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Old 07-07-2014, 04:05 AM
 
71,946 posts, read 71,997,171 times
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here is an interesting article about the use of deferred annuities as longevity insurance. it can be quite an effective product for someone who needs to stretch their savings further then they really saved for.

in effect you are in contest with the insurance company but the odds are on your side that you will win. a 65 year old has a 50/50 chance of seeing 82 if a male , 86 if female and 89 as a couple with other estimates as high as 92 . in fact we have been averaging living one year longer every 4 years now. that is pretty scarey when it comes to having your money out last you.

of course your overall health has to be considered when buying any annuity product but statistics show that seems to self regulate as buyers of annuities tend to have longevity .

annuities would pay far more if the general population bought them and more folks died since the mortality credits are based on those who die pay for those who live.

but it wouldn't be worth the risk for those not in decent shape to buy them.


more and more i am of the opinion that these unconventional times of low interest rates and high stock valuations are going to put huge pressure on our own portfolios over the next decade.

these unconventional times may very well call for unconventional investing and products.

takling at least some of the whims of the markets and interest rates off your shoulders may be a very smart move.

diversifying away from markets and rates in to dead bodies may be almost required going forward in order not to drive yourself nuts watching every move your portfolio does as the sledding gets tougher.

many products today do not charge much at all for what you get , in fact an immediate annuity has no other fees or charges. it is like a cd . if you like the rate that is your deal.

everything has cost to it ,even a cd has a cost, the bank is not doing it for free, you just do not see the cost broken out but you can bet it is pretty high in comparison to the interest you get.

did you know over funding a whole life policy ,the product we all love to hate can be a great source of tax free income in retirement ?

yep , there are no fees or expenses on any overfunding and so it gains interest and can be borrowed out later tax free and never payed back.

only requirement is that you stay under the mec amount which means you over funded it to much and in tax law you converted it from a life insurance policy to a modified endowment contract which is taxable.

as i said being closed minded and running on the bull-sh*t you hear from other uninformed folks can be your own worst enemy to your wealth and retirement success..

most of us ,self included will need the help of financial pros to sort out what is best for each individual. it is not something most of us can do on our own and this phobia with seeking help and god forbid paying for it hurts more than it saves.

planning is a whole lot more than buying index funds and here is your 4% rule ,have a nice life.

http://www.nytimes.com/2010/11/05/bu...LONG.html?_r=0

Last edited by mathjak107; 07-07-2014 at 04:37 AM..
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Old 07-07-2014, 05:28 AM
 
Location: Saint Johns, FL
1,195 posts, read 945,609 times
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rmmagow ....

You did not state a couple big factors. Does the pension pay off keep going to your wife after your death? That's an extra $4,800 if it does. And between it and the rental income, essentially a $12,000 base from which to work.

You also did not say whether you had life insurance, and if so when does it terminate. That would be a big "need to know".

Since your primary concern is income for your wife once you die, I would certainly do everything I could to delay SS until age 70 for you. That's what she will draw when you die assuming she waits till age 66. She can draw her survivor benefit as early as age 60, but it will be reduced by 29% if she draws then. Every month she can hold off until age 66 increases her benefit.

Like most people here I'd be reluctant to go with annuities.

I would suggest taking a small portion of your IRA's and investigate dividend paying stocks. Let's say $20,000. Start a Brokerage IRA account. Some stocks you might consider would be Realty Income (O), ATT (T). There are plenty of others that have never cut dividends and increased them for over 20 years in a row. Reinvest the dividends automatically.

You might find out that your comfort level doesn't allow that, but I suspect you'll find it will. Try dipping your toes into the water..
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Old 07-07-2014, 05:43 AM
 
71,946 posts, read 71,997,171 times
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i like "O" a lot but my opinion is unless the op can buy enough stocks to move away from individual company risk , diversified investments would be a better choice.

i would l;ook very carefully at the ramifications of your rmd's and delaying ss . there are a whole slew of taxes that may strike that may be avoidable by taking ss at fra vs later.

it is not easy calculations when you put all the pieces together. we are going friday to see a planner who will run some scenerios for us because dalaying until 70 for us may be a tax mistake.

when you have a lot of money in retirement plans the combination of rmd's and the whopping payments from ss may not play nice together. it may require juggling to avoid tax situations while providing for your spouse.

Last edited by mathjak107; 07-07-2014 at 07:09 AM..
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Old 07-07-2014, 07:24 AM
 
Location: Orlando
2,013 posts, read 2,651,078 times
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This one says, "Do A!" That one says, "For God's sake, don't do A, do B!" The other one says, "No, no, no, if you don't do C you'll lose all your money!"

I'm so confused now I think my brain is going to explode.
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Old 07-07-2014, 07:29 AM
 
71,946 posts, read 71,997,171 times
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and you thought this was going to be easy right? nope , it is some of the most difficult and complex number crunching you can ever do in your life.

it is so unique to everything about you and only your situation.
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Old 07-07-2014, 08:44 AM
 
758 posts, read 1,216,773 times
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Quote:
Originally Posted by organic_donna View Post
I had a "professional" consultation with a Vanguard advisor. I like Vanguard but they will tell you to invest a mix of stocks, bonds and cash no matter what interest rates are doing. They want you to keep your money with them. You need to find a Fee Only Financial Advisor that is not biased and does not earn a commission. Always ask "how much commission will you earn on my money"?
And I have most of my money with Vanguard and it is a mix of stocks, bonds, and cash. I do NOT use their advisors.
And I re-balance. And what I do with the money other than re-balancing takes NO account of what the interest rates are doing.

I am a Boglehead. We invest rationally.
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Old 07-07-2014, 12:11 PM
 
Location: SoCal desert
8,093 posts, read 13,251,822 times
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I have 2 annuities (Lincoln ChoicePlus) that I'm happy with. One bought in 2005, one in 2008, both with 1-year Automatic Step-ups. Yes, I thought the rider fees were high. Past tense, because I can't complain at all about my balances now.

YMMV.
Don't expect to get much positive response here regarding variable annuities, LOL.
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Old 07-07-2014, 12:14 PM
 
71,946 posts, read 71,997,171 times
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i am not a fan of variable annuities from any company. you need an mba just to figure out your deal. so far all of the ones i looked at including vanguard and fidelity are to expensive and to complex.

fidelity claims there annuities are cheaper but when you read the prospectus you see they have no death benefit. you have to buy an optional policy for that putting right back in range with the others price wise since the competitiors include a death benefit
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Old 07-07-2014, 03:00 PM
 
8,875 posts, read 5,156,823 times
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Mathjak - I agree with much of what you write. I am familiar with Wade Pfau's work, and am aware that the 4% withdrawal "rule" is based on the work of William Bengen. I do acknowledge that under the exact right (wrong?) circumstances, the 4% withdrawal strategy will not work without adjustment.

Nonetheless, I disagree strongly that the drawdown period is so complex everyone must work with an "advisor" of some sort or risk "shooting themselves in the foot".

many are fee only because they lack the creditionals and knowledge to sell certain type products or they would.

Nonsense. CFPs do not lack credentials or knowledge. (And what financial services credential is more prestigious than CFP, anyway?) They do not sell products because they have chosen to align their interest with that of their clients and sell their services instead.
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Old 07-07-2014, 03:04 PM
 
8,875 posts, read 5,156,823 times
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Quote:
Originally Posted by mathjak107 View Post

i would l;ook very carefully at the ramifications of your rmd's and delaying ss . there are a whole slew of taxes that may strike that may be avoidable by taking ss at fra vs later.

it is not easy calculations when you put all the pieces together. we are going friday to see a planner who will run some scenerios for us because dalaying until 70 for us may be a tax mistake.
A planner is one option; Turbo Tax is another.
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