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02-13-2017, 08:09 PM
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#21
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Quote:
Originally Posted by Gill
Having worked for five financial firms, I was never vested in a pension plan until my last job. Accordingly, my pension is only about $20,000 and SS is about $26,000. After retiring I became a bit envious of a relative with six figures of guaranteed income. This prompted me to buy some SPIA 's and the more I increased my guaranteed income the more I liked it. I have now put about $1.1 million in SPIA's including $100k in a longevity annuity. As I mentioned, I still have a substantial portfolio and budget a SWR from this of about 3% a year giving me a total cash flow of about $230K which will increase to over $260K when the longevity annuity kicks in at age 85.
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So being a financial professional I assume you worked out the IRR for various lifespans..........I think it's interesting at what IRR people would choose a SPIA, pension etc over direct investing. For me it would be around 6% for an average lifespan. Today a 70 year old living to 83 will get an IRR of 1% from a single life SPIA....but living to 95 pushes the IRR up to 6%. Still with so much cash I wouldn't feel the need for the insurance value of the SPIA so it's not what I would do.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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02-14-2017, 06:23 AM
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#22
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Recycles dryer sheets
Join Date: Jun 2010
Location: Southwest Florida
Posts: 470
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Quote:
Originally Posted by nun
So being a financial professional I assume you worked out the IRR for various lifespans....
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No, I didn't, because it is irrelevant for the often-discussed reason that I view it as insurance, not an investment.
Gill
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02-14-2017, 08:03 PM
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#23
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Recycles dryer sheets
Join Date: Jun 2015
Posts: 239
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Another reason to consider an annuity -
I plan to purchase a small annuity for each of my 3 heirs. I will also purchase a small whole (not universal) life insurance policy for each beneficiary.
Most of my estate will go to charity. I expect one of the three heirs to dispute my Will. My having provided each with an annuity, life insurance benefit, and some cash will help prove that I did not "forget" to provide for each of them.
So I am using annuities and life insurance mostly as a strategy.
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02-15-2017, 09:18 AM
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#24
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Thinks s/he gets paid by the post
Join Date: Jul 2011
Location: The Bay Area
Posts: 2,736
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Quote:
Originally Posted by Gill
Your question caused me to reflect a bit on my appetite for financial security. I guess I've always been a bit insecure about money, and even more so in retirement. I'm now 78, in great health, and my mother lived to be 100. I also have no real need to leave a substantial inheritance.
Having worked for five financial firms, I was never vested in a pension plan until my last job. Accordingly, my pension is only about $20,000 and SS is about $26,000. After retiring I became a bit envious of a relative with six figures of guaranteed income. This prompted me to buy some SPIA 's and the more I increased my guaranteed income the more I liked it. I have now put about $1.1 million in SPIA's including $100k in a longevity annuity. As I mentioned, I still have a substantial portfolio and budget a SWR from this of about 3% a year giving me a total cash flow of about $230K which will increase to over $260K when the longevity annuity kicks in at age 85.
As you can see from my earlier posts, I spent my career in the personal trust business. I don't know if that influenced my thinking and I wouldn't necessarily feel it is for everyone. For me, I'm very happy, enjoying retirement and have no worries about money.
Thanks for asking..
Gill
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Gill-
Thanks very much for your candor. I think it's this kind of discussion which makes E-R.org the great community that it is. Even though others, including me, might not take the same path, there's wisdom to be gained by understanding what you've done. Thx much.
__________________
You may be whatever you resolve to be.
100% x 10% > 10% x 100%
Small pensions & SS cover essentials
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02-15-2017, 09:39 AM
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#25
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Thinks s/he gets paid by the post
Join Date: Jun 2014
Posts: 1,188
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One other reason, because as a child trying to get their parents to put their money in the market is fruitless. They have been ripped off by every advisor they have ever done business with, thus getting at least 1/2 of their money into an annuity means I know they will have income period. Given the 10 year age gap between my parents with my father being older, it puts the odds of my mother living 20 years without my dad at pretty good odds and she was never involved in the investing side but has a tendency to be a hoarder/spender, so I don't want a situation like my aunts where her husband died and she got his and blew threw 1/2 of it within a few years buying her way through her depression. Locking in assets can be good for people who don't have self discipline.
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