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Re: Pension – Lump Sum Rollover or Keep it?

To compare the relative value of the offer to a Single Life Annuity the pension plan used the following interest rates. 1.24% for benefits commencing within 5 years,4.47% for the subsequent 15 years and 5.52% thereafter. ( not sure of the meaning of this as I have been receiving monthly benefit for...
by Frugal Al
Fri Aug 29, 2014 2:59 pm
 
Forum: Investing - Help with Personal Investments
Topic: Pension – Lump Sum Rollover or Keep it?
Replies: 12
Views: 873

Re: When, if ever, should an annuity be used in retirement p

dhodson wrote:I don't believe you learn the full truth at these dinners.

Those "Captain Obvious" commercials come to mind here.
by Frugal Al
Fri Aug 29, 2014 9:09 am
 
Forum: Investing - Help with Personal Investments
Topic: When, if ever, should an annuity be used in retirement plans
Replies: 32
Views: 2308

Re: When, if ever, should an annuity be used in retirement p

I've got better things to do with my time than sit through a sales presentation from someone "trying to help me" as they line their pockets. Variable annuities are suitable for almost no one, especially the VAs that are espoused at "free" dinners. There are exceptions for relativ...
by Frugal Al
Fri Aug 29, 2014 7:45 am
 
Forum: Investing - Help with Personal Investments
Topic: When, if ever, should an annuity be used in retirement plans
Replies: 32
Views: 2308

Re: Motorcycle for short commute?

It's not that the risks can't be mitigated; it's that it's probably the wrong way for most people to be trying to save a buck (at least on US roads). Our very own EmergDoc is a rock/mountain climber, and his position against the motorcycle commuting idea might at first seem a bit hypocritical, but i...
by Frugal Al
Tue Aug 26, 2014 6:02 am
 
Forum: Personal Consumer Issues
Topic: Motorcycle for short commute?
Replies: 63
Views: 3700

Re: Reducing time spent paying bills

I don't like automatic pay debits (pulls), but I understand why some prefer the convenience. I push everything though Quicken and my banks online bill pay. Quicken provides reminders if I haven't seen or otherwise missed an online or mailed bill. It takes a bit to set up, but is then very quick and ...
by Frugal Al
Wed Aug 20, 2014 9:47 am
 
Forum: Personal Consumer Issues
Topic: Reducing time spent paying bills
Replies: 25
Views: 1727

Re: Pension – Lump Sum Rollover or Keep it?

This is yet another case of very long time horizons and a nominal pension. The young age of the prospective pensioner really makes this a long lasting decision. While many of us here might be willing to take a long bond today at 5% to 6%, this decision would ultimately be for a very long bond, of 40...
by Frugal Al
Wed Aug 20, 2014 8:15 am
 
Forum: Investing - Help with Personal Investments
Topic: Pension – Lump Sum Rollover or Keep it?
Replies: 12
Views: 873

Re: POLL: Breaking up with advisor

Advisors have a job to do,they need to make a living like everyone else,I don't begrudge them,for many an individual they provide valuable services. :happy Toons, I know you well enough from your postings that you are referring to "good" advisors. I definitely agree they can provide valua...
by Frugal Al
Mon Aug 18, 2014 1:57 pm
 
Forum: Investing - Help with Personal Investments
Topic: POLL: Breaking up with advisor
Replies: 47
Views: 2853

Re: Retirement luxury vehicle

Red CPO Lexus ES350 :D http://atcm.co/S2PVDP/166E6A92 Folks, isn't this 3 years old and close to 40% less than new? This particular example has been wrecked twice. I agree with livesoft, if your negotiating skills are good you can pick up a CPO Lexus, without an accident record, for a decent price.
by Frugal Al
Mon Aug 18, 2014 10:46 am
 
Forum: Personal Finance (Not Investing)
Topic: Retirement luxury vehicle
Replies: 62
Views: 4483

Re: Leaving job - What to do with pension fund?

It's seldom a good idea to raid one's pension to pay down debt. You claim to be debt averse, yet you do have debt. Taking the pension proceeds to payoff debt is taking the easy, albeit expensive, way out. Don't do it. We don't have enough info on your pension growth, but if you don't leave it in the...
by Frugal Al
Tue Aug 12, 2014 11:06 am
 
Forum: Personal Finance (Not Investing)
Topic: Leaving job - What to do with pension fund?
Replies: 1
Views: 461

Re: AARP: The Great Pension Sell-Off

Problem is: a lump sum is likely to be taxable income in the year received; I'm not aware of any way to roll it over into your IRA, for instance. Dodecahedron has a handle on it. If it's a qualified pension plan you can roll it over: http://www.irs.gov/Retirement-Plans/Plan-Participant,-Employee/Ro...
by Frugal Al
Wed Aug 06, 2014 9:00 am
 
Forum: Investing - Theory, News & General
Topic: AARP: The Great Pension Sell-Off
Replies: 30
Views: 3589

Re: AARP: The Great Pension Sell-Off

Certainly, there are valid reasons to take a lump sum: You don't need the income, you know something about your life expectancy that they do not, you hate insurance companies, ... ...or the prospective pensioner has left the employ of the sponsoring company , has a long time horizon, and seeks grow...
by Frugal Al
Wed Aug 06, 2014 7:50 am
 
Forum: Investing - Theory, News & General
Topic: AARP: The Great Pension Sell-Off
Replies: 30
Views: 3589

Re: Need help deciding whether to sell inherited business

All good points, jimb. Another question to be determined is whether the brother with 50% ownership is working the business and getting pay and fringe benefits in excess of fair and reasonable compensation, thereby resulting in a paper loss.
by Frugal Al
Tue Jul 29, 2014 12:12 pm
 
Forum: Personal Finance (Not Investing)
Topic: Need help deciding whether to sell inherited business
Replies: 12
Views: 838

Re: Best way to reach initial allocation in a bull market?

Leerar, you need to learn how the Sharpe ratio works before using it to make a point.
by Frugal Al
Tue Jul 29, 2014 11:58 am
 
Forum: Investing - Theory, News & General
Topic: Best way to reach initial allocation in a bull market?
Replies: 28
Views: 2631

Re: Pension Lump Sum vs Immediate Annuity

I know there are a ton of other personal factors in the decision, all of which require consideration, of course. These seem to have been well covered in previous topics. In my case, the "retirement" annuity is to be purchased by my employer from an insurance company and seems to be compet...
by Frugal Al
Mon Jul 28, 2014 9:43 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension Lump Sum vs Immediate Annuity
Replies: 4
Views: 601

Re: Vanguard quietly adds longevity annuities

In addition to TIPS, the insurance companies are also able to hedge annuity longevity risk and inflation risk through the sale of life insurance. In general, the insurance companies are long life insurance and high inflation, as was mentioned above, reduces the life insurance payments in real dolla...
by Frugal Al
Mon Jul 28, 2014 8:41 am
 
Forum: Investing - Theory, News & General
Topic: Vanguard quietly adds longevity annuities
Replies: 85
Views: 6820

Re: Ditch car and commute to work in 250cc scooter in Raleig

Wow i'm shocked at how many people say not to get a motorbike due to safety. In Europe these are very very common. Their popularity in Europe and Asia makes them safer--drivers are more aware of cyclists around them. Also the commutes are generally much shorter in those regions, and at slower speed...
by Frugal Al
Sat Jul 26, 2014 6:50 am
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 79
Views: 6634

Re: $32k Subaru Outback or $14k Mitsubishi Outlander Sport

In my department of 20 we've now got 4 Outback owners, and they all seem to love them. As with GM, Honda, and Toyota, Subaru is not without its issues. They are apparently suffering teething problems with the FB series, 4 cyl, engine they introduced in 2010/2011 http://www.nj.com/news/index.ssf/201...
by Frugal Al
Wed Jul 23, 2014 7:41 am
 
Forum: Personal Consumer Issues
Topic: $32k Subaru Outback or $14k Mitsubishi Outlander Sport
Replies: 46
Views: 5053

Re: What about the 2015 Volvo XC60?

Browser, I think the XC-60 looks pretty good. It has had a few issues with oil consumption complaints, but they are not widespread--hopefully those issues have been resolved (rings/seals). I wouldn't touch the new for 2015 4 cyl engines and trannies--too new. I suspect if you stick with the 6 cyl ve...
by Frugal Al
Tue Jul 22, 2014 9:51 am
 
Forum: Personal Consumer Issues
Topic: What about the 2015 Volvo XC60?
Replies: 6
Views: 790

Re: Poll - Do you use Quicken?

Windows version. Been using it about 20 years--no problems. I had a couple glitches when my bank changed their system, but was able to recreate data due to diligent back-up protocol. I use all features. I find the fingertip history, charting, graphing, cashflows, balance sheets, aggregation, etc., t...
by Frugal Al
Tue Jul 22, 2014 7:27 am
 
Forum: Personal Finance (Not Investing)
Topic: Poll - Do you use Quicken?
Replies: 85
Views: 5100

Re: SPIA quotes from Vanguard

3) This has no meaning in the absence of a comparative context. It is equally valid to say "Take joy in the low cost of guarantees." I actually agree somewhat with this point (see my edit). My point is that all guarantees come with a price, and often it's quite high. Today, over an averag...
by Frugal Al
Sun Jul 20, 2014 1:51 pm
 
Forum: Personal Finance (Not Investing)
Topic: SPIA quotes from Vanguard
Replies: 8
Views: 1159

Re: SPIA quotes from Vanguard

With caveats: * The internal rate of return of a SPIA is meaningless. In the context that we don't know when we might pass on, thus making the time element rather nebulous. * It is the monthly/yearly guaranteed lifetime income that's important. Guaranteed up to the given state's solvency fund, usua...
by Frugal Al
Sun Jul 20, 2014 1:27 pm
 
Forum: Personal Finance (Not Investing)
Topic: SPIA quotes from Vanguard
Replies: 8
Views: 1159

Re: Cash out pension?

OP used 4% real, which I would not necessarily call the "optimistic view." It seems like a good, middle-of-the-road estimate to me. I didn't have time to crunch the numbers but it looks like it is probably best to take the lump. I do think using 4% real is too optimistic an estimate going...
by Frugal Al
Fri Jul 18, 2014 4:58 pm
 
Forum: Investing - Help with Personal Investments
Topic: Cash out pension?
Replies: 30
Views: 1689

Re: Whole Life Conundrum

IRR = 2.066% worst case. You are also getting the death benefit which you need. It's not a total disaster... You're right, just a partial disaster. Only in our current interest rate environment would this seem reasonable. Bluemarlin's suggestion to 1035 it to a low cost Vanguard annuity is a good o...
by Frugal Al
Thu Jul 17, 2014 9:59 am
 
Forum: Personal Finance (Not Investing)
Topic: Whole Life Conundrum
Replies: 22
Views: 1669

Re: Newbie whole life insurance policy question

"Life insurance adds a layer of safety next to your investments. I was in this business in 2008 as the world fell apart. I saw first-hand older clients tell us that they were so happy they had CV that did not lose value when they watched their investments dip close to 40%. Every one of them wi...
by Frugal Al
Thu Jul 17, 2014 5:16 am
 
Forum: Investing - Help with Personal Investments
Topic: Newbie whole life insurance policy question
Replies: 30
Views: 2403

Re: Oil Change due: Synthetic vs Regular Oil

Realistically if the car doesn't normally see cold starts approaching zero F or lower, the difference in cold start performance relating to engine life of a dino vs synthetic is probably 650,000 miles vs. 700,000 miles. IE, something else will fail on your car before oil related wear takes it out. ...
by Frugal Al
Wed Jul 16, 2014 9:30 am
 
Forum: Personal Consumer Issues
Topic: Oil Change due: Synthetic vs Regular Oil
Replies: 33
Views: 2841

Re: Oil Change due: Synthetic vs Regular Oil

It's actually been found that synthetic oil will prevent "wear matting " not so sure this is an issue with today's engines , but the reason why I don't use synthetics in cars that the manufacture do not recommend using it . I think you mean wear "mating," not matting. The claim ...
by Frugal Al
Wed Jul 16, 2014 7:34 am
 
Forum: Personal Consumer Issues
Topic: Oil Change due: Synthetic vs Regular Oil
Replies: 33
Views: 2841

Re: Newbie whole life insurance policy question

This is his reply to me, I post it just to know how to respond to his questions. You don't have to respond to his questions and you don't have to meet with him. I'm not saying to be rude, but to rebut his arguments is an act in futility for a layperson--they are well indoctrinated. He may truly bel...
by Frugal Al
Wed Jul 16, 2014 5:26 am
 
Forum: Investing - Help with Personal Investments
Topic: Newbie whole life insurance policy question
Replies: 30
Views: 2403

Re: Oil Change due: Synthetic vs Regular Oil

How many miles are you driving between oil changes? My concern for you is your short trip usage and only changing every 6 to 8 months. A significant number of short trips constitutes severe use. Severe use and only changing twice a year may not be optimal, depending on the number of miles you're dri...
by Frugal Al
Mon Jul 14, 2014 2:21 pm
 
Forum: Personal Consumer Issues
Topic: Oil Change due: Synthetic vs Regular Oil
Replies: 33
Views: 2841

Re: Ditch car and commute to work in 250cc scooter in Raleig

freebeer wrote:Kymco is #1 brand in Taiwan and high quality - no need to pay the Honda/Yamaha/etc.

Agreed, Kymco makes an excellent scooter. I've ridden them many times. My only reservation is that they don't have the parts distribution in the US that Honda/Yamaha/Suzuki have.
by Frugal Al
Mon Jul 14, 2014 1:20 pm
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 79
Views: 6634

Re: Ditch car and commute to work in 250cc scooter in Raleig

I would never consider a 250cc scooter, too slow and the dinky wheels are not great for stability. Everything in vehicle design is a compromise. There's more to motorcycle/scooter stability than just the wheel size: rake/trail, wheelbase, suspension compliance. Many of the the larger scooters have ...
by Frugal Al
Mon Jul 14, 2014 1:11 pm
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 79
Views: 6634

Re: SPIA pricing and risk beyond 30 years

I'm wondering if my assumptions of how annuities are priced are wrong, or if the SPIA market is really this competitive? The best SPIA prices are, indeed, very competitive and efficient, but you are also cherry-picking the most competitive prices, and perhaps with little regard to a company's finan...
by Frugal Al
Mon Jul 14, 2014 8:16 am
 
Forum: Investing - Theory, News & General
Topic: SPIA pricing and risk beyond 30 years
Replies: 5
Views: 1169

Re: Imputed income (rent) Owner occupied houses.

I am simply fascinated that Bogleheads who analyze investment portfolios to multiple decimal places do not analyze their imputed income and its related housing expenses. I'm certain there are many Bogleheads who DO analyze imputed income and housing expenses, especially those who are nearing retire...
by Frugal Al
Sun Jul 13, 2014 7:26 am
 
Forum: Investing - Theory, News & General
Topic: Imputed income (rent) Owner occupied houses.
Replies: 21
Views: 2418

Re: Ditch car and commute to work in 250cc scooter in Raleig

- I would never consider a scooter based on 'manly' reasons. I'm sorry, but that fails the man test unless you're < 17 or over 70. If you want a small bike, get a 250cc. I know a few Harley riders that also ride scooters occasionally--they're different experiences. I also know which one I'd prefer ...
by Frugal Al
Sat Jul 12, 2014 12:05 pm
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 79
Views: 6634

Re: Ditch car and commute to work in 250cc scooter in Raleig

I used to have a 250cc Honda Helix scooter that would go about 80 mph or so, two-up, with no problem. I believe that model has been discontinued. There is a replacement that has just been released I believe. There's also the Suzuki Burgman line that would be no problem in traffic. Having said that, ...
by Frugal Al
Sat Jul 12, 2014 8:14 am
 
Forum: Personal Consumer Issues
Topic: Ditch car and commute to work in 250cc scooter in Raleigh?
Replies: 79
Views: 6634

Re: Repair or replace old Taurus?

The car is done, kaput, rolling scrap iron. You've gotten good value out of it. Time to move on.
by Frugal Al
Fri Jul 11, 2014 10:52 am
 
Forum: Personal Consumer Issues
Topic: Repair or replace old Taurus?
Replies: 32
Views: 2835

Re: $47,000 cash now or $330 per month for life

Really, the rate he should have considered was the 5.395%, which is the rate that makes the $47,000 equal to the $330 monthly annuity over 19 years. Really, the rate to be considered should, at a minimum, be the rate Cruncher pointed out, 5.75%, as the life expectancy per the SSA Life Expectancy ta...
by Frugal Al
Fri Jul 11, 2014 8:31 am
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 5026

Re: $47,000 cash now or $330 per month for life

It's theoretical in the sense that you are calculating the value based on a never ending stream of payments (perpetuity), but in reality the stream of payments is finite (annuity) as it only goes to the end of ones life. Music_man, with all due respect, I think you are the only one calling it theor...
by Frugal Al
Thu Jul 10, 2014 2:28 pm
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 5026

Re: $47,000 cash now or $330 per month for life

Good points on the longevity expectation, Cruncher. And given that the SSA life expectancy tables includes a necessarily broad demographic, we might even assume slightly better than average longevity since the subject 64 year-old is noted to be in good health. At just 22 years longevity, the IRR inc...
by Frugal Al
Thu Jul 10, 2014 10:47 am
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 5026

Re: $47,000 cash now or $330 per month for life

It's also important to note, that 8.4% is really theoretical. It's not at all theoretical; it's the annuity payout rate: $330*12/47000=0.084. Can't get simpler than that. I never said it was the IRR. As for the IRR over an average lifespan, 5.5% tests very nicely against historical average inflatio...
by Frugal Al
Thu Jul 10, 2014 8:17 am
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 5026

Re: $47,000 cash now or $330 per month for life

Definitely hard to come up with an argument NOT to take the $330 annuity, unless reasonable longevity is an issue. Even if one anticipates more normalized payout rates in the future, say 8.0% for a 65 year old male, the 8.4% payout available today at age 64 far outpaces that.
by Frugal Al
Thu Jul 10, 2014 7:17 am
 
Forum: Investing - Help with Personal Investments
Topic: $47,000 cash now or $330 per month for life
Replies: 33
Views: 5026

Re: Using a variable annuity to pre-fund an SPIA

Shop extensively. I discovered that annuity cos change features-pricing fairly often and rapidly. Take a month or two to shop, get some free dinners, and you will thoroughly understand their workings. This is actually questionable advice; some annuity peddlers can be very persuasive. The best way t...
by Frugal Al
Tue Jul 01, 2014 12:06 pm
 
Forum: Investing - Help with Personal Investments
Topic: Using a variable annuity to pre-fund an SPIA
Replies: 30
Views: 1388

Re: Buy A New Windows Computer Now?

My 2010 Dell computer works great and has never needed any repairs. That being said, I like new technology and my experience has been that it's a huge PITA if you wait for a hard drive crash to replace your machine. I would like to get a new computer with solid state hard drive.Any thoughts? You ha...
by Frugal Al
Thu Jun 26, 2014 8:58 am
 
Forum: Personal Consumer Issues
Topic: Buy A New Windows Computer Now?
Replies: 53
Views: 2962

Re: SPIA and Inflation Interview

First and foremost, if possible, one should maximize the best inflation indexed annuity there is: Social Security.
by Frugal Al
Thu Jun 26, 2014 8:38 am
 
Forum: Investing - Help with Personal Investments
Topic: SPIA and Inflation Interview
Replies: 9
Views: 703

Re: Why is lump sum payout for pension so low?

The discount rates have been tinkered with in recent years because the fed has suppressed interest rates, and corporations and other pension providers sought relief from the lump sum "inflation" that was pushing the lump sums up quite high. A new rule was passed to allow the use of corpor...
by Frugal Al
Thu Jun 26, 2014 8:00 am
 
Forum: Personal Finance (Not Investing)
Topic: Why is lump sum payout for pension so low?
Replies: 20
Views: 1802

Re: Pension - lump sum or leave it

...the interest "look-back" provision of the pension plan does impact the lump sum amount but it's not something that is controllable by the participant and the particular rate set for a particular "look-back" month varies over time just like any other month, i.e. you can't &quo...
by Frugal Al
Mon Jun 23, 2014 11:57 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension - lump sum or leave it
Replies: 40
Views: 3670

Re: Pension - lump sum or leave it

Just wanted to re-visit this post briefly since I felt the OP was being steered toward a benefit at 65 and I don't think it's a slam dunk... I don't think it's a slam dunk either,but the OP can't even take the lump for two years or so. The look-back month can have an impact when rates are so change...
by Frugal Al
Sat Jun 21, 2014 6:14 pm
 
Forum: Personal Finance (Not Investing)
Topic: Pension - lump sum or leave it
Replies: 40
Views: 3670

Re: ? Best car for a new driver

Livesoft, I love the narrative driving concept. It really drives home (pun intended) the fact that there's more to driving than the mechanics of driving, memorizing the traffic laws, and keeping your eyes on the car ahead. Too many drivers think they can do other things while driving because they ar...
by Frugal Al
Sat Jun 21, 2014 6:01 pm
 
Forum: Personal Consumer Issues
Topic: ? Best car for a new driver
Replies: 41
Views: 1415

Re: synthetic motor oil?

Speaking of Subauru maintenence, my wife was told the other day that the upcoming Outback 30000 mile service runs about $600. This includes replacing brake fluid, air filter, fuel filter, anti-freeze, differential fluid and spark plugs. Hard to believe those have be done at 30K, although air filter...
by Frugal Al
Sat Jun 21, 2014 9:41 am
 
Forum: Personal Consumer Issues
Topic: synthetic motor oil?
Replies: 17
Views: 1219

Re: Pension decision: Monthly benefit vs. lump sum

+1 Sbashore, the lump sums are a poor deal; moreover, the OP would seem to have little need for it. Over 35 years they'd need about an 8% return to make the lump sum worthwhile--better off with the full pension.
by Frugal Al
Fri Jun 20, 2014 9:00 am
 
Forum: Investing - Help with Personal Investments
Topic: Pension decision: Monthly benefit vs. lump sum
Replies: 10
Views: 856

Re: Pension Lump Sum - Impact of Higher Corporate Rate

After reading everyone's input, it does appear that an outside annuity may cost more than the lump sum offered to the employee. That is quite an interesting situation and I would think that companies should now be happy when one takes the lump sum. However, one also wonders if my company has a busi...
by Frugal Al
Tue Jun 17, 2014 8:55 am
 
Forum: Personal Finance (Not Investing)
Topic: Pension Lump Sum - Impact of Higher Corporate Rate
Replies: 16
Views: 1370
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