Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Waggoner has a wit! "If you have a bond or other income investment that throws off 5% income a year, you could take 5% — $12,500 a year — without fears of running out of money ..." But notes later that such yields are typical of junk-rated issues today. (-: Food for thought. Worth a second read. Thanks Ted.
As a professional cynic (it pays poorly, but disappointments are rare), I was much less impressed with this article than some claim to be. With parents living at 99 and 92, I'm not even selecting 95 as the zero funds date. I see little point quoting "The 10-year T-note has had an average yield of 6.6% since its inception in 1962, and 4.6% the past 20 years" when it's not rising to that level for the foreseeable (a useless adjective in this environment) future. I don't see this supporting the 4% withdrawal rate. While I know annuities provide protection, I'll certainly hold off as long as I can, unless I get one adjusted upward as interest rates improve (and I'll take the one providing my wife a benefit - Even with my genes, I may not see that car coming when I step off the curb).
I think the title "Don't worry, be happy" applies to this article, written by someone who had inches to fill for a fee.
Unpaid cynics are allowed dissenting comments, I believe. 3% withdrawals and enjoyment of the many inexpensive pleasures of the USA will satisfy me for now. With improved interest rates, maybe I'll visit the cheaper parts of Europe (probably the PIIGS).
For someone worried about outliving their money, the ALDA annuities using only a small portion of your portfolio might be the best bet. Read some of Moshe Milevsky's research on these. http://www.ifid.ca/research.htm
I've considered this approach, but, having seen long term care insurers raise their premiums or alter their contracts, I wonder how reliable these contracts will be at age 80? While buying early reduces cost; contracting with the survivors produces income. I recognize the premise of shared risk makes insurance policies affordable until Hurricane Andrew or some other event such as "the new normal" comes along, but all of these companies are profit-based. They employ people more knowledgeable than I, but that doesn't mean they can predict the future. If they can alter their contracts if the market tanks, or declare bankruptcy, I may as well keep my own portfolio. If they will guarantee survival and payout, it's a fair deal. I haven't investigated their contracts, so I don't know how good the guarantees are, but apparently the ones for LTC contracts weren't iron-clad.
Comments
I see little point quoting "The 10-year T-note has had an average yield of 6.6% since its inception in 1962, and 4.6% the past 20 years" when it's not rising to that level for the foreseeable (a useless adjective in this environment) future. I don't see this supporting the 4% withdrawal rate.
While I know annuities provide protection, I'll certainly hold off as long as I can, unless I get one adjusted upward as interest rates improve (and I'll take the one providing my wife a benefit - Even with my genes, I may not see that car coming when I step off the curb).
I think the title "Don't worry, be happy" applies to this article, written by someone who had inches to fill for a fee.
Unpaid cynics are allowed dissenting comments, I believe. 3% withdrawals and enjoyment of the many inexpensive pleasures of the USA will satisfy me for now. With improved interest rates, maybe I'll visit the cheaper parts of Europe (probably the PIIGS).
Here is a quick summary of the ALDA- http://www.dummies.com/how-to/content/examining-advanced-life-deferred-annuities-aldas.html
If they can alter their contracts if the market tanks, or declare bankruptcy, I may as well keep my own portfolio. If they will guarantee survival and payout, it's a fair deal. I haven't investigated their contracts, so I don't know how good the guarantees are, but apparently the ones for LTC contracts weren't iron-clad.