UnThreaded | Threaded | Whole Thread (24) | Ignore Thread Prev | Next
Author: Lokicious Big gold star, 5000 posts Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75810  
Subject: Re: annuities 101 please Date: 2/1/2009 10:19 AM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 2
I don't usually post on this board, but Vicki linked Greg's excellent post on annuities on the bond and fixed income board (my usual hangout), and I thought I would add a comment and, more importantly, remind people that we do have a bond and fixed-income board, with extensive (if somewhat dated) FAQs, where we regularly discuss ways of balancing "safety" and risks in the bonds/fixed-income universe, of which lifetime fixed or inflation adjusted annuities are one option. (See our discussion in the last part of the FAQs.)

http://boards.fool.com/Message.asp?mid=25173616

http://boards.fool.com/messages.asp?bid=100135

I did note in this discussion that someone mentioned that bond indices cannot lose money. This is incorrect. There is an extensive discussion of risks on bond funds in the bond and fixed-income board FAQs.

One point I'd like to add to Greg's comment. For some people, turning at least a portion of assets into a lifetime annuity may be the only way to insure you do not run out of money if you live beyond what the actuaries predict. However, this needs to be a hard-headed decision at the time this really becomes an issue. It should be no earlier than when you start drawing down your original principal (i.e., the principal you had when you started living off your assets instead of your employment). And even then, if you reach this point late enough in life that you won't run out even if you live well beyond average life expectancy (factoring in longevity in your family), you won't need an annuity. For example, if at age 80 I have a 5% withdrawal rate (including taxes and everything), I only need to stay even with inflation for the money to last until I'm 100, so if I'm getting 4% returns with 3% real inflation, I don't need an annuity.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (24) | Ignore Thread Prev | Next

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement