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Barron's Fund Of Information: Create Your Own Pension Plan
Last paragraph sums it up for me ! Insurers continue to have a spotty reputation for charging such fees. “Most insurers service their annuity clients in the same way John Dillinger serviced banks,” says William Bernstein, a well-known author of financial books. “I wouldn’t trust them at all to do this job in 401(k)s.” Treasury officials think differently.
Mr. Bernstein couldn't be any clearer than that. Insurers always keep an eye on their bottom line instead of your best needs. Annuities are huge money makers for them.
The insurance lobby must have made a big push in the White House.
What if you bought one offered by T. Rowe Price? Is that still run by an insurance company? Or might there be a degree more "ethicsity"? (coined a word here.)
BTW - I've heard Price's are a cut above most. Can see the (limited) advantages annuities offer for some persons. But can't bring self to buy one at the currently low interest rates. Oddly enough, suspect it's the boomers buying up these things that's partially responsible for rates being so low.
Direct link: http://online.barrons.com/article/fund_of_information.html. Annuities? No, thanks. The death of defined-benefit retirement plans is a piece of the bigger picture of society's race to the bottom, when it comes to the welfare of the worker. In other words: screw the worker. Give the CEO an obscene bonus. And increase the pay-out for shareholders. And needless to say, that dividend is for shares in a company the average worker can't afford to buy-into.
Must be a subscription-only deal. OK. I stand corrected. I'm able to get in through the link I posted. One extra step doesn't sound horrible, for non-subscribers to Barron's.
The skeptic in me thinks this is more about a new market to buy government debt, than looking out for retirees. But overall, it makes pretty good sense.
Sounds like you are probably not yet in the distribution phase.
Have you given much thought yet to: (1) when you will begin taking distributions, (2) how you will structure your withdrawals and which assets you will sell first, (3) and whether the distribution process will affect your choice of investments and risk profile?
Might start "taking" some money this year from some non IRA investments (67yo), figure 20 years of spending Money (should be easy), at same time have to still buy Roth Ira's as much as limited w2 income will allow, Have developed a withdraw strategy that I have titled "thinning the herd" (patent pending): Really? Bascially.... investments that are not holding their own (portfolio averages) will go first and thus lower in Gains with no taxes....Big gainers, steady earners and Roth money will be taken as tax schedules/rules will allow for min. payments to the Gov.(taxes) , Risk control will be mainly by Bond adjustments if Equities get into trouble... Spend less? probably not.... Not perfected but a starting plan for 2015....Will SEE
What I discern is you are geared for growth and "letting go" won't be easy. Several years into withdrawals (69) I find that aspect much harder than the accumulation stage.
We've continued to grow a bit more than we're taking out. That will change some day of course. I've tried to put larger and larger segments on auto pilot, reducing my ability to muck things up too much by miscalculation. Overall, we're somewhat more conservatively positioned than ten years ago - but not dramatically so.
Your reference to buying Roths is interesting, as is your reference to bonds. Not to criticize or question those choices. Just that it surprised me a little.
One way to let go gradually would be to sell portions of your equity funds, hopefully at higher prices than you bought them at, and put those proceeds into a good income and growth fund or a balanced fund. That way you are getting conservative in a gradual way and if you are monitoring closely, when you want.
Hank,I got started late with Roths, I always used IRAs for income reduction in my high income years, later I realized Roths could be an annual source of income in retirement, without taxes...now playing catch up best I can, even doing some conversions, while staying in same low tax brackets, Bonds have been a cash substitute for me while they continue to bring in earnings, also I keep funds open in all my various accounts for easy movement of cash, from equity sales. drags total returns slightly, but necessary evil/convenience
Same here. Late on the Roth boat. Woulda, coulda, shoulda. Mr. Market gave us a couple belated opportunities. One in March '09 when we converted a chunk in depressed global equity funds and again last month with a depressed commodities fund we converted. In both cases we paid the tax out of pocket rather than selling shares.
I'm agnostic on the issue for older investors. Depends on situation. However, as I think you allude to, it's nice not to have to pay taxes on withdrawals (yet, anyway). If we need $5,000 for some item in the budget we'll actually only have to take a $5,000 distribution. For simplicity sake alone, that's much nicer than having to withdraw an additional 30% for fed and state tax and than try to figure all that into our budget.
Yes - if you still have a little income coming in (unlike us) than it makes sense to go with the Roth.
Comments
Insurers continue to have a spotty reputation for charging such fees. “Most insurers service their annuity clients in the same way John Dillinger serviced banks,” says William Bernstein, a well-known author of financial books. “I wouldn’t trust them at all to do this job in 401(k)s.” Treasury officials think differently.
The insurance lobby must have made a big push in the White House.
What if you bought one offered by T. Rowe Price? Is that still run by an insurance company? Or might there be a degree more "ethicsity"? (coined a word here.)
BTW - I've heard Price's are a cut above most. Can see the (limited) advantages annuities offer for some persons. But can't bring self to buy one at the currently low interest rates. Oddly enough, suspect it's the boomers buying up these things that's partially responsible for rates being so low.
regards,
Ted
Sounds like you are probably not yet in the distribution phase.
Have you given much thought yet to: (1) when you will begin taking distributions, (2) how you will structure your withdrawals and which assets you will sell first, (3) and whether the distribution process will affect your choice of investments and risk profile?
Have developed a withdraw strategy that I have titled "thinning the herd" (patent pending): Really?
Bascially.... investments that are not holding their own (portfolio averages) will go first and thus lower in Gains with no taxes....Big gainers, steady earners and Roth money will be taken as tax schedules/rules will allow for min. payments to the Gov.(taxes) , Risk control will be mainly by Bond adjustments if Equities get into trouble... Spend less? probably not....
Not perfected but a starting plan for 2015....Will SEE
What I discern is you are geared for growth and "letting go" won't be easy. Several years into withdrawals (69) I find that aspect much harder than the accumulation stage.
We've continued to grow a bit more than we're taking out. That will change some day of course. I've tried to put larger and larger segments on auto pilot, reducing my ability to muck things up too much by miscalculation. Overall, we're somewhat more conservatively positioned than ten years ago - but not dramatically so.
Your reference to buying Roths is interesting, as is your reference to bonds. Not to criticize or question those choices. Just that it surprised me a little.
Bonds have been a cash substitute for me while they continue to bring in earnings, also I keep funds open in all my various accounts for easy movement of cash, from equity sales. drags total returns slightly, but necessary evil/convenience
Same here. Late on the Roth boat. Woulda, coulda, shoulda.
Mr. Market gave us a couple belated opportunities. One in March '09 when we converted a chunk in depressed global equity funds and again last month with a depressed commodities fund we converted. In both cases we paid the tax out of pocket rather than selling shares.
I'm agnostic on the issue for older investors. Depends on situation. However, as I think you allude to, it's nice not to have to pay taxes on withdrawals (yet, anyway). If we need $5,000 for some item in the budget we'll actually only have to take a $5,000 distribution. For simplicity sake alone, that's much nicer than having to withdraw an additional 30% for fed and state tax and than try to figure all that into our budget.
Yes - if you still have a little income coming in (unlike us) than it makes sense to go with the Roth.