Protect Your Retirement from Future Stupidity

[Ready]

Protect your retirement from future stupidity - MarketWatch

An interesting MarketWatch article that talks about what happens to seniors when mental ability declines and they start making bad financial decisions.

As you would suspect, annuities come up as the main solution. But while I don't have much interest in reading another generic article about annuities, I do like the information he shares on the commissions earned by various insurance companies. And, a question that came up recently in another thread about Vanguard - he confirms that even Vanguard annuities have a 2% commission built into them.

 

[Chuckanut]

My plan when I get near the age of incompetence is to put it all in PSSSSSST....Wellesly, and collect a monthly check.

 

[MRG]

My plan when I get near the age of incompetence is to put it all in PSSSSSST....Wellesly, and collect a monthly check.

Hope you remember! Seriously, DF had everything figured out for EOL decisions. When it got time to do some of these, he no longer understood why, they never got done.
Best wishes,
MRG

 

[REWahoo]

My plan when I get near the age of incompetence is to put it all in PSSSSSST....Wellesly, and collect a monthly check.

It's paid quarterly, and I didn't wait until I got to that point. Or did I.

 

[Options]

I'm too busy protecting myself from the present stupidity of the business press acting as mouthpieces for the financial "services" industry. Another veiled sales pitch for annuities.

 

[aja8888]

I remind myself every time I read one of these articles;

I should have become an annuity salesman instead of an engineer......

 

[Alan]

And, a question that came up recently in another thread about Vanguard - he confirms that even Vanguard annuities have a 2% commission built into them.

That thread was about withdrawing funds from a VG variable annuity account, instead of annuitizing it through an insurance company, but it is useful to know that there is a 2% commission should an annuity be purchased instead of withdrawing funds.

 

[pb4uski]

From the article referenced in the OP.

Most consumers will never acquire the expertise to effectively sort out all the choices. And this leads me to the best source I know for buying annuities: Low Load Insurance Services Inc., where the commission is only 1%.

Actually the best source for buying annuities is the Social Security Administration - deferring SS to 70 is the best deal around from what I read considering what you give up in relation to what you get - especially for couples. (I concede the couple in the article were already in their 70s so that opportunity would not apply to them.)

 

[MichaelB]

Wellesley is an excellent choice for someone in the "losing it" stage (and most other stages also). When I approach that moment hopefully I'll not have lost too much and still have sense enough to choose it.

 

[Ready]

From the article referenced in the OP.



Actually the best source for buying annuities is the Social Security Administration - deferring SS to 70 is the best deal around from what I read considering what you give up in relation to what you get - especially for couples. (I concede the couple in the article were already in their 70s so that opportunity would not apply to them.)

Very true!

 

[Hermit]

My plan when I get near the age of incompetence is to put it all in PSSSSSST....Wellesly, and collect a monthly check.

Actually the best source for buying annuities is the Social Security Administration - deferring SS to 70 is the best deal around from what I read considering what you give up in relation to what you get - especially for couples. (I concede the couple in the article were already in their 70s so that opportunity would not apply to them.)

That's my plan exactly! When I turn 70, I will start SS on my account, move all investments to Wellesly and do RMDs from tax deferred to after tax Wellesly accounts. Haven't worked out details for withdrawing living expenses vs reinvesting. Don't think annuities will be needed and certainly would prefer to stay away from them.

 

[donheff]

This article does address my concerns. I don't need an annuity but I worry about becoming befuddled and doing stupid things. It doesn't run in my family so I may dodge that bullet but if I don't will I ever realize it hit me? My plan is to shift control over to the kids (with substantial written directives) if I see things going south. But....

 

[Gumby]

This article does address my concerns. I don't need an annuity but I worry about becoming befuddled and doing stupid things. It doesn't run in my family so I may dodge that bullet but if I don't will I ever realize it hit me? My plan is to shift control over to the kids (with substantial written directives) if I see things going south. But....

That's my concern as well, but we don't have any children, so we'll need to plan carefully in advance.

 

[SteveL]

Told my younger son recently that I was considering buying something for $2500, and sent him a picture to ask what he thought of the item. He responded (jokingly) that he would have to call his older brother to discuss whether they thought we could afford it.

If your children are as thrifty as you are, what kind of home might they put you in? Of course, if you have lost it, you won't care.

 

[InParadise]

Great article, thanks. After the experience I had with my dad, who got more and more aggressive with his financial decisions as he felt his control over life slipping away, I have concluded that we become our own worst enemies as we age, and that we need to learn how to protect ourselves from our self. Dad threw hundreds of thousands of dollars away, and we could not stop him. Expressing concern and trying to get him to think through his actions rendered him paranoid that we were out to get him, and pushed him into the arms, so to speak, of "his friends" the young couple that wined and dined this old couple right into buying a risky variable annuity, which he later abandoned at the market crash when told he needed to put more money into it. He cancelled his long term health care policy just when he was likely to need it most, saying he had already paid $70,000 in premiums for the "worthless" policy and was not going to pay one cent more. Worse yet, had he been destitute at the end, we kids could have been tapped for his expenses depending on what state we lived in, due to Filial Responsibility laws. The state we live in currently is one of the most aggressive in going after the kids to pay their parent's bills.

Do not assume you will be rational in later years. Figure out a solution now. I am not a huge fan of paying for an annuity, but perhaps it could be considered stupidity insurance. Lord knows many of us will benefit from such a thing.

 

[aja8888]

Do not assume you will be rational in later years. Figure out a solution now. I am not a huge fan of paying for an annuity, but perhaps it could be considered stupidity insurance. Lord knows many of us will benefit from such a thing.

^^^ Some real good food for thought.

 

[Refresher]

Protect your retirement from future stupidity - MarketWatch

An interesting MarketWatch article that talks about what happens to seniors when mental ability declines and they start making bad financial decisions.

As you would suspect, annuities come up as the main solution. But while I don't have much interest in reading another generic article about annuities, I do like the information he shares on the commissions earned by various insurance companies. And, a question that came up recently in another thread about Vanguard - he confirms that even Vanguard annuities have a 2% commission built into them.

At what age does this start to happen (in general)?

 

[travelover]

At what age does this start to happen (in general)?

What was the question again?

 

[Ready]

At what age does this start to happen (in general)?

Good question. My dad began early onset dementia in his early 60's. But I see many 80+ year olds out there still running large corporations. So I don't think there is any way to answer that meaningfully. It's different for everyone.

 

[InParadise]

Good question. My dad began early onset dementia in his early 60's. But I see many 80+ year olds out there still running large corporations. So I don't think there is any way to answer that meaningfully. It's different for everyone.

I totally agree with Ready on the variability of timing, or if it happens at all. Dad did not have dementia. He was just an angry old guy on a tear to take his life back after having spent a decade of their much anticipated retirement caring for a woman who was reduced to much less than the woman he loved by the after effects of a stroke. Fortunately they retired early and had a good 20 years of play time before this happened, but he had always been the one who needed tending, never thinking to survive his bride.

This kind of uncertainty is what one buys insurance for.

 

[MRG]

Great article, thanks. After the experience I had with my dad, who got more and more aggressive with his financial decisions as he felt his control over life slipping away, I have concluded that we become our own worst enemies as we age, and that we need to learn how to protect ourselves from our self. Dad threw hundreds of thousands of dollars away, and we could not stop him. Expressing concern and trying to get him to think through his actions rendered him paranoid that we were out to get him, and pushed him into the arms, so to speak, of "his friends" the young couple that wined and dined this old couple right into buying a risky variable annuity, which he later abandoned at the market crash when told he needed to put more money into it. He cancelled his long term health care policy just when he was likely to need it most, saying he had already paid $70,000 in premiums for the "worthless" policy and was not going to pay one cent more. Worse yet, had he been destitute at the end, we kids could have been tapped for his expenses depending on what state we lived in, due to Filial Responsibility laws. The state we live in currently is one of the most aggressive in going after the kids to pay their parent's bills.

Do not assume you will be rational in later years. Figure out a solution now. I am not a huge fan of paying for an annuity, but perhaps it could be considered stupidity insurance. Lord knows many of us will benefit from such a thing.

Thank you for sharing a very painful experience. While the details are somewhat different, your story is so very similar to my late DF.

Yes he lived in that state too. He had a gifting addiction, 50% of his pension, SS, any investment gains went to the church. We knew the 5 year lookback would mean my 2 DSs and I would be liable for his expenses. He couldn't understand what we were talking about. Oh yes the POA my DS had was practicly useless.

When he passed, he still had some assets, managed by a 3rd party. He was in a 90% equity 10% bond portfolio. Now we're waiting on that state for 4-6 months to finish the paperwork saying his 4.5% inheritance tax has been paid.

I joke, saying to save a bullet for me. The reality is even if that happened, I'd probably think it was a special suppository.
MRG

 

[InParadise]

Thank you for sharing a very painful experience. While the details are somewhat different, your story is so very similar to my late DF.

Yes he lived in that state too. He had a gifting addiction, 50% of his pension, SS, any investment gains went to the church. We knew the 5 year lookback would mean my 2 DSs and I would be liable for his expenses. He couldn't understand what we were talking about. Oh yes the POA my DS had was practicly useless.

When he passed, he still had some assets, managed by a 3rd party. He was in a 90% equity 10% bond portfolio. Now we're waiting on that state for 4-6 months to finish the paperwork saying his 4.5% inheritance tax has been paid.

I joke, saying to save a bullet for me. The reality is even if that happened, I'd probably think it was a special suppository.
MRG

Dad was still 100% invested in stocks. I think the adrenaline kept him going until the market crashed and paralysis set in....thankfully. If he had followed through on cashing in at lows, he would have had so little left to live on.

I tell my son that when the time comes, put me in my kayak and push me toward the open sea, telling me to paddle for the horizon. Strap an electric motor on if you need to. DH finds the joke a bit too morbid, but there is no way I want to put our kids through what my sibs and I went through.

 

[W2R]

Nobody in my family has had Alzheimer's, thank heavens, so my genes are good. But then one never knows. For planning purposes I am assuming that at some time in my 80's (should I live that long), I will no longer be able to carefully manage my investments.

So, I am putting off SS to age 70 to make it larger, and that plus my mini-pension plus my RMD's should give me enough to live on or slightly less.

If necessary I will supplement that amount by buying a small SPIA after age 80. The objective is to bring up the total predictable automatic bank deposits to equal more than my living expenses, whatever they may be at that time.

I also plan to review my Vanguard situation at that time and could possibly start having my dividends or more sent to me from my taxable accounts each month.

All my bills except one or two are already paid by automatic deduction from my bank account, and I eventually I will get around to having all of them paid that way.

I can't imagine being so non compis mentis as to be unable to do my own taxes with TurboTax. To me that equates to mental vegetable status. Maybe a CPA at that point? Maybe my daughter? Aargh. Maybe Frank would take care of this stuff for me, assuming that he is not worse off than I am .

 

[Refresher]

It doesn't seem that managing the types of investments and returns would be a big problem its getting the bills paid with the money you receive from them.

A monthly debit from investment account to checking account with all bills automatically debited from checking should make it easier.

 

[MichaelB]

In my (limited) experience 1) the decline in cognitive function begins far sooner and is well underway before people become aware, 2) others, mostly friends and family, are aware before the affected individual is, and 3) all the early symptoms are easily mistaken for other conditions, most commonly confused with "just getting older. This makes planning for this condition a real challenge, as once it is diagnosed, rational thought and behaviour can't be counted on.

I never got around to doing the "23 and me" test, now it's too late, but cognitive decline is a real possibility. My plan (not yet implemented) is to prepare a set of instructions, similar to the one when I kick the bucket, that sets the stage for someone else to manage the financials and other important stuff, with specific instructions on what to do with me. Over the past few years, as I have dealt family members I have tried to involve my own children, in part to teach, and in part to communicate with them and set the stage when it's their turn. The one thing I am absolutely clear on is the time to prepare and plan is now, not then, and a lot of communication before it happens is needed for things to work out well.