Say Goodbye to the 4% Rule - tips from the WSJ

[Midpack]

Quote:

Originally Posted by obgyn65 I am aware many here dislike or even hate annuities and will beat up my comments above. That's fine. This is America, people can disagree.

People 'beat up your comments' because your posts rarely if ever do more than scratch the surface. You always tell us you're too busy to add any substance, fair enough. But when someone tries to give another POV, you take that as getting 'beat up' - instead of providing a thoughtful rebuttal.

You've admitted you're an outlier, you have a high income relative to your spending - more than most members (congrats). And IIRC you've never owned equities or equity funds - so you may know the cons of equities much better than the pros, and therefore can't present a balanced view on equities. Longtime members have learned what your financial/investment philosophy is, and you're as entitled to it as anyone else is to theirs. But you have to realize that your POV, could be puzzling or worse to newbies, that's where I personally get concerned with some of your overly brief/too general posts.

Most people can't/don't LBYM to the extent you do, so they can't be as conservative investing as you are. History suggests inflation will ruin their chances. Again, congrats that it's an option for you.

My intent is not to beat up on you. FWIW...

Quote:

Originally Posted by MichaelB Didn't see anything new in the linked WSJ article. The analysis and proposal by W. Pfau has been discussed here before as well.

+1. A SPIA is one of my plan B options, presumably later in life depending on how our annuitization hurdle plays out. Hopefully that's not 'hating annuities.' And as another member noted, some annuities have inordinately high commissions and provide relatively poor value - arguably some annuity products are categorically bad.

[youbet]

Quote:

Originally Posted by HFWR I have nothing against SPIAs, per se, but you are still taking market risk with one, just indirectly...

My major concern with standard SPIA's is inflation risk. Using an SPIA, especially if the rates are attractive at the time, when you're deep into retirement might be fine. But to rely on an SPIA early in retirement hoping that the real value of the payments doesn't erode too severely over the decades would be a concern for me.

[MichaelB]

Quote:

Originally Posted by youbet My major concern with standard SPIA's is inflation risk. Using an SPIA, especially if the rates are attractive at the time, when you're deep into retirement might be fine. But to rely on an SPIA early in retirement hoping that the real value of the payments doesn't erode too severely over the decades would be a concern for me.

+1

Even with inflation protection, one loses over long periods because taxes consume part of the inflation factor.

[Sarah in SC]

Annuities rank right up there with the "crunchy" cat food in my retirement plans, say around Plan F or so. Wade Pfau is too young to feel the way he does, IMHO.

[Tyro]

Quote:

Originally Posted by Sarah in SC Annuities rank right up there with the "crunchy" cat food in my retirement plans, say around Plan F or so.

I'm sorry, you gotta splain me that one. We feed our dog one of the top three, but it's still crunchy, and he likes loves it. Been a while since we've had a cat, but friends who do (including a couple vets) feed em crunchy cat food too.

Tyro

[nun]

Quote:

Originally Posted by MichaelB Didn't see anything new in the linked WSJ article. The analysis and proposal by W. Pfau has been discussed here before as well.

I don't see anything new in W. Pfau's enthusiasm for annuities as I've always had a deferred annuity in my retirement portfolio. Even as I paid into 401ks etc I always planned to use a combination if annuities, SS, and rental income to fund my retirement.

[ziggy29]

Quote:

Originally Posted by Tyro I'm sorry, you gotta splain me that one. We feed our dog one of the top three, but it's still crunchy, and he likes loves it. Been a while since we've had a cat, but friends who do (including a couple vets) feed em crunchy cat food too.

Keep in mind that she never disclosed whether moist/canned cat food was Plan E or Plan G...

[NotMyFault]

Quote:

Originally Posted by Sarah in SC Annuities rank right up there with the "crunchy" cat food in my retirement plans, say around Plan F or so. Wade Pfau is too young to feel the way he does, IMHO.

Dry cat food has no expiration date so buy now to beat inflation.

[ziggy29]

Quote:

Originally Posted by NotMyFault Dry cat food has no expiration date so buy now to beat inflation.

You could say the same for Twinkies, though I suspect "buy and hold" of Twinkies a year ago could be rather profitable.

[rayvt]

Um, no. I once tucked away some Twinkies in the back of my desk drawer for a hunger-emergency.

After about a year, Twinkies turn green and fuzzy.

[Sarah in SC]

Quote:

Originally Posted by Tyro I'm sorry, you gotta splain me that one. We feed our dog one of the top three, but it's still crunchy, and he likes loves it. Been a while since we've had a cat, but friends who do (including a couple vets) feed em crunchy cat food too. Tyro

LOL, I mean ME eating the crunchy cat food! The cats and dogs like it just fine!

[Tyro]

Quote:

Originally Posted by NotMyFault Dry cat food has no expiration date so buy now to beat inflation.

Actually, it does, but we do stock up when dog food goes on sale (up to that date).
However being her plan F, I'm not convinced that's what Sarahbear meant.

Tyro

Edit: Oopsus Crosspostus I've tried both (dry cat & dog foods), and I think I'd have to go with...

Tyro

[JoeWras]

We feed our cat crunchy food. Am I supposed to feed him annuities now? Man, I'm getting confused.

[NotMyFault]

Quote:

Originally Posted by JoeWras We feed our cat crunchy food. Am I supposed to feed him annuities now? Man, I'm getting confused.

Now that's funny

[Sarah in SC]

Quote:

Originally Posted by NotMyFault Now that's funny

+1 But must add, if you are feeding annuities to the cats, please feed annuity salesmen to the dogs!

[pb4uski]

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Originally Posted by Sarah in SC ....feed annuity salesmen to the dogs!

GREAT idea!!! It's a dog-eat-dog world out there.

[braumeister]

Crunchy is fine with me.
DW buys those big 50 pound sacks of Hubby Chow and just pours some in my bowl, next to my beer stein. Saves so much time and effort!

[samclem]

Remember the risk of that Purina Diet.

[Lisa99]

We will be well above 4% in our first years of retirement then will drop well below when some other income streams besides our investment portfolio become available.

I consistently fail to understand why people take 4% as 'though shalt never cross that line." Having a financial plan, knowing where your income is coming from and knowing how to adjust when needed is of far more interest to me than knowing that 4% might not be safe after all.

[pb4uski]

Quote:

Originally Posted by Lisa99 We will be well above 4% in our first years of retirement then will drop well below when some other income streams besides our investment portfolio become available. I consistently fail to understand why people take 4% as 'though shalt never cross that line." Having a financial plan, knowing where your income is coming from and knowing how to adjust when needed is of far more interest to me than knowing that 4% might not be safe after all.

+1 It is the "ultimate" WR (once SS, pensions, etc come on-line) that one should focus on. In many cases it will be higher prior to those sources coming on-line.