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But Mathjak, is that premise successful because it is tied to idea that investors will use higher % of stocks in portfolio invested outside the annuity--so the investor changes the balance allocation toward more equities with likely higher return rate?
The siren call of the SPIA is easy to understand if you browse the thread. "Odds" and "likely" are sprinkled around because there are so many things that could happen. "Guaranteed" is only used with annuities (SPIAs or SS). I am not saying that makes them a great idea, just that it is the single thing you get from them that the other avenues for investment do not offer. Only you can decide what that is worth to you. Being positive that you will have enough for planned expenses versus being fairly certain you will have more than enough is a difficult decision for some of us.
You come down on the South a bit hard. As a former Yankee myself, the South can be pretty diverse.
Here is an example of what $150K can buy in the Columbia SC area:
PS: McGuinn built my present home. They offer great value for the dollar. Granted their homes can be a bit tight/close to a neighbor's home, but for a retiree who wants a big lot to maintain?
I'm sure I would draw the same conclusion about other parts of the country. There are nicer parts of various areas - and not-so-nice parts. What I am objecting to primarily is the broad assumption that everything is cheaper here than elsewhere.
I've only been to the Columbia SC area a couple of times. Business trips a long time ago (litigation involving a steel mill). So my impressions are very out of date.
The houses I looked at (in your link) aren't that attractive for retirees IMO. All 2 story (I'm a firm believer in 1 story retirement houses). And most/all of the smaller ones don't have bedrooms on the first floor - or a full bathroom.
Like you mentioned - they're also on little tiny lots on blocks that are usually a bunch of straight lines up and down and up and down and up and down. That seems to be a trend these days when it comes to newer relatively inexpensive houses. Row upon row of 2 story houses crammed in on little tiny lots. While I agree that most retirees probably don't want to maintain large lots - I think most (like most homeowners in general) want at least a modicum of privacy. And a relative amount of peace and quiet.
FWIW - I am seeing this trend (2 story houses/tiny lots) where I live too. Although the houses in my area are larger and the prices are (much) higher. I can understand these developments in my zip code - because my immediate area is almost 100% built-out and land prices are high. But I don't understand them in other parts of my county - where land costs are lower. Are land costs high in Columbia SC? And - even to the extent that I understand the financial logic of these developments - well I still think they're ugly (no matter where they are) and I wouldn't like living 10 feet away from another house with a postage stamp size yard. You would think that the people who plan these places could/would make them more attractive. But apparently most builders/buyers don't seem interested in that kind of thing these days. Robyn
We purchased a small SPIA last summer. We are only 62 and realized that it would be better to wait till we were older for a better "refund %" etc.
There was some math involved in the process as we had about 3 years of spending info to base our $ needs on. I also wanted to have a floor of known income, set at about 75- 80% of our spending levels. Our spending level was estimated at 10% higher than actual figures.
I am not concerned about the lack of inflation adjustments as I will have SS and Jim has a federal pension for the largest bulk of our assured $.
This small 75K SPIA, did one major thing, it provided a very real level of sleep comfort.
Wow lots of discussion since I left. I think the most convincing argument yet against my idea came from the Investment Watchdog link, sorry I forgot the poster's name. Inflation is clearly the big factor. However as we age I do kind of see a purpose for a small one as the poster above has dscribed.
As for housing in the south I really don't understand the "small crappy house that you can find anywhere" argument. But first I need to clarify that we live in Mount Airy, MD not PA. Apparently half the states in the union contain a Mount Airy as we have learned.
I'll just say I've done my research and trust me the houses we have seen in Johnson City will cost 2 X as much in Maryland and taxed at 2-3 X the TN rate. The neighbors were not hillbilly white trash and the house was perfectly fine for us. I have no idea why anyone would argue that housing is much less expensive in the south than in the northeast, that's pretty much common knowledge.
Last edited by DaveinMtAiry; 04-24-2016 at 08:06 AM..
Re the sticker shock of housing in "south" for retirees relocating...
We own three homes...one my husband's sister lives in basically rent free, one is in FL nxt to our daughter and family and one in the DFW TX area...
DFW has seen stable market for most part even during the RE downturn and in past 2-3 yrs has seen tremendous growth because large companies are relocating and bringing either new jobs or jobs and employees...building boom has added homes but there is still market scarcity and residential valuations have gone up significantly for 2016...everyone is complaining and planning to appeal...
People who come here from out of state usually expect to get a "better deal" -- basically that means make out like a bandit...and they are usually given a rude awakening because our taxes can be higher and prices/lot sizes don't fit their expectations...no state income tax but there are other ways the state gets its money...
In FL we bought house next to our daughter because of that lucky location primarily but it was also well-maintained, single -level, good price point (before that market recovered from doldrums), and our daughter/SIL have no real desire to move...so looking forward to our really senior years it seemed like very workable aging in place solution...
We can certainly sell at a profit the way the market is now...and the only reason we bought in FL was because they obviously were not moving to TX--her home state--and longer visits with a dog and cat now that we are both retired just would not work in rental,properties... We did consider that initially...
Relocating in retirement is an issue that is so complex and tied to individual situations that multiple books, articles, and threads here still can't offer any finite list that fits everyone...
But the idea that you can Google RE sites and chose a relocation destination w/o some serious time in that area seems the worst way to make decision...
We have friend who was living in Houston after years in CO, LA, AK, and son in San Diego...
They chose to buy home in Washington state for various reasons but w/o spending any real time there...think after about 2 yrs they have spent 15 mo in an RV traveling....which they could have done from Houston just as well...
So some people decisions are mysteries to me...
But Mathjak, is that premise successful because it is tied to idea that investors will use higher % of stocks in portfolio invested outside the annuity--so the investor changes the balance allocation toward more equities with likely higher return rate?
the balance in stocks stays higher longer continuing to grow because it requires less selling to refill early on . so hypothetically with the spia spitting out 40-50% more income you can go longer without selling to raise more cash
Last edited by mathjak107; 04-24-2016 at 11:29 AM..
We purchased a small SPIA last summer. We are only 62 and realized that it would be better to wait till we were older for a better "refund %" etc.
There was some math involved in the process as we had about 3 years of spending info to base our $ needs on. I also wanted to have a floor of known income, set at about 75- 80% of our spending levels. Our spending level was estimated at 10% higher than actual figures.
I am not concerned about the lack of inflation adjustments as I will have SS and Jim has a federal pension for the largest bulk of our assured $.
This small 75K SPIA, did one major thing, it provided a very real level of sleep comfort.
dead bodies are a nice diversification . the ability to shed some market and interest rate risk to a 3rd party and off your shoulders is also a nice diversifier .
Location: Was Midvalley Oregon; Now Eastside Seattle area
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Originally Posted by loves2read
But Mathjak, is that premise successful because it is tied to idea that investors will use higher % of stocks in portfolio invested outside the annuity--so the investor changes the balance allocation toward more equities with likely higher return rate?
I treat our deferred GLWB VA like a conservative stock fund, without the shortterm gyrations.
I treat our deferred GLWB FIA like a Long Bond fund, but with no gyrations.
I treat our discretionary, which is a stock/Index vehicle, as a moderate stock portfolio. Currently, mostly in cash. But on Dec 01, 2015, we were 100% invested. It is this portion where I hope to manage the any longterm inflation/deflation issues.
I hope that the "premise" is valid, else we are screwed.
those variable annuity's should not really be counted as any stock fund because of how they work . yeah they are linked but odds are because of design the guarantees will be likely the best you will see .
i recently reviewed a variable annuity here which like the stock annuity is linked to something you likely can't high water mark much if at all .
i would count them all like a cash instrument on steroids but a far cry from an equity investment .
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