Poll: Annuities and retirement

[Empty Pockets]

Typo, sorry about that.

[rs0460a]

Quote:

Originally Posted by Empty Pockets I'm not trying to convince anyone who doesn't want an annuity to go out and get one, but for the rest of us, they can possible be a great alternative.

That's the problem I have with the responses on this board (and more specifically on this thread). It seems that everybody has the "correct answer" (and you're a moron if you don't agree).

When you walk into a car dealership, you expect them to have more than one model, one color, one set of options, etc. Everybody's needs are different, and the dealer is expected to offer a model that will fit your needs.

For me (being 60'ish), with a goal of conserving my retirement portfolio (rather than building it), an instant annuity (not defered, and not bought at age 80+) gives me/DW the ability to "take some cash" off the table (20%). That still leaves us with 80% of our joint portfolio to manage, and forecast through various tools (including FireCalc) to meet at a 100% level (actually, beyond that) of our goal.

That's not being foolish. The model works for me/DW. It's our money, our future, our decision. What works in "our world" (with less time on this earth than say a person a generation younger) may not work in theirs.

When I/DW started saving/investing for retirement in our early 30's, there were no 401K's, there were no IRA's, there were only company supplied retirement (e.g. annuity) plans.

The world changes, your requirements change, nothing remains the same.

Get over your indivudial "bias" in your thinking. I may be an "old fart" on this board, but I believe I'm more flexible in my thoughts than a lot of the "young folk" who's "words of wisdom" I read...

- Ron

[donheff]

As long as we are flogging the annuity issue again I have a question for the cognoscenti about SPIAs, how sensitive are they to current interest rates?

[cute fuzzy bunny]

Gee Rondy...seems to me that all the discussions regarding this topic have included an awful lot of people regularly saying that they're right for some people, its just that all the facts need to be presented.

And the only people called 'morons' are the ones who claim to have data and formulas that they actually dont have.

But in a pattern I see emerging, you seem to form interesting but often incorrect opinions with generally limited data. It'd help if you actually informed yourself on the matters at hand before making accusatory statements.

By poll, the vast majority of users here support use of annuities as part of their asset allocation, providing the numbers make sense.

[brewer12345]

Quote:

Originally Posted by donheff As long as we are flogging the annuity issue again I have a question for the cognoscenti about SPIAs, how sensitive are they to current interest rates?

Very. SPIAs are effectively a pertpetuity from the perspective of the annuitant, so they have very long duration (high sensitivity to rate changes). Search for a formula for perpetuity duration if you care.

[renferme]

Quote:

Originally Posted by Cut-Throat I take it you don't buy any of that Health Insurance, Auto Insurance, Home Owners Insurance and Life Insurance crap for the same reason either?

Well, I buy health insurance, auto ins., home owners insurance,
but, I still realize that all insurance companies are, in fact, out to fleece the consumer.
Also, out to fleece us are lawyers, doctors, dentists, hospitals, phone companies,
utility companies, politicians, school boards, gasoline companies, auto companies,
auto dealers, home improvement companies, teachers and their unions, and just about everyone I can think of.
Every one and every company is out to get the most they can from us; they screw us and we have to take it most of the time.
I just told Verizon to go to H#LL; I'm switching companies.

[Empty Pockets]

Which business do youscrew people inwork in ?

[Cut-Throat]

Quote:

Originally Posted by Cute Fuzzy Bunny Gee Rondy...seems to me that all the discussions regarding this topic have included an awful lot of people regularly saying that they're right for some people, its just that all the facts need to be presented. And the only people called 'morons' are the ones who claim to have data and formulas that they actually dont have. But in a pattern I see emerging, you seem to form interesting but often incorrect opinions with generally limited data. It'd help if you actually informed yourself on the matters at hand before making accusatory statements. By poll, the vast majority of users here support use of annuities as part of their asset allocation, providing the numbers make sense.

Cool it CFB! - You don't need to particpate in these annuity discussions because you've already got your mind made up. Move along to another topic.

First warning!

[cute fuzzy bunny]

Oh i'm sorry, is this in your official capacity?

Ronda's been trolling me for some time now, making snippy comments that arent particularly accurate or called for. And you're just grumpy because you got caught with your pants down.

Now, if you were an actual moderator, I'd take you more seriously. Just cant do it with a guy who deletes his own account without really understanding the implications.

As far as your warning, how about you snack on some of my smartpills?

Then think twice before posting while intoxicated...

[chinaco]

Well, all of you have certainly given me some food for thought.

I do believe that annuities are a valid mechanism for retirement income. I do not believe that they are intended as an investment, rather to generate an income and to reduce most risks (but not all risks).


Does an annuity make sense for DW and I Not sure yet. I will continue to study my options.

[Martha]

Let us keep the discussion polite please everyone. We are talking about annuities after all. Not religion. Not politics.

And yes, moderators wear two hats. We participate in discussions as well as occasionally moderate them. We have even had to moderate each other on rare occasions. Heck, I edited Nords once and banned myself for a couple of days.

[FinanceDude]

Glad I iddn't start the thread...............

[Bikerdude]

Quote:

Originally Posted by HFWR I had no choice but to "purchase" my SS "annuity"...

And I had no choice on my pension. I'd rather have the money on both.

[mb]

I invested in a variable annuity from Vanguard. The reasons follow:

- I wanted exposure to REITs
- Because of my tax bracket it was important that it was in a tax deferred account
- I did not have access to a REIT fund in my 401k
- There wasn't enough money in the IRAs and they were designated for other investments

I decided that a VA was the only option that made sense and that the solution was to invest in Vanguard's VA REIT fund. I think that the ER is about 0.6% including the insurance and of course there isn't a load.

This was about four years ago. I have made a lot of money on it in those four years.

DWs 401k now has a REIT fund so I'm no longer putting new money into the VA but given the same situation I think that I would do the same thing again.

If anybody has a better idea please let me know?

MB

[2B]

Quote:

Originally Posted by Cut-Throat Cool it CFB! - You don't need to particpate in these annuity discussions because you've already got your mind made up. Move along to another topic. First warning!

Now CFB has had his share of obnoxious posts but I didn't see any problem with this one. I made far stronger posts earlier in this same thread. Do I get special dispensation since I am the self-proclaimed "anti-annuity troll?"

I will admit I have fought using the term "moron" myself in replying to some posts. Some were so "different from my opinion" I declined to reply because there was no way I could have avoided the term.

I just hope that those wanting to purchase annuities have enough assets where it will not seriously limit their financial life like it did my father and in-laws. If the numbers really make sense, I would consider buying an annuity myself but I have never seen the case where they really did. So until I do I'll repeat a far earlier post and proclaim again that I still consider buying an annuity a sign of a cognitive disorder.

[W2R]

Quote:

Originally Posted by Martha We are talking about annuities after all. Not religion. Not politics.

LOL!! That is so true. We are each so focused on our own "Master Plan" and personal goals that sometimes our discussions get pretty intense, perhaps overly intense.

As for annuities, I have had the leader of a government sponsored retirement seminar jump my case for even asking her whether the MetLife TSP annuity offered to federal retirees has any fees (it doesn't). Without finding out my circumstances, she chewed me out for thinking about one (in front of my fellow employees). No intelligent person can manage to NOT hear the arguments against them. Still, when I run the numbers, a small annuity comes out as the better option for me every time. I am still undecided since so many people apparently see reality so differently from me.

A problem in discussing annuities is that often we are comparing apples and oranges. If a person:

• has no heirs or relatives
• has no pension
• expects little or no social security
• is over 62 or so
• is in excellent health with a family history of living past 95 or 100
• has no particular desire for much money beyond the basics, but
• needs some stable income for minimal expenses during bear markets and other times, and
• realizes that insurance companies fail and has a backup plan

then I am really not so sure that spending 25-30% of one's nestegg on a fixed lifetime immediate annuity (possibly with inflation adjustment) is such a terrible idea.

But most people here are not in such circumstances and for whatever reasons they don't see it that way.

[donheff]

Quote:

Originally Posted by Want2retire Still, when I run the numbers, a small annuity comes out as the better option for me every time. I am still undecided since so many people apparently see reality so differently from me. But most people here are not in such circumstances and for whatever reasons they don't see it that way.

I have a nice Federal pension. I have run the Vanguard calculator to see how much of a lump sum I would need to purchase an equivalent SPIA. I would not even consider trading the pension for that lump sum. So I am in the same camp as you - having the pension is equivalent to dumping a third of the otherwise total portfolio into an inflation protected SPIA with a very trustworthy company.

I am not a moron, I am not a moron...

[W2R]

Quote:

Originally Posted by donheff I have a nice Federal pension. I have run the Vanguard calculator to see how much of a lump sum I would need to purchase an equivalent SPIA. I would not even consider trading the pension for that lump sum. So I am in the same camp as you - having the pension is equivalent to dumping a third of the otherwise total portfolio into an inflation protected SPIA with a very trustworthy company. I am not a moron, I am not a moron...

Exactly - - I think many people who perhaps are more limited in vision tend to see the world from our own little vantage point and find it impossible to take a broader view and see that our circumstances are not identical to everyone else's.

No federal employee would claim that all federal employees have a large pension, especially those stuck in the newer FERS retirement system where the bulk of retirement is intended to be funded by the 401K (TSP). Yet it is sometimes difficult for those who do, to see beyond their own circumstances and realize that others may need to supplement their pensions. In my case, even with a 3.5% SWR I would receive more from my TSP than from my measly pension.

When I run the numbers, I come out ahead using part of my TSP for a MetLife annuity, every time.

[cute fuzzy bunny]

Quote:

Originally Posted by Martha Let us keep the discussion polite please everyone. We are talking about annuities after all. Not religion. Not politics. And yes, moderators wear two hats. We participate in discussions as well as occasionally moderate them. We have even had to moderate each other on rare occasions. Heck, I edited Nords once and banned myself for a couple of days.

You're correct Martha.

I'll accept C-T's apology for trolling me, claiming he didnt say something to facilitate criticizing my opinion, claiming I fabricated a post he made, and then pulling the moderator bit on me when he started to look like an idiot.

I'll also accept the apology from the other poster in the thread who seems to persistently create rancor by regularly implying that there are people calling others morons and not respecting their opinions when thats simply not the case.

Leaving out those two activities would have made the thread a lot more polite.

Aside from the comments made regarding those two posters, I felt my commentary and discussion in this thread were quite reasonable.