audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
I think this defaulting issue is well discussed on the Bogleheads thread. One poster points out:
Bogleheads :: View topic - The Decumulation Phase
I mean basically we're talking about relative risks here. And you can spread the risk somewhat.
Audrey
On the comment about the risk of the insurance company going under:
Depending how deep you are in the red zone, the probability of running out of money holding an investment portfolio generally -at reasonable withdrawal rates- is 40% and higher. (about 45% at 5% initial withdrawal rate, 80% at 6% even with a balanced portfolio)
The risk of an insurance company going under is significantly less than 50%. Furthermore, there is a guaranteed amount ($2,000/month in Canada) which is continued to be paid even if the insurer goes under. So, if the person needs $3000/month to meet his basic shortfall, I buy it from two different insurers
Bogleheads :: View topic - The Decumulation Phase
I mean basically we're talking about relative risks here. And you can spread the risk somewhat.
Audrey