990s annuity research concluded that they were a bad deal, but his recent book "Are You a Stock or a Bond?" concludes that certain types are not inappropriately priced.

Greaney's REHP board has an analysis of actual vs retail annuity costs. It's been useful in assessing annuity products.

Otar's e-book is a strong advocate of annuities for retirees who can't afford to risk their entire ER portfolios.

I believe you're correct, though, in claiming that the board's members are highly allergic to annuity sales pitches, abusive annuity practices like selling them inside IRAs, high-cost products like equity-indexed annuities, and high commissions.

 

[rescueme]

I believe you're correct, though....

Wow! (via cut/paste) at least I have one post where I'm looked at in a positive manner.

(BTW, I'm a regular poster over at B* (here very infrequently), and we welcome you, Nords )...

Additionally I don't get a military pension, but I do get a small monthly stripend as a disabled vet (but that's not for this, or any other forum, for discussion).

 

[Nords]

(BTW, I'm a regular poster over at B* (here very infrequently), and we welcome you, Nords )...

Thanks! I left the M* Vanguard Diehards board a few years ago when the M* mods wouldn't exterminate the H0cus infestation. I think Bogleheads started up shortly after that. Seems like a big group.

 

[kyounge1956]

You should check, but I would assume your state guarantee's the city pension and the insurance annuity is probably covered up to 100K. If the state fails to cover the city pension the Fed's would step in. However, if you have a large pension you probably will not be fully covered.

Where do I get this info? I googled Washington + "pension guarantee" and got a bajillion hits. Is it usually the state insurance auditor or someone? And I take it the Feds in this case would mean the Pension Guarantee corp or whatever their name is?

 

[caninelover]

So I was able to download the ebook for $3.99 via PayPal...

First - Bosco, if I were you, I would go to Amazon.com immediately (his book is showing as available for pre-order) and post your experience there. At least that will let Otar know there is some consequence for his rudeness to you.

Second - the ebook does have a lot of info in it. I am only on Ch 21 so far but my head's already spinning around some of his ideas. I think I will read it through once and will probably have to go back and re-read it again, but so far I am really impressed with some of his ideas and will probably try the free version of his calculator (don't know whether paying $99 for the full version is worth it...)

Oh, on the 8% SWR, he does state that one of his warning signs is if the WR ever touches 10% it will deplete no matter how "lucky" the portfolio is after that...

 

[Bikerdude]

Where do I get this info? I googled Washington + "pension guarantee" and got a bajillion hits. Is it usually the state insurance auditor or someone? And I take it the Feds in this case would mean the Pension Guarantee corp or whatever their name is?

For your state I would look up the 'Insurance Commission' in the blue pages and give them a call. For the pbgc try this link:

Pension Benefit Guaranty Corporation (PBGC)

 

[donheff]

Where do I get this info? I googled Washington + "pension guarantee" and got a bajillion hits. Is it usually the state insurance auditor or someone? And I take it the Feds in this case would mean the Pension Guarantee corp or whatever their name is?

I Googled "Washington State annuity guarantee rate" and got this:
Life and annuity guarantee associations by state

It looks like you are covered up to $500K in the aggregate and per contract. Your mistake was to look for pension guarantees -- different animal.

 

[kyounge1956]

I Googled "Washington State annuity guarantee rate" and got this:
Life and annuity guarantee associations by state

It looks like you are covered up to $500K in the aggregate and per contract. Your mistake was to look for pension guarantees -- different animal.

Hi donheff,
thanks for the link.

based on what Bikerdude wrote, there may be a WA state guarantee on the City pension as well as on insurance company annuities:

You should check, but I would assume your state guarantee's the city pension and the insurance annuity is probably covered up to 100K. If the state fails to cover the city pension the Fed's would step in. However, if you have a large pension you probably will not be fully covered.

My thought was, suppose the state pension guarantee (if any) wouldn't replace the full amount of the ordinary pension benefit. In that case maybe it would be smart to choose one of the reduced benefit/lump sum combos. That might bring the pension payment down into the range where it would be fully guaranteed, and the annuity would be under $500K so that would be guaranteed too. I still need to follow up on Stevewc's suggestion and find out whether my City pension is actually an annuity purchased on my behalf by the pension system. I don't think it is—to the best of my knowledge the pensions are actually paid by the pension fund, not by a private insurer, but it can't hurt to double check.

 

[donheff]

Hi donheff,
thanks for the link.

based on what Bikerdude wrote, there may be a WA state guarantee on the City pension as well as on insurance company annuities:

I was focusing on the commercial annuity option. The city pension should be covered by the Federal program administered by the Pension Benefit Guarantee Corporation - you can confirm with your HR people. I don't know the details on PBGC's guarantees but it should be relatively straight forward to check. Was this already discussed earlier in the thread? My gut tells me a PBGC covered pension is a safer bet.

 

[michelle]

I'm not sure exactly what you mean, Michelle. I am Canadian, and used to being treated more politely by Canadian merchants. This is partially why I was so shocked at rude behavior by this man.

Having spent a lot of time in both countries, I will say that this is an atypical experience, in either country. I have never noticed a lower quality of customer service in Canada, with the possible exception of government agencies.

Admittedly, it was a stretch. I hope the sting of your experience is wearing off though. His book is really quite a good read.

 

[gryffindor]

I would love to see a good analysis of how to accurately ascertain the long-term risks of annuities / pensions. Otar spends little time on this unfortunately, Because one of the biggest issues in my opinion is the consumer being able to understand the true risk of the institution bearing the long-term risk.

People who had been counting on their defined pension plans with companies going bankrupt are finding that they never thought about this systematic risk.

Even now its very hard to clearly ascertain this risk if you find a good price on an annuity without the sales fees, etc. Does anyone believe the ratings institutions after they measured a lot of junk paper at AAA?

And finally, those with state government pensions are likely to be exposed to more risk of unilateral reductions than federal / military pensions as the state fiscal crisis worsens in the next 20 years and the states figure out a way to declare some type of bankruptcy.

Now many people don't have a choice -- they have to keep their pensions. But others have the potential to take the lump sum and at least transfer risk from a single company to 1 or many financial institutions if they could make a good decision