For this poll, we will consider a retiree “safety first” if s/he uses guaranteed income streams for at least essential expenses.
I cannot choose any of your choices.
I would say "Safety first" to cover essential spending, and then probabilistic for anything above that.
I found the link racy provided above to help with the terminology used here:
https://www.kitces.com/blog/even-sa...stinction-is-risk-transfer-vs-risk-retention/
Another great food-for-thought Kitces article.
And this one has a long argument with Pfau in the comments!
I found the link racy provided above to help with the terminology used here:
https://www.kitces.com/blog/even-sa...stinction-is-risk-transfer-vs-risk-retention/
Another great food-for-thought Kitces article.
And this one has a long argument with Pfau in the comments!
DH's second (company) 401k as something called a lifetime income fund; it is basically a very cheap variable annuity, and it can be turned into a lifetime income stream with a minimum guaranteed income; so if I am still around - I will look at converting this when he hits RMD age.
The value of an annuity depends on the numbers and your circumstances. They have been very poor value for a long time because pf low interest rates.
Just before I retired I got the chance to use DC pension money to buy into my employer's DB pension plan. I looked at the numbers and I found I could get a $20k index linked annual pension starting at age 55 by transferring $280k from my DC plan to the DB plan at age 52. So the payout rate was 7% and I estimated that if I lived to 83 I'd have to get an 7% annual return on the money to match the pension. As I had plenty of other DC and investment money I bought into the pension. I'm now 57 and collecting the pension each month and can be pretty sanguine about the stock market.
There is no safety and there never was. Safety is an illusion, a mirage.
The rock is ground to sand by the action of waves and wind.
...We have our essentials fully covered by pensions and SS so that would put us in safety first by OP's reckoning, but I see that as a circumstance, not a school...
Good article.
The comments though... Glad I never heard of Pfau before I retired , 60-80% shot a 4% WR will succeed. I would have waited till I was 70 to retired.
Does anyone think we're in the most dire straights since 1920?
Fair enough. But most of my funds fees are less than 0.15% and the ones most of my money is invested in are less than 0.1%. I bet the fees on my small annuity dwarf those.From his comment, the low probability of success would appear to be because the 4% withdrawal rate he uses as example is actually understated at somewhere around four and a half to five and a quarter or so, due to failure to include investment expenses within it.
So not sure there is anything new there.
Pfau has always come off as a doom-and-gloomer, promoting the safety of annuities*, and using high investment fees to push down future projections of safe withdrawal rates (this time it's different - we could be like Japan/Germany). Kitces has often challenged him. One challenge resulted in a great joint paper about using a rising equity glide-path to reduce SORR.Good article.
The comments though... Glad I never heard of Pfau before I retired , 60-80% shot a 4% WR will succeed. I would have waited till I was 70 to retired.
Does anyone think we're in the most dire straights since 1920?
“probabilistic” school versus the “safety first” school of thought
False dichotomy. There is no true safety.
I do not love the terms as they are misleading in my view.