IxnayBob, ok. Bummer. I was looking at those deferred annuities earlier. I like the concept.
@dstark, Iāll look it up tomorrow. I was going through some insurance company that seems to be unavailable now.
@IxnayBob, thanks.
I think you will understand this story. I am retired. My wife was working 4 days a week. Last week she said, āI want to quitā. Half the job she found boring. Didnāt want to do it anymore.
I said to her the money you make is extra but it is nice to have. 
I said it is your decision. I am not working. I canāt tell you to work.
Next day she quit. She was extremely happy.
Day after that, her two bosses got together. She can work 15 hours a week. Just do the work she likes.
She said yes. She is still happy.
Today, we got a doctorās bill from a procedure done last year. $5,000. Easier on the psyche with my wife working.
I told my son, whatever you do, if you marry, marry somebody smart. It will make your life easier.
Book smart or street smart? They are not mutually inclusive.
I think itās helpful for people to be/have ānative intelligence,ā be able to āreadā people/situations and be able to apply knowledge so itās not in a vacuum. The persons multiple degrees arenāt as important to me as these 3 attributes.
I donāt think there is any safety in a broad index of fixed income securities in a time of rising rates. Here is a chart of the total bond index in 1994.
http://finance.yahoo.com/echarts?s=VBMFX+Interactive#{ācustomRangeStartā:757404000,ācustomRangeEndā:788853600,ārangeā:ācustomā,āallowChartStackingā:true}
(looks like you will have to copy/paste that link)
The first of several rate hikes was in February. Losses of 10% just arenāt my cup of tea in fixed income. There have been several in that fundās history. When near a historic low in rates and with a fed threatening to raise rates, why sit and wait for your certain loss?
āWhen near a historic low in rates and with a fed threatening to raise rates, why sit and wait for your certain loss?ā
Yes, Iād like to hear the answer to that question. Why do it?
@dstark, the monthly payment for a female, aged 65 today and not receiving payment until age 80, $100,000 annuity from an A1 company, is $1495.
Ps. The calculator is at https://www.incomesolutions.com/AnnuityReviewQuotes.aspx
IxnayBob, thanks. I guess I have to sign up to play there.
http://m.kiplinger.com/article/insurance/T003-C001-S001-how-annuities-are-taxed.html
Itās premature, but have you done any calculations comparing this annuity to other investment alternatives?
^^ I discovered that you donāt need to give your name, and I gave them a throwaway email address.
I havenāt done any analysis, but if DW keeps her job for the expected 3-6 years, she should probably do fine even with her long-lived genes. I was more considering it when she was likely to retire.
I donāt like to give out phony info or any info.
Depending on variables, comparing the annuity to munis or corporate bonds, the annuity probably is better after age 94. Give or take a year or two.
I am walking. I am not going to pencil this out.
My daughter was doing acturarial work. She was looking at how long people live. I told my daughter that her grandfather was 88. A friendās mom is 90. Whatās their life expectancies?
My daughter replied, āNot muchā.
After age 90, life expectancy crashes off a cliff.
I was thinking of buying one of these deferred annuities for myself and my wife.
Maybe start the annuity payments at age 85 or 90. Real longevity insurance.
Having said this, maybe I should by a deferred annuity for my daughter instead?
She is 23. Maybe I can buy something that starts payments when she is 65 or 70. I wish the government sold these. I have more confidence the government wonāt go bust compared to a private life insurance company.
We may be sitting on a heap oā cash in a couple of months ā our much beloved 10% fixed, federally insured IRA CDās we set up in our early 20ās reach their final maturity early this fall. Sigh. They were rather core for our ābondā holdings (and I know they arenāt bonds, but they fit the fixed income part of the asset allocation) that are otherwise rather too heavy in equities. Does it say something that I am sadder about these IRAās maturing than I am about turning (gulp) 60? 
So weāll roll the cash over to Fidelity, but then what? Iām still having a lot of trouble with the idea of locking up funds in bonds at current yields.
Completely off topic, yet along the lines of āWhere are the customersā yachtsā:
I just picked up my Interiors magazine from our mailbox. Prominently featured within is an article about an empty-nest couple who just built their fabulous multi-million-dollar modern house. Son attends our state flagship university. I can relate to the empty-nest syndrome so I take some time to skim the gorgeous pictures. The house is incredible and, just before I toss the magazine into the recycle bin, I noticed thatā¦the coupleās name is somewhat familiar.
I do a quick Google search. Turns out he is a financial advisor ā someone we spoke to many years ago recommended him. One of those, āoh yes, heās my financial advisor, want his card?ā kind of conversations. His boutique practice might have impressed the young impressionable us. So, luckily, back then we had such little money that we dismissed the notion of using a financial advisor. And, I was already investing with Vanguard, so I could tell my H, āNo all our money is already invested. No need for a financial advisor to tell me which private placements or stocks to buy. Nope.ā Or, we (along with his other clients) might have ended up helping to fund their fabulous new home.
Wow, 10% fixed sounds like it was a nice run while it lasted for all those decades! Congrats! It is hard to decide what to do with fundsābroad market low expense ratio funds via ETF or index fund plus some in intermediate bond low expense ratio index fund?
@AttorneyMother, I donāt think itās OT. Expenses add up, and years and years of paying 1% of AUM can be material. We live within commuting distance of NYC, and we have many townspeople who make their living as financial advisors, brokers, etc.
One anecdote: our landscaping guy recently complained to me about a client of his, down the block, who he said had offered to āmanage his money.ā He said that this client, over the past few go-go years, had not made much money for him, and was constantly trying to get free landscaping and other perks. I donāt know what happened, but a monkey with darts could make money over this time interval. I think, with no proof, that the FA (sorry, he calls himself a āwealth managerā) took advantage of an unsophisticated guy trying to put aside something for his family. I offered to set up accounts for him, obviously with no guarantee other than that I would not have a financial stake in it.
@IxnayBob , I noted that this manās firmās website lists himself, his wife and their son (!) all as members of said boutique firm. Thatās a bit unholy for my taste.
Yes, itās easy to look like a genius when the markets are up.
But, TBH, there are some people who just donāt believe in boring index-fund investing and are seduced by the so-called inside track to riches. The irony is that Iām all in favor of entrepreneurship and startups as much as the next person. Back in the 80s, I worked on some venture deals at my old firm that spawned, among other companies, the Container Store, OfficeMax and some I canāt even remember now. Not that attorneys are ever allowed to invest, of course. In fact, quite the opposite. Itās just clear to me that there is a great deal of venture money out there salivating to invest in the next big thing. And the more money is concentrated in deep pockets, the more there is for those private deals.
Anyway, what ARE people doing for bond funds and do we care if there is a risk of a downward movement of fund prices when interest rates go up. It seems that bond funds donāt zig when stock funds zag anymore as we were all initially taught. What to do?
@arabrab, Congratulations for having had that fabulous run on the 10% CDs. Goodness, you were astute in your 20s!
I put Hās TSP (Thrift Savings Planāfor federal employees) all into G fund, which is US government bonds guaranteed not to lose principal. The rest of the money we have in low expense ratio broad index funds and I admit a few stocks. We havenāt figured out what to do with the cash we haveāsome is in a money market account as an emergency fund, but we arenāt making as productive use of our cash as we could.
I just keep stumbling along. Taxable holds some intermediate term tax free funds, some Total Bond Market, and a potpourri of various equity funds that have done too well to sell. Itās around 50/50.
Tax advantaged accounts are almost surgically 50/50 between TSM and TBM.
Since DW just took a job, unless weāre all living in caves and her employer declares bankruptcy, itās hard to picture a scenario where she isnāt employed for the next 3 years and/or her new employer has to pony up contractually specified buyouts. But, we are more comfortable holding 6 months of living expenses in a MM account.
Since Iām in it for the long haul, I donāt worry too much about the āinevitableā bond slump. Yield increases will have made up for price decreases by the time Iām selling. Tbh, I worry more about the possible shock in equities than I do about the often predicted and slow to materialize bond decline. Iām not predicting anything, but a 40% decline in equities is much easier to see than a similar slump in bonds.
Yes, I agree that Iām more concerned about the potential over-reaction in the equity market when the Fed raises rates byā¦horrors, 1%.
And +1 on staying in for the long haul. Iāve only ever gotten out of the Vanguard European Stock Index Fund. Now, Iām ambivalent about international investing but think Iāll probably have to re-examine for the longer haul. But I figure that so many corps of the 500 Index are multi-national that there is enough inherent international exposure for now. Iām not sure what Iād tell my D though, especially regarding emerging markets. Itās just not an area of investing that is great for passive investors. I know that Total International is the answer.
Iāve been keeping 6-8 months of living expenses in a tax-exempt MM fund for 15+ years. Iāve been meaning to do something about it, but the alternatives are not really more attractive. I consider it our good fortune that we havenāt had to tap into it ā thatās a good way to look at it aside from looking at recent returns. Thatās what I told H and he agreed.