Quote:
Originally Posted by howard555
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I asked a similar question in 2008, when I was caring for my Mother. Our age 58/61.
Ultimately I came to the conclusion that "Heisenberg Uncertainty Principle" for money rules.
Thus inorder to predict how much money you will have far into the future, you will have to fix the knowns, and this also equates to risk fees.
example1: Buy-writes Long Leaps will fix the outcome in the generally an Index future. However the cost for this will be enormous to execute today and still have a chance of not succeeding.
Example2: You can either fix the minimum or maximum using long call or long put leaps.
Example3: Mortgages. The bank will generally sell the mortgage to FannieMae who will package the mortgages into bond packages to be sold to institutions and individuals who will assume the rate and possibly the repayment risk. The bank may even do the packaging themselves and sell them as bond tranches (shades of 2000-2008)
Example4: credit cards. Shortterm credit. unsecured. Banks offer these because they think they can make money on the spread between the cost of their borrowing and what they get from your interest payment. Again 2000-2008.
I opted for long GLWB annuities. The annuity company tells you the risk fees. The guarantee, is a minimum amount annual withdrawal benefit, to you, when you exercise, 1 to 10 years into the future (2019, 2018); We have newer 2 GLWB 2018 vintage annuities with 15 year option (2033) but exercised in 2021. I would Not know the maximum which could theoretically be unlimited, but below SP500 because of the loss in fee compounding & depending on fund selection within the annuity.
You CanNOT purchase these annuities today because the annuity companies assumed too much market risk for the option fees received and thus no longer offering them...there is No Free Lunch for anyone.
reference;
Your financial advisor(s).
Wade Pfau,
Safety-First retirement planning, 2019. {currently reading}
Wade Pfau,
How Much Can I Spend in Retirement, {on hold at library}
sim firecalc.
Private communications with older bro, Phd Economics, career banker.