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Old 04-02-2017, 12:18 PM
 
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there are a whole host of ways to structure it but until rates are way higher it is not going to work well .
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Old 04-02-2017, 12:41 PM
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
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op,
this would be difficult to consistently get 5%.
to Mathjak's explanation on EIA's: We have contracts purchased in 2012. We also have GLWB VA from 2008-2012 contracts. Our motives was for retirement Income and Insurance to the Market. Looking backwards we could have done in a .SPY and do as well maybe a ~30stock/70bond in both types of annuities. However, had the Markets had gotten worse in 2008 and 2012, our Annuity's Income would be exceptional compared to income from Market returns investing. We boiled the rationale to buying a Pension Plan and we knowingly and thoroughly researched it and looked at the alternatives.

For EIA's, forget about the ways that you can "participate in the Market for the Account Value " but look at what is the best "income account" for growth and withdrawal features in the "income account."

Annuities are much more complicated than a stock/bond portfolio on the face but annuities are simplier to understand when you look at the Income-Risk rewards compared to a S/B retirement plan.

Notes: Our Income will consist of Annuities, ~25% of retirement income when fully exercised. SS will make 25%. Pension ~8%, Rental after expenses ~27%. And other investments ~15%. We are 67/70. Took early SS. Full implementation will happen when 2-4 years. We are OK on just 2 buckets, Well on 3 buckets.
YMMV

Last edited by leastprime; 04-02-2017 at 12:56 PM..
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Old 04-02-2017, 02:32 PM
 
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No... essentially nothing is 100% risk free over 1% for now
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Old 04-02-2017, 04:36 PM
 
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Quote:
Originally Posted by BeerGeek40 View Post
There is no such thing as a risk free return. They don't exist.
Sure there is, but not at 5%. Current t-bill rate is 2.42% on 10 year t-bills. Lower for shorter terms.
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Old 04-02-2017, 04:54 PM
 
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Those are certainly not risk free. They carry high inflation risk. A loss in purchasing power is the same as a capital loss. It is only real returns that count.

There is no such thing as a 10 year t-bill . A t-bill only runs out to 1 year
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Old 04-02-2017, 05:00 PM
 
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You can get an online savings account that is FDIC at 1% on Ally
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Old 04-02-2017, 05:10 PM
 
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Originally Posted by mathjak107 View Post
Those are certainly not risk free. They carry high inflation risk. A loss in purchasing power is the same as a capital loss. It is only real returns that count.
Treasuries are commonly understood to be risk-free, in that the return is guaranteed. A t-bill paying 1% will in fact pay 1% with no risk. That inflation might result in that money not having the same purchasing power as it does today is a very real issue, but it in no way changes the risk on whether or not I will receive the contracted rate.

I'm pretty sure that you understand this, so I don't get the point you are trying to make.

If I invest $100 today at 10%, I will have $110 at the end of the year. It is a 10% return even if inflation erodes the purchasing power of that money.

Quote:
There is no such thing as a 10 year t-bill . A t-bill only runs out to 1 year
Oops! I quoted Treasury Notes, not T-Bills.
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Old 04-02-2017, 05:20 PM
 
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All bonds and cash carry inflation risk as well as interest rate risk if you need the money sooner on bonds . .

Long term , stocks carry less risk for that reason than bonds in retirement .

Trying to draw more than a 2% draw inflation adjusted from fixed income has failed to last to many times to be even considered a safe withdrawal rate.

what do you think a bond holder was able to buy if he bought a 10 year bond in 1965 when inflation was at .97 and when he got his 1k back inflation was almost 12% ?

getting your 1k back and having it buy 200 bucks worth of goods is losing money and taking on risk despite what you think .

Market risk ,interest rate risk and inflation risks are the 3 risks all investments face.

Last edited by mathjak107; 04-02-2017 at 05:42 PM..
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Old 04-02-2017, 06:02 PM
 
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Quote:
Originally Posted by bmw335xi View Post
No... essentially nothing is 100% risk free over 1% for now
Almost but not quite...

I just opened a 12 mo CD paying 1.40% with PurePoint.

They have a savings account rate of 1.25% on a minimum deposit of $10,000.

They also have a checking rate of around 1.15%
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Old 04-02-2017, 07:08 PM
 
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3 moth tbill is a pretty common reference point for risk free rate of return
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