Annuities

[hocus]

Re: Annuitieshttp://www.nofeeboards.com/boards/vie

At the time of Trinity's publication, valuations as measured either by p/e, p/b, or yield on the S&P 500 were considerably in excess of those "today".
 
Here's a link at which JWR1945 reports on what the historical data says re the SWRs that have applied at the valuation levels we have experienced from 1995 forward:

http://www.nofeeboards.com/boards/viewtopic.php?t=2657

JWR1945: "For those who are invested 80% in stocks, the Safe Withdrawal Rate bottomed out near 1.59%. It was below 2.00% from 1999-2001. It was below 3.00% from 1996 until today [the post was put up in June 2004]. The odds in favor of success are at least 50-50 in all cases with a withdrawal rate of 3.17% and lower. Except for 1998-2002, the odds in favor of success have been at least 50-50 at a withdrawal rate of 4.00%. Those who started withdrawing 5.00% in 1999-2000 are almost certain to run out of money within 30 years."

 

[unclemick]

Not Straightforward - the future be cloudy Obi Wan.

JWR has put up some links to Prof Ponzo's past efforts aka Gummy Stuff.

Just started - but there is a gamblers pick aspect to this based on history future. Dampened somewhat with the inflation adjusted - but I've just started.

First impression - you want to be an older phart and know more than the insurance company actuaries.

Early ER probably not - as noted in earlier threads - in your sixities or later, possibly.

History - I still remember when I could have bought a 12% payable in Swiss Francs annuity. So proceed cautiously.

If you have a smaller nest egg and need to damp volitility to get as much as possible out - there are trade-offs to work.

Or your wife could insist you buy one - in which case all the numbers in the world are worthless.

This is most definately an area where you want to buy only if it fits your situation and avoid getting sold like the plague.

My problem is: I don't like the irreversability of the bet with annuities.

Interesting stuff - but so far balanced index is still my bag.

 

[hocus]

This is most definately an area where you want to buy only if it fits your situation and avoid getting sold like the plague.

That's my general take on annuities too, UncleMick. Thanks for adding a voice of balanced common sense to the discussion.

 

[nfs]

Re: Annuitieshttp://www.nofeeboards.com/boards/vie

At the time of Trinity's publication, valuations as measured either by p/e, p/b, or yield on the S&P 500 were considerably in excess of those "today".

Here's a link at which JWR1945 reports on what the historical data says re the SWRs ...

Which proves exactly what wrt your statement re valuation?

 

[Hyperborea]

Its a dance, baby.  Banging them on the head with a club and dragging them home by the hair doesnt work when you get past Chevys.

<snip>

(PPS...any connection between Tony2002 and Hocus2004?)

TH, why do you think that h*cus has been trying to scare everyone about 2% or -1.5678% SWRs for the last 4 years?  It's been the long continuous setup to come in as yet another of his online personalities and try to sell us annuities to rescue his own underfunded retirement.  He came on a little hard but it's only the practice run - he'll get better at it by the time he tries it over on the bigger more populated boards.

 

[hocus]

My goal is to provide information that helps aspiring early retirees put together successful plans. I believe that those who review the material at the link will find that it helps them.

I pick up hostility from you, NFS. But I am not able to say what is behind the hostility. So I don't think I can satisfy you.

I stand by my statement that the authors of the Trinity study performed a service by making people aware that the SWR for stocks was lower than they thought it was, and that intercst has performed a disservice by insisting that the SWR for stocks it higher than what we know now the historical data reveals it to be.

 

[cute fuzzy bunny]

 

[hocus]

I will acknowledge being surprised by what the historical data said when I first looked into the matter, hyperborea. But I did not find anything "scary" in it. It says what it says. I adjusted my investments so that they made sense for someone in my circumstances given what the data says, and I went on with my life.

I don't even agree that there is some sort of "anti-stock" message in the historical data. The risks of stock ownership are far higher today than they are at times of low or moderate valuation, to be sure. But I see that as more of an opportunity than anything else.

If stocks perform in the future at all in the manner in which they have always performed in the past, we are going to see better prices in the not-too-distant future. Lower prices will allow those who lowered their stock allocations when prices were at extreme highs to buy lots of shares at a time when far higher SWRs will be available from stocks. What's so scary about that?

If you are a short-term trader, you shouldn't be making use of the Data-Based SWR Tool. It wasn't designed to provide guidance for short-term traders. If you are a buy-and-hold investor, knowing what the historical data says re how your investment is likely to perform over a 30-year time-period is a big plus. I cannot imagine a circumstance in which it could be a bad thing to inform one's investing decisions.

The emotional reaction I see from a lot of intercst supporters tells me that intercst supporters are feeling insecurity re their views. The voice of fear you are hearing is not mine, hyperborea. It is a voice coming from within.

 

[haha]

My goal is to provide information that helps aspiring early retirees put together successful plans. I believe that those who review the material at the link will find that it helps them.

*****, I admire your doggedness and refusal to respong with anger. Still, I am totally in the dark as to why you continue. What is your goal? And please, don't give me that" I want ot help others" line; even Mother Teresa had her limits. I truly hope you do have some scam in mind. It would terrible for the head of a young family to waste his time trying to save souls on the internet.

Mikey

 

[nfs]

I stand by my statement that the authors of the Trinity study performed a service by making people aware that the SWR for stocks was lower than they thought it was, and that intercst has performed a disservice by insisting that the SWR for stocks it higher than what we know now the historical data reveals it to be.

If intercst is performing this disservice, why on earth do you need to misrepresent easily verified historical facts? I don't understand why you would undermine your own argument in such a simplistic way.

JWR's estimates notwithstanding (and they are estimates, being regression coefficients with very wide standard errors), the simple truth is that valuations on the S&P 500 at the start of both 1997 and 1998 were higher than they are today and nobody who retired using 4% SWR at the beginning of either of those years with a 100% US large cap portfolio is in much danger of going bust.

Perhaps you believe that acknowledging that 97/98 SWR retirees are alright somehow damages your argument wrt today's situation. Believe me, your argument is damaged much less when you acknowledge outliers than when you pretend they do not exist.

 

[hocus]

My goal is to open up the various boards to honest and informed posting on investing questions, Mikey. That's it. If people hear both sides of the story, it's not my concern what road they take. It's up to them. If they are not able to hear both sides, the integrity of the board experience has been damaged in a serious way. That hurts all of us who make use of these boards.

I don't view myself as a Mother Teresa. I don't get paid to post here, but then neither does anyone else. Does it make you Mother Teresa that you offer us the benefit of your knowledge and experience on these boards? I presume that you just enjoy the give-and-take of the learning experience. Well, so do I.

I have seen these boards do wonderful things for people, and this one does that today on topics other than SWRs. I think that SWRs matter, so I would like the learning experience to be extended to the SWR topic. I think it is a pretty darn modest goal. It shouldn't take us so long to get there, in my view.

But it takes what it takes, you know? I don't decide the timing. I do my little part and then I go about my other businesss. I am going to try as hard as I can to open the boards to honest and informed SWR posting. But that's not the only way I hope to be able to help aspiring early retirees achieve their goals. I have other goals I am working on at the same time.

The boards are important, so I do what I can to help. The SWR area is an area where I happen to possess some special expertise. So I tend to put most of my board energies into the SWR matter. I have hopes that the time will come when honest SWR posting will be permitted and I will be able to move on to some other things that have long been kept on hold for lack of time.

 

[hocus]

the simple truth is that valuations on the S&P 500 at the start of both 1997 and 1998 were higher than they are today....

JWR1945's SWR number for January 1997 is just about the same as his number for today. His number for January 1998 is a little lower than his number for today (2.1 vs. 2.4). That means that his valuation assessment tool (PE/10, the tool used by Robert Shiller) shows valuations today to be about the same as in 1997 and a little better than in 1998.

and nobody who retired using 4% SWR at the beginning of either of those years with a 100% US large cap portfolio is in much danger of going bust.

They are still in the danger zone. JWR1945's research shows that the high-risk period of a retirement is the first 11 years. Those who retired in 1997 or 1998 using a 4 percent take-out from a high stock portfolio have been using a take-out far higher than the one identified by the historical data as safe. If we get to 2009 and they have not suffered a big hit, the historical data indicates that the odds are they will make it all the way.

We are not there yet. These retirees should be examining what the historical data really says re SWRs and making appropriate adjustments in their plans before it is too late, in my view. They have been misled into a false sense of security by REHP study enthusiasts.

 

[hocus]

TH has zero evidence for his claim, His claim is of course untrue.

I think that it shows bad intent on his part that he would repeatedly put forward untrue claims for which he has no evidence.

I believe that Dory36 has tools available to him to check into this unfounded claim and to report to the board community that TH is reporting untruths. I would appreciate it if you would take the time to look into this and report to the board community what you are able to determine, Dory36.

 

[sgeeeee]

Are those buttermilk pancakes? And more importantly, does that bunny have a kayak?

 

[cute fuzzy bunny]

Yes, those are in fact buttermilk pancakes.

The good news is, he has a friend!

If anyone is still hungry, I have photos of animals with bacon on their head as well.

 

[haha]

If anyone is still hungry, I have photos of animals with bacon on their head as well.

Yes, please, I would like to see these also. And thank you for all the preceding ones.

Mikey

 

[nfs]

and nobody who retired using 4% SWR at the beginning of either of those years with a 100% US large cap portfolio is in much danger of going bust.

They are still in the danger zone. JWR1945's research shows that the high-risk period of a retirement is the first 11 years. Those who retired in 1997 or 1998 using a 4 percent take-out from a high stock portfolio have been using a take-out far higher than the one identified by the historical data as safe.

You can look at the numbers I put in my 3:22 pm message, in particular the 1997 figure. The SWR retiree of 1/1/97 has a portfolio 43% larger than he started with, while inflation is up a cumulative 20% since then. There is no way that person's portfolio is going bust. I don't care what you say or if jwr's regressions "prove" there's danger for 11 years from the start. That poor deluded (your words, not mine) retiree is 20% better off in real terms than he was eight years ago and, even with markets at close to equivalent valuations, must be feeling pretty good. After all, his withdrawal rate is now down to 3% of current value and he's much further into your "pretty certain to be safe" zone.

Dismiss it (and numerous recent other years, btw) as an irrelevant and/or misleading outlier if you prefer. But to pretend that current valuations are the bogeyman, when anyone with half a brain and access to google can find recent examples where your bogeyman has not posed the danger you claim is lurking, just makes you look silly.

 

[haha]

*****, I would recommend to you that you cultivate schadenfreude. Edmund Burke said, "I am convinced that we have a degree of delight, and that no small one, in the real misfortunes and pains of others."

Let that be your delight. If you tell someone once what you honestly believe, let that be enough. Then let the games begin. If someone has dissed your recommendations, either you will be right or he will or you both will be wrong. But if you are right, and he is wrong, maybe someday you will encounter him jumping around outside an apartment building wearing a clown constume, waving a banner that says "One Month Free Rent !!!" You could even open the window of your BMW 735 and offer,  "I told you Intercest was wrong!"

Now that would be pleasure, no? If if you are getting along in years, and the ordinary pleasures of the flesh do not call so loudly, even greater will be the pleasures of schadenfreude.

Mikey

 

[cute fuzzy bunny]

Yes, please, I would like to see these also. And thank you for all the preceding ones.

Mikey

Glad to oblige.

Hey, we needed something other than kayaks and kilts (and that other unmentionable hairy stuff).

In a pinch, I might come up with a baby with some hash browns in its hat brim. For you big eaters.

 

[Cut-Throat]

*****, I would recommend to you that you cultivate schadenfreude. Edmund Burke said, "I am convinced that we have a degree of delight, and that no small one, in the real misfortunes and pains of others."

Let that be your delight! If you tell someone once what you honestly believe, let that be enough! Then let the games begin! If someone has dissed your recommendations, either you will be right or he will or you both will be wrong. But if you are right, and he is wrong, maybe someday you will encounter him jumping around outside an apartment building wearing a clown constume, waving a banner that says "One Month Free Rent !!!" You could even open the window of your BMW 735 and offer,  "I told you Intercest was wrong!"

Now that would be pleasure, no? If if you are getting along in years, and the ordinary pleasures of the flesh do not call so loudly, even greater will be the pleasures of schadenfreude!!!

Mikey

Mikey, you must be a liberal with a post like that! - Us liberals would be proud to have you on our side. Now, posts from Ed teach is what we'd expect from the far right, but this is far too poetic

 

[cute fuzzy bunny]

But if you are right, and he is wrong, maybe someday you will encounter him jumping around outside an apartment building wearing a clown constume, waving a banner that says "One Month Free Rent !!!" You could even open the window of your BMW 735 and offer, "I told you Intercest was wrong!"

Reminds me of when I ran into one of my chief "rivals" in HS a few years later. While he was bagging my groceries and taking them out to my mercedes for me.

I tipped him a dollar.

 

[haha]

TH, it might partly be the wine, but the cat with bacon-brow made me laugh for a long while. Muchas gracias!

Mikey

 

[hocus]

if you are getting along in years, and the ordinary pleasures of the flesh do not call so loudly....

Excuse me?!!!

This was your idea of a "calming the waters" post, Mikey?

I'd hate to see what you come up with when you're trying to stir up the pot!

 

[Hyperborea]

Hey, we needed something other than kayaks and kilts (and that other unmentionable hairy stuff).

 

[laurence]

Ah Hyper! My eyes! 8)