Poll: How Much Income Are You Planning From Purchased Annuities?

[jollystomper]

No current plans. Fortunate that Megacorp pension + SS will provide us with a very nice base income.

 

[GravitySucks]

I bought a small SPIA that I planned on starting at 62. It should cover about 20% of my spending initially but that will decrease as it is not COLAed.

 

[Huston55]

None planned, so I answered "zero". The exception would be if we approach Otar's "Red Zone" and the combination of mortality credits and a favorable interest rate environment would let us buy a SPIA and maintain a more satisfactory spending level than we could otherwise get.

^This (NW<28 x annual expenses for us)

I'm watching our annuity hurdle, but I don't plan to buy and annuity. Wouldn't consider it at today's horrible payout premium. If we do, it probably won't be until we're 80+ years old, and then a SPIA unless something better comes along.

^And This (as illustrated below)

Our essential expenses are/will be covered by two small pensions, rental income & SS when we take it @ 70-ish. The portfolio is to get us to that point and, to pay for discretionary expenses & act as a safety net.

Voted 'none unless Armageddon' in the poll.

 

[MrFlish]

There have been many dozens of (dire) "bond warning" threads since 2009, just one of the latest http://www.early-retirement.org/for...r-is-not-safe-in-a-low-yield-world-86798.html. The threads detail the concerns, but very few offer real alternatives ** - so what's the upshot? Anyone can just point out risks without solutions. Put all your $ in cash if you can't tolerate any volatility or risk (other than inflation eating you alive) and you can sustain yourself (it takes about twice the nest egg if you want to go all cash instruments).

** the three most often cited:
- cash hasn't kept up so you've given away some returns for about 8 years,
- dividend stock funds are not equivalents at all, essentially a change in AA higher return/risk, and
- SPIA's, though evidently 86% here haven't bought/aren't actually buying them?

I see your point now. I was thinking you were making reference to some recent worries about bonds. We looked at annuities but decided against them.

Our plans at 57/54 are a simple 60/40 equity/bond AA. We do keep a good chunk of cash(~200k) in savings/money market for opportunities, emergencies and discretionary moments. We'll begin looking at reducing our equity AA exposure in our 60's to establish a more conservative plan. At least that's our plan...and we're sticking to it if we can.

 

[Gill]

You must plan to live a long live (sic). 78 is cutting it close for me. I don't know if I last until mid 80s. If I purchase it now, I have a good chance to use this benefit for 30 years.

That's what an SPIA is all about. I'm insuring against the possibility I will live a long life. My mother died at 100 and grandfather at 97.
Gill

 

[Rustic23]

When you talk about prospective longevity it's like the market:

Prior performance does not guarantee future returns

 

[Huston55]

When you talk about prospective longevity it's like the market:

Prior performance does not guarantee future returns

Yep but, it really does come down to odds though, doesn't it.

I think of longevity calculators like I do the CAPE Ratio: based on a set of factors, "the odds are" that there will be the predicted result. IMO, that's a good place to start. If one wants to be more conservative, adding years or $$$ from there is always an option.

 

[Midpack]

When you talk about prospective longevity it's like the market:

Prior performance does not guarantee future returns

True there's no "guarantee," but it's not random either - somewhat correlated and therefore somewhat predictive within family. I've never seen anyone here putting guarantee and longevity in the same sentence. My Mom lasted until 93 and Dad is still living semi-independent at 95. So I can't plan on less...I wish I could.

 

[Fedup]

That's what an SPIA is all about. I'm insuring against the possibility I will live a long life. My mother died at 100 and grandfather at 97.
Gill

It makes sense in your case. You may have to deal with longevity. Not likely in my case.