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Old 07-02-2008, 07:13 AM   #221
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True-though if you'd locked into a fixed annuity in 1965 there would have been no opportunity to get those higher rates. At least as far as I can tell, there's no single vehicle (including giving all of one's money to an insurance company) that protects against all eventualities. I've got a long time horizon, and I feel a lot safer with a mix of assets and no dependency on one industry, one national economy, and especially not a single company.
If I ever buy one, it will only be a small part of the equation. No more than 10% of my investments. Just enough to add to my SS to meet my monthly cash flow requirements. So we agree for the most part. Only difference, I have included an annuity as part of my mix.
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Old 07-02-2008, 07:16 AM   #222
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Originally Posted by Razor View Post
People that live below their means survive inflation better than those that don't. They adapt, cut back, substitute and make due.
I've seen this comment posted before - seems backwards to me.

If one is LBYM - how does one cut back? Unless your means is very high, you already *have* cut the 'frills' from your budget.

-ERD50
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Old 07-02-2008, 07:25 AM   #223
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Whowser! No wonder the Brit engineers I worked with in the 70's and 80's were talking annuities - SWISS of course.

heh heh heh - provincial American me - that's about the time I started DCA via 401k into the then new 500 Index.

Ya gotta have faith baby. I don't think I even noticed the 'Stocks Are Dead' article back then.

heh heh heh - So far my non cola pension, SS and dividends on my small amount of Norwegian widow stocks are sufficient for a 'hard times' cash flow. With time and inflation never say never on annuities - but not now or yet even.
Unclemick, full of wisdom. BTW, your pension is basically an annuity, correct? You may not have had a choice to opt for anything else when you were working, but that is what you have and it is part of your income mix. That is all I'm advocating. Just a piece of the puzzle to possibly make me sleep a little easier.

BTW folks, I'm not a die hard annuity advocate. I just think for some, it can help be helpful product at some point in one's retirement. Now, time to head to the golf course.
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Old 07-02-2008, 08:44 AM   #224
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I've seen this comment posted before - seems backwards to me.

If one is LBYM - how does one cut back? Unless your means is very high, you already *have* cut the 'frills' from your budget.
I think a better way to put it is "those who LBYM can fare better because they have room in their income stream to absorb some inflation without going into debt."
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Old 07-02-2008, 08:47 AM   #225
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I've seen this comment posted before - seems backwards to me.

If one is LBYM - how does one cut back? Unless your means is very high, you already *have* cut the 'frills' from your budget.

-ERD50
Thought the same thing when I read it, but the point remains valid. They survive better because they actually have a little breathing room and haven't spread themselves so thin. So maybe they can't "cut back" more, but they are still in a much better position than those who are living tooth to nail, paycheck to paycheck, leveraging themselves with 40 credit cards. Just saying...

As I am far, far off from ever needing to retire, I looooove the bear market. Puts me at odds with many of the older folks shaking their heads at the stock market at work but I just keep my mouth shut and continue to save. Working into a bear market is very good when you are young, and as P/E multiples come back to reasonable ranges you are able to buy more stocks as the prices become cheaper. Someday, the faith goes, the decreased value will certainly pay off when you have a lot more money invested in the market. Then again, if you are less than 3 years from retiring or already have, it is a much different animal... but then again, that is why you shift your AA
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Old 07-02-2008, 08:57 AM   #226
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Talk about a feeling of panic. I looked and saw that BRKB was shown this morning by Google and Yahoo as down 46% in AFTER HOURS trading. I don't know what the explanation for that is, but it opened this a.m. only down a smidge. Yikes.
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Old 07-02-2008, 09:01 AM   #227
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Talk about a feeling of panic. I looked and saw that BRKB was shown this morning by Google and Yahoo as down 46% in AFTER HOURS trading. I don't know what the explanation for that is, but it opened this a.m. only down a smidge. Yikes.
It may well have been incorrect.

Either that or someone really took it in the shorts by placing a market order after hours.

Market orders and after-hours trading don't mix. I don't trade after hours because of the often-punitive bid/ask spreads, but for goodness sakes, if you do trade after hours, ONLY use limit orders!
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Old 07-02-2008, 09:24 AM   #228
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Unclemick, full of wisdom. BTW, your pension is basically an annuity, correct? You may not have had a choice to opt for anything else when you were working, but that is what you have and it is part of your income mix. That is all I'm advocating. Just a piece of the puzzle to possibly make me sleep a little easier.

BTW folks, I'm not a die hard annuity advocate. I just think for some, it can help be helpful product at some point in one's retirement. Now, time to head to the golf course.
I think your broker would agree that an annuity can help in one's retirement. (HIS/HERS)
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Old 07-02-2008, 10:27 AM   #229
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Unclemick, full of wisdom. BTW, your pension is basically an annuity, correct? You may not have had a choice to opt for anything else when you were working, but that is what you have and it is part of your income mix. That is all I'm advocating. Just a piece of the puzzle to possibly make me sleep a little easier.

BTW folks, I'm not a die hard annuity advocate. I just think for some, it can help be helpful product at some point in one's retirement. Now, time to head to the golf course.
Pensions and Social Security ARE annuities, whether people believe it or not...........
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Old 07-02-2008, 10:33 AM   #230
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Pensions and Social Security ARE annuities, whether people believe it or not...........
But no one is forcing you to "purchase" an annuity...
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Old 07-02-2008, 10:43 AM   #231
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Pensions and Social Security ARE annuities, whether people believe it or not...........
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But no one is forcing you to "purchase" an annuity...
Have you checked out your Social Security taxes recently?
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Old 07-02-2008, 10:58 AM   #232
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Have you checked out your Social Security taxes recently?
Exactly my point! Your company and the govt may "force" you to buy any annuity, but AIG can't...
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Old 07-02-2008, 11:22 AM   #233
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If one is LBYM - how does one cut back? Unless your means is very high, you already *have* cut the 'frills' from your budget.
My annual expenses are about $30K. Of that, approximately $12K goes to my mortgage, $3K goes to property taxes, $5K goes to charity, and $10K goes to living expenses. This has been fairly constant for about 8 years (inflation, what inflation).

I can't really cut back on the mortgage or property taxes unless I move, which I'm not likely to do. However, I could refinance and get a 30-year mortgage instead of a 15-year mortgage. I haven't run the numbers but that might "save" $5K a year, at least on an annual outflow basis.

I'm not the late Mother Teresa or that woman in the bible. I'd reduce or stop my charitable contributions if I was desperate. That's another $5K.

I probably could reduce my general living expenses by $2-3K, without too much difficulty ... stop driving my car, stop eating junk food, get rid of cable TV, etc.

Even though I'm a LBYM type, I still feel like a spendthrift in some ways. If I had to, I could reduce my expenses or more specifically my cash outflow by maybe 35% without too much hardship on my overall lifestyle.
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Old 07-02-2008, 11:40 AM   #234
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Originally Posted by Razor: "People that live below their means survive inflation better than those that don't. They adapt, cut back, substitute and make due."

I've seen this comment posted before - seems backwards to me.

If one is LBYM - how does one cut back? Unless your means is very high, you already *have* cut the 'frills' from your budget.
It's not so difficult to understand. Perhaps your confusion resulted from the reference to "cutting back", which is not really the point.

Example: Sheila spends as much as she earns. If inflation erodes the spending power of her $60,000 annual income, she has a problem and must find some way to either consume less or increase her income.

Gary believes in living below his means, and spends (only) $45,000 each year. If inflation erodes the spending power of his $60,000 annual income, the $15,000 surplus is available to restore the lost spending power. It will not be necessary for Gary to reduce his consumption.
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Old 07-02-2008, 12:32 PM   #235
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I have known that traditional pensions are annuities, but is SS actually an annuity? I thought it was a direct worker to recipient payment program (similar to a Ponzi scheme, but I will leave my editorial comments out for now) which isn't set up as a lump sum buy-in to an insurance company or whatever product they are peddling nowadays.
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Old 07-02-2008, 12:36 PM   #236
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I have known that traditional pensions are annuities, but is SS actually an annuity?
It has some characteristics of an annuity but IMO, it's not an annuity. Annuities are contracts. SS is not a contract and can be changed at will by Congress.

Annuities provide a guarantee to pay benefits according to a certain schedule based on lifespans or a fixed number of years. SS contains no such guarantees. This is why *strictly* speaking, future promises of SS benefits have no cash value.
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Old 07-02-2008, 02:19 PM   #237
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Annuities by contract can be changed by bankruptcy too; can't they? So the real point is that any annuity check next month is dependent on someone else. However, somehow I kind of trust the SS check a tad more that the AIG (or whoever) check, especially since I have already received about 100 of them so far along with about 350 from my "other annuity". Fortunately, thus far, the only changes in these checks is to increase in dollar value each year.
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Old 07-02-2008, 02:23 PM   #238
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I think your broker would agree that an annuity can help in one's retirement. (HIS/HERS)
Well that's pretty much the standard anti-annuity line. And they might like the idea for the reason you imply. Never asked their opinion.
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Old 07-02-2008, 02:25 PM   #239
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Annuities by contract can be changed by bankruptcy too; can't they? So the real point is that any annuity check next month is dependent on someone else. However, somehow I kind of trust the SS check a tad more that the AIG (or whoever) check, especially since I have already received about 100 of them so far along with about 350 from my "other annuity". Fortunately, thus far, the only changes in these checks is to increase in dollar value each year.
The original name of the Social Security Act was the "Old Age Pension Act", so it is a sort of annuity...........
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Old 07-02-2008, 02:36 PM   #240
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The original name of the Social Security Act was the "Old Age Pension Act", so it is a sort of annuity...........
Wrong country and too young for that one. England and AGE 70 - and it was free (no contributions). Predates SS a bit as it was enacted in 1908.
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