<p>Just read this article about proposed public policy changes that could affect Roth, SS, & retirement tax-advantaged savings. Am thinking it makes Roth IRA conversions somewhat less attractive if you’ll have to withdraw from them anyway.</p>
<p>I’m sure it will provide a lot of business to CPAs, estate planners & more trying to figure all of this out. It may make real estate an even more attractive investment to help fund retirement.</p>
<p>Fluffy, I was just commenting that for some, getting the money back later is not going to help,them NOW. And yes, this has been the policy for a very long while. There is NO misinformation with regards to getting reduced checks NOW if you have earned income exceeding a certain amount in a year. That is what was I was saying. </p>
<p>@HImom, I think it will make life insurance more attractive because you can live it tax free to your children. In fact, that is a strategy a lot of really folks are doing.</p>
<p>I have always hated life insurance agents (believe they take obscene profits), and believe I’m likely uninsurable at this point due to health issues. </p>
<p>I’m WAY below the max estate amount for individual or couple, but had believed the Roth IRAs would be a nice thing for me and any remainder for our kids. If we have to take RMDs, it will require more thinking to figure out what makes sense. </p>
<p>H is older and would be old enough to have to take RMDs if they change rules, but we really would prefer to have the funds for after H dies, to help with cash flow due to the reduced pension after he dies. </p>
<p>I’m sure once any changes are finalized many “solutions” will be popping up left and right to try to help for lots of $$$$!</p>
<p>^x2 for a couple, $10.7M. Life insurance is included in calculating the estate tax unless one sets up an irrevocable trust PITA IMO. It is income tax free as is the inheritance.</p>
<p>I wonder how the baby boomers selling assets instead of buying assets will affect asset prices.</p>
<p>I am a little surprised nobody has mentioned longevity insurance. Longevity insurance doesn’t look like that great a deal right now but there is potential that this could become a pretty good product.</p>
<p>This product is where you pay now…
And start receiving payments years in the future. For example, you are 60 and pay $100,000 now and you receive payments of $50,000 to $60,000 a year starting at age 85. (My example is an estimate). There are variations of this product but in my example, if you don’t live to 85, you receive nothing. So, obviously, you better live well past 85. The returns, if there are returns, look pretty crummy. I have my eyes open though. :)</p>
<p>I was reading that a healthy 60 year old has a 50 percent chance of living to 85 and a 25 percent chance of living to 95. </p>
<p>If both husband and wife are healthy at 60, and ignoring gender differences in longevity, this means there is only a 6 percent chance both the husband and wife wont live to 85. I find this interesting.</p>
<p>Another thing I noticed, even some of the elderly that have close to a zero chance of running out of money, worried or still worry that they are going to run out of money. </p>
<p>@dstark, welcome back, we miss you in stock investing speculating thread. I was wondering why do you need to buy longevity insurance, you can create the insurance yourselves, use the $100K and invest in the stock market and you get the same effect. In 25 years the $100K will turn into a nice sum.</p>
<p>I look at longevity insurance as a way to diversify and as insurance just in case returns elsewhere are lower than expected and I live a very long time. </p>
<p>Everybody has their own situations and comfort levels. </p>
<p>You are right that stocks may give you the same or better result. I am not suggesting that people should sell their stocks and buy this insurance. </p>
<p>The returns are too low right now anyway for me to use longevity insurance. If rates ever rise though… I may change my mind and put a little money in this insurance. A small percentage of my portfolio.</p>
<p>It’s sold as a delayed or deferred annuity, I believe, not longevity insurance. Many warn against it. One of the big dangers is the company not being around when you nece to collect after all you paid in with your premium. </p>
<p>Insurers and agents love it, as they get commissions when you buy and every year you pay an additional premium. They’re betting you’ll die before collecting or before they start paying out more than the value of what you paid in. </p>
<p>Folks are much more encouraging of single premium immediate annuities. These start payments immediately after you make a single premium payment. </p>
<p>Longevity insurance is a subset of delayed or deferred annuities.</p>
<p>You can pay the premium in a lump sum… A one time shot.</p>
<p>I am not recommending this product. I like the concept but the product may never be worthwhile.</p>
<p>Investors can get better returns buying tax free zero coupon bonds. There are some similar characteristics between zero coupon bonds and longevity insurance. I prefer the bonds… But there is risk there too.</p>
<p>If you assume a 7% annual return and all $100K in stocks, it wll be $542K. If that $100K is in 50% stocks 50 fixed income as recommended for the age group, it’s about $300K. If the payout is equivalent to annuity payment on $300K, it is a reasonable deal. Not saying you should get it. Just that you can’t compare returns as if it is 100% in stocks since no one keeps everything in stocks.</p>
<p>I know people who have kept 100% in stocks, usually with some rationalization such as “stocks have a much higher return than bonds.” Even if told that a mixed asset allocation will have higher risk-adjusted returns, they don’t believe it. They are usually the ones who, at a time like 2008-9, will sell everything at the bottom and then are paralyzed about getting back in (usually until the market has been roaring for a while).</p>
<p>^People like that won’t get the 7% annual return. By age 85, they may not have anything left. In that case, getting the logevity insurance may be a very good idea. i stay away from financial products like life insurance, annuities. In net, I am paying for security. The price for security doesn’t match my need.</p>
<p>^I’m pretty well set without those products also and IMO most of the insurance products are ripoffs. To me, the exception is Single Premium Immediate Annuities, which represent a pooling of longevity risk (the pool members who die early fund the payments to long-lived pool members). That said, I can’t remember the last time I recommended one. </p>