U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
Old 04-29-2016, 07:58 AM
71,669 posts, read 71,801,099 times
Reputation: 49257


milevsky paper

Reply With Quote Quick reply to this message

Old 04-29-2016, 08:08 AM
30,129 posts, read 47,361,961 times
Reputation: 16070
Amazon reviews of that particular books says that it keeps referring readers to his website for specific advice about how much to invest depending on your portfolio and needs yet the website is subscription only to advisor types...
So maybe the prior book about annuities is better choice---MANY books about annuities and their role as retirement strategy...
Reply With Quote Quick reply to this message
Old 04-29-2016, 08:13 AM
71,669 posts, read 71,801,099 times
Reputation: 49257
he basically does research for the financial industry publications and works with advisors . michael kitces used to be the same way with his white papers.
Reply With Quote Quick reply to this message
Old 04-29-2016, 08:35 AM
Status: "Re-edit status" (set 20 days ago)
Location: Was Midvalley Oregon; Now Eastside Seattle area
4,185 posts, read 1,906,934 times
Reputation: 3211
I think that many detractors of deferred annuities have some or will have some, of their retirement income in secured sources.

When I post something pertinent to the conversation, I try to add enough background to make my statement more valid.

We have considerable amount of deferred GLWB, VA and Fixed-Indexed annuities, laddered by time and amounts. I pay ~3.5% in fees which includes a death benefit and a 10 year, guaranteed income growth in the Income account.

the comment/disclaimer: Our SS and small pension is small- $38,000 to be exact. I was not happy to see our retirement portfolio plummet, -40% in 2008 from 2007 highs, in a very popular balanced W fund. Final RIF in 2010 at age 60/63, and when first started #1 SS followed by #2 SS in 2012. We simply needed more secure Income.

Reply With Quote Quick reply to this message
Old 04-29-2016, 08:38 AM
71,669 posts, read 71,801,099 times
Reputation: 49257
generally a good mix is to lock in your non discretionary bills with guaranteed income sources and then use your own investing for inflation adjusting and the discretionary spending .

i know eventually that is the structure my wife would like being she was a widow once already and had a pile of investments she knew nothing about dropped in her lap to live on .
Reply With Quote Quick reply to this message
Old 04-29-2016, 08:46 AM
30,129 posts, read 47,361,961 times
Reputation: 16070
Originally Posted by mathjak107 View Post
The idea that he is calculating for a 7% rate of return caught my attention...Since that is likely the "avg" rate going when he wrote it...but not to say the math strategies/concept is wrong...

It would take me (an English Major/teacher) a while to get through the math but I understand the idea that I (and I do mean me, personally) am likely not really smart enough to make market decisions that would guarantee a rate of return as secure as an annuity is supposed to return..

Have read so many articles lately about the unreliability of humans to stick to a plan, their inability to react to negative market conditions appropriately and avoid damaging their future prospects, even their ability to choose the better/best profile from myriad investment options in first place just leaves them vulnerable to more negative than positive outcome...
Reply With Quote Quick reply to this message
Old 04-29-2016, 08:51 AM
71,669 posts, read 71,801,099 times
Reputation: 49257
nooooooooooooo , he did not use 7% because that is what a withdrawal rate would be .

he used 7% because he needed a figure that would exhaust the portfolio under enough time frames to see the effects of sequencing so he could measure the difference betwween best and worst case ..

you can't see the effects if you don't have opposite results happening enough times .

remember if it wasn't for the 4 worst rolling 30 year periods the safe withdrawal rate would actually have been 6.50% .

so 7% would let you see enough effects on enough time frames to measure the difference between best possible and worst possible outcomes ..

by the way even if you use 4% you would get the same 15 year spread between best and worst . so the 7% was only to identify how many years difference you would see .

in fact the chart i posted above used 6.50% for the same reason , so it exhausted the portfolio enough times to see the effects adding an spia would have .

in fact the greatest bull run was the 17 years from 1987 to 2003 , they averaged almost 14% cagr . that is amazing .

but if you were spending down and left the rate of inflation with the house and spent the difference depending on the order of gains and losses that same average return on a 100k investment ended up either plus 76k or minus 188k all from a 14% cagr average .

Last edited by mathjak107; 04-29-2016 at 09:24 AM..
Reply With Quote Quick reply to this message
Old 04-29-2016, 09:18 AM
1,731 posts, read 617,686 times
Reputation: 1813
Sounds like the Milewsky book is fascinating, but in my mid-40s I started both some annuity accounts and a mutual fund SEP-IRA, and 10 years later I can see that the annuity accounts are worth slightly more. That is all I can say about financial history and the financial patterns of the 21st century (but obviously I am not Milevsky :-).

Since this topic is about annuities, I want to mention one more thing. As you might have already concluded from my English grammar, I actually spent the first half of my life in Europe, and the first two annuity accounts I ever got were in Switzerland. Swiss deferred annuities have these properties that make them different from the US annuities:
- as a US citizen or resident you have to pay annual US tax on annual dividends in these Swiss accounts, and file an annual report of foreign accounts to the IRS. You do not pay Swiss tax on Swiss annuities.
- you can take out any amount of money at any time during accummulation period from these accounts without any surrender fees or penalties to the Swiss insurance company; however, if you take out money before the age 59.5, you have to pay 10% penalty for early withdrawal of pension to the IRS (ie, if you are over 60, a Swiss annuity account can serve simply as a high-yield backup bank account)
- at the maturity date, you can either start taking annuity payout, or close the account and receive the entire lump sum. The latter is far more favorable because Swiss annuities have a low payout, and you do not pay any extra tax on it to the IRS because you already paid IRS tax on all the dividends over the years.

I don't know what the rates are now, but my two Swiss annuities (opened in 2002 and 2003) are earning about 4.5% per year on average (I say on average because the yield has been increasing slightly every year). Just Google Swiss annuities if you think this is something that might interest you.
Reply With Quote Quick reply to this message
Old 04-29-2016, 06:46 PM
30,129 posts, read 47,361,961 times
Reputation: 16070
What kind of fees were associated with those (if you don't mind giving that info) and what were your fee parameters? I would have thought just from memory that annuity rates would have been higher in early 2000s--and yours seem to have an adjustable rate since you say they are creeping higher...

And I never noticed anything really different about your grammar as far as ESL touches--
and I am a retired English teacher...
Reply With Quote Quick reply to this message
Old 04-30-2016, 02:48 AM
Location: Los Angeles
2,919 posts, read 1,962,991 times
Reputation: 2450
All annuities are inferior financial products. 99% of the time you will do better with a low risk mix of stock and bond index funds.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.

Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top