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Old 01-03-2016, 11:09 AM
JRR
 
Location: Middle Tennessee
3,679 posts, read 2,227,855 times
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We are actually kicking around buying a SPIA with some of our retirement that is currently in bond funds. We have approximately 10% in short term bonds and 20 % in other bonds. I'm thinking that if we take 20% and buy a SPIA, that we can still have 5% in short term bonds for emergencies, and have a large % in stocks for growth. With my wife's social security and my spousal social security added to the annuity income, we would have sufficient cash flow for our living expenses. And when I turn 70, we will get a nice boost when I stop the spousal and start my own increased social security.

I would not be looking for growth with the SPIA; just an income stream that would not be dependent on the whims of the bond market. And barring some sort of financial catastrophe, it will allow us to not have to sell any equities.

As I said, we are still kicking this around, but it seems like am interesting piece of the retirement puzzle to consider. It might seem a bit short-sighted to just arbitrarily say that no annuity of any kind has a place in retirement planning.
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Old 01-03-2016, 11:23 AM
 
Location: Florida
4,366 posts, read 3,704,692 times
Reputation: 4111
Quote:
Originally Posted by JRR View Post
We are actually kicking around buying a SPIA with some of our retirement that is currently in bond funds. We have approximately 10% in short term bonds and 20 % in other bonds. I'm thinking that if we take 20% and buy a SPIA, that we can still have 5% in short term bonds for emergencies, and have a large % in stocks for growth. With my wife's social security and my spousal social security added to the annuity income, we would have sufficient cash flow for our living expenses. And when I turn 70, we will get a nice boost when I stop the spousal and start my own increased social security.

I would not be looking for growth with the SPIA; just an income stream that would not be dependent on the whims of the bond market. And barring some sort of financial catastrophe, it will allow us to not have to sell any equities.

As I said, we are still kicking this around, but it seems like am interesting piece of the retirement puzzle to consider. It might seem a bit short-sighted to just arbitrarily say that no annuity of any kind has a place in retirement planning.
Might want to put the remaining bond money in CD's as bond funds will not do well as interest rates increase.
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Old 01-03-2016, 04:48 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,935,948 times
Reputation: 6716
Quote:
Originally Posted by foundapeanut View Post
Right now in my life we are remodeling, a very ill husband, and running a business. All huge life challenges. I'll excuse myself for the slip up. But of course your type wouldn't.

Since you are such an internet know it all on annuities, you should be able to tell me what I have. Oh that's right, you did that with no success at all. There are dozens of different types of annuities. And yet you pick one and run with it as if its the truth.

I'm not even trying to explain to to anyone. Just giving out where one can get the info for those who want to investigate more. Those with an open mind, obviously not for you.

Have a great day!
So you're not retired. I was in a situation very similar to yours once - about 30 years ago. When I was about 40. Wish you the best in terms of dealing with it. Know it isn't easy. Been there - done that.

And yes - I am a "type". A type who doesn't write on chat boards without knowing what the heck I'm talking about. And - when you write here about your great annuities and your "bonuses" and yada/yada/yada - you can consider yourself fair game in terms of questions and similar.

FWIW - you still haven't told us what kind of annuities you have/you're talking about. Which is pretty much all I asked you. Seems like a pretty simple question to me.

Maybe you don't know what your husband bought? Strong possibility of that IMO. Many women don't know what their husbands are doing. If that's the case - I suggest you find out. And worry more about finding out what's going on in your own financial life than attacking me. Robyn
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Old 01-03-2016, 05:11 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,935,948 times
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[
Quote:
Originally Posted by mathjak107 View Post
...it isn't as much greed as it it is we are skeptical of insurance products and anything not held directly in our hands...
I am very much in agreement with that POV.

I get very nervous about these insurance products and companies these days. Especially post-2008.

If/when we're about 80 - we might look into single premium immediate charitable annuities (from charities already in our wills)

If you ever consider SPIAs - please diversify among several different companies/charities. I was opposed to my father when he bought his annuities. He didn't listen to me for the most part - except for the diversification part. For which I am grateful.

Quote:
a few more years like this past one and that thinking may be quite harmful to our retirements if we are already pulling sizable withdrawals...
I strongly recommend at this point in time - in terms of your age and the markets - that you live on what you're earning - and not worry/ponder about "spending down". Who knows - 5 years from now - interest rates might even be back to somewhat normal (although I an not holding my breath). And then you can indulge in the luxury of spending down . Robyn
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Old 01-04-2016, 12:05 PM
 
29,782 posts, read 34,876,173 times
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Again we are blessed when it comes to long term health care. The only possible issues are the solvency of our LTC insurance, pensions and SS. We got the LTC insurance some time ago (group association policy) with annual rate increase containment and it has a great inflation provider built in with unlimited life time benefits. Our pensions are strong and we have great SS. However the realist in me makes me understand that redundancy of funding sources may down the road be our best friend. Again as with the pension and SS we each have our own identical policies and we are finding that each having good options is our best friend now.
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Old 01-20-2016, 10:47 AM
 
Location: LTCShop.com
236 posts, read 113,265 times
Reputation: 151
Quote:
Originally Posted by biscuitmom View Post
DH & I comparison shop every year for the best auto/homeowners' insurance and switch to take advantage of lower rates. In 2015 for instance, our premiums would have gone up about $900 if we had stayed with the same insurer. We switched and ended up paying $1300 less for the same coverage. That's not feasible with LTCi. We have no intention of "marrying" an insurance company and that's exactly what you do with LTCi - for better or for worse.



I agree.


Why not just buy long term care coverage where the premium is guaranteed to never go up?
There are policies like that.
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Old 01-20-2016, 10:49 AM
 
Location: LTCShop.com
236 posts, read 113,265 times
Reputation: 151
Quote:
Originally Posted by Robyn55 View Post
But no one should ever forget that LTC insurance isn't any different than auto or homeowners' insurance. Your rates with a company can go up dramatically over a period of a few years. Your insurer can go out of business. Yada yada yada. Also - LTC insurance usually pays a specific dollar amount of benefits which is usually less than those who spend the most on LTC will spend (and more than those who spend the least pay). Since the OP is in his/her 40's - I suggest as an alternative simply putting X into an account labeled LTC insurance account. A specific amount every year. Invest it in something like bond/stock index funds. By age 80 (when most people wind up needing LTC care if they ever need it) - it should be a tidy amount of money. And more reliable than any insurance policy. LTC insurance is very actuarial (X dollars for Y years mostly likely to be paid out Z years in the future) - and it is pretty easy to get the same benefits from a personal investment account as opposed to buying the insurance if one starts fairly early. Robyn


If OP's spouse becomes disabled at age 55, your idea just cost her hundreds of thousands of dollars.
Which retirement account do we liquidate first, dear?
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Old 01-20-2016, 12:18 PM
 
Location: LTCShop.com
236 posts, read 113,265 times
Reputation: 151
Quote:
Originally Posted by Robyn55 View Post
The company is currently having lots of issues with LTC insurance.

Genworth Financial struggling under the weight of long-term care costs

The current CEO is under pressure to sell the LTC unit - Genworth (GNW) Buffeted in Debate Over Long-Term Care Insurance Business - TheStreet - but is - as of today - committed to try to make the unit work. Don't have a clue how long that will last - especially in this age of "activist" investors. Note that I have no interest in LTC insurance or the company (as an investment). It just seems to pop up in financial news a lot. As a "poster child" for the woes in the industry. Robyn

Robyn,

It's true that the Genworth stock has lost a lot of value due to Genworth's LTC division.
That's because Genworth had to add $1.2 billion to their LTC reserves last year.

They review their LTC claims trends every couple of years and they found that claims were lasting much longer than they had originally projected. In fact, they discovered that claims that last over 7 years are lasting 65% longer than they had originally projected. That's why they had to add $1.2 billion to their LTCi reserves.

The $1.2 billion addition increased their LTC reserves from $19.7 Billion to $20.9 Billion.
Genworth currently incurs about $1.6 billion in LTC claims every year.

Adding $1.2 Billion to their LTC reserves is great for the policyholders, but not so great for the stockholders. The stockholders would have preferred that the $1.2 billion be counted as profit! But, setting aside sufficient reserves to pay all future claims always comes before stockholder profits. Insurance regulations require that.

Genworth may be a lousy stock to own. But, Genworth policyholders needn't worry about the money being there to pay their claims when they need it.

Long Term Care Insurance Claims vs. Stockholder Profits
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Old 01-20-2016, 12:49 PM
 
Location: LTCShop.com
236 posts, read 113,265 times
Reputation: 151
Quote:
Originally Posted by Robyn55 View Post
But no one should ever forget that LTC insurance isn't any different than auto or homeowners' insurance. Your rates with a company can go up dramatically over a period of a few years. Your insurer can go out of business. Yada yada yada. Also - LTC insurance usually pays a specific dollar amount of benefits which is usually less than those who spend the most on LTC will spend (and more than those who spend the least pay). Since the OP is in his/her 40's - I suggest as an alternative simply putting X into an account labeled LTC insurance account. A specific amount every year. Invest it in something like bond/stock index funds. By age 80 (when most people wind up needing LTC care if they ever need it) - it should be a tidy amount of money. And more reliable than any insurance policy. LTC insurance is very actuarial (X dollars for Y years mostly likely to be paid out Z years in the future) - and it is pretty easy to get the same benefits from a personal investment account as opposed to buying the insurance if one starts fairly early. Robyn


Your rates with a company can go up dramatically over a period of a few years.

Robyn, you live in Florida. Most things have improved over the past 20 years, including long-term care insurance. Long-term care policies that are available for sale today have much different rules and regulations than policies that were sold years ago.

Most of the policies that have had premium increases have been policies that were sold before the "Rate Stability Regulation" was approved in that state.

Florida passed their “Rate Stability Regulation” in January 2003 and it became effective for all policies purchased after February 28th, 2003. Nearly all of the premium increases on Florida LTC policies have been on policies purchased BEFORE March 1st, 2003.

Everyone who has purchased a long-term care insurance policy approved by the state of Florida since March 1st, 2003 is protected by these strict rules regarding rate increases.

13 insurance companies sell nearly all of the long-term care policies in Florida. Of these top 13 companies, only one of those 13 companies has had a rate increase on policies sold since March 1st, 2003. The other 12 have not had any rate increases on any of the policies they’ve sold since the regulation took effect.

Long-Term Care Insurance Rate Increases Florida


Your insurer can go out of business.

As a lawyer, you should know that this rarely happens with large insurance companies, especially large mutual insurance companies. "National States" (the one company you were able to find that went bankrupt after the mortgage crisis) was never a strong company. To suggest that companies like Mutual of Omaha, Mass Mutual, New York Life, Transamerica, are likely to go out of business in our lifetimes, is ludicrous. You're smarter than that.

And your reference to AIG "needing a bail out" is flat wrong. When AIG needed a bailout, it was NOT the AIG insurance companies that went bankrupt. The AIG insurance companies NEVER needed a bailout. The non-regulated part of AIG that sold non-regulated credit default swaps needed the bailout from the federal government. AIG ended up selling many of its insurance companies (which were all very profitable) in order to pay back all of the “bailout money” plus a profit for the federal government of about $22 billion.

https://goo.gl/7aDgq7 (Read the Big Short, if you haven't already).



Also - LTC insurance usually pays a specific dollar amount of benefits which is usually less than those who spend the most on LTC will spend

So? If I have an LTCi policy that pays $200 per day and my care costs $250 per day, it was a good thing to own the LTCi policy. I'd rather withdraw only $50 per day from my savings to make up the difference, rather than the full $250 per day. Wouldn't you?




and it is pretty easy to get the same benefits from a personal investment account as opposed to buying the insurance if one starts fairly early.

If I knew that I (or my wife) was going to need surgery 10 years from now, I wouldn't own medical insurance, Robyn. I would save the $18,000 per year I pay in medical insurance premiums and invest it. And then when I got cancer or needed that open heart surgery, the money would be there and I'd pay it.

The problem is that I don't know when it will happen. That's why I pay those exorbitant medical insurance premiums every month.

The same is true with long term care. You think that long term care insurance is insurance for a "future event" that is decades away. Mathjak sees it as something that could happen at anytime. And so do I.

Suggesting to the OP to invest for her long term care expenses is assuming that nothing is going to happen to her or her hubbie for decades.

For about $90 per month per person, they could each have over a half million in LTCi benefits from one of the oldest insurance companies in the country. (hint: the company was founded during the Civil War).
And, it's a company that has NEVER had any premium increases on any of their LTCi policyholders.



You're obviously very intelligent. I suspect that your bias against LTC insurance is based upon reading headlines and not understanding the substance.
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Old 01-20-2016, 05:11 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,935,948 times
Reputation: 6716
Quote:
Originally Posted by LTCShop View Post
If OP's spouse becomes disabled at age 55, your idea just cost her hundreds of thousands of dollars.
Which retirement account do we liquidate first, dear?
At age 55 - most people will still be working. And - at that point in their lives - disability insurance will be much more important than LTC insurance. If for no other reason than most good LTC places - at least those where I live - don't accept men who are < 65 years old (don't know about the age limits for women).

If you're still working - and your income is important in terms of your family life-style - I'd say disability insurance should come first. LTC insurance a distant second. If you can afford both and both make dollars and sense for you - great. Doubt that will be the case for most people. Robyn
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