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LIBC posted..

"Consumers have overlooked this time-honored principle of “annuity income” as the financial markets have thundered into new highs. This type of a continuing economic attitude depends on an ongoing market boom to keep people clear of the barriers in their path to a stream of retirement income.

A prudent person like the wife in the hypothetical case study may want no part of managing money. And dealing with a constant interest average formula versus actual investment performance. And likes the idea of receiving a check every month either in the mailbox or by way of direct deposit—without any effort on her part."

I think many people are understanding risk and their own risk tolerance much better due to the information that is more readily available. Also more people understand the effect that inflation has on spending when living off a fixed income.

An annuity basically moves the risk of investing from the investor to the insurance company and any time risk is reduced so are the long term returns. More and more people can see that annuities are costly. The way annuity can reduce cost is to move some of the risk back to the investor as variable annuity may do.

There are now lower cost,lower risk measures like I-Bonds which for a widow could produce similar income which would change as the inflation rate would change.

As a French Planner once said when asked how a person should invest their money:

"Do you want to eat well or sleep well?"


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