Search found 1472 matches

by Frugal Al
Sat Jun 27, 2015 5:14 am
Forum: Personal Finance (Not Investing)
Topic: Assuming Retirement Withdrawal from Portfolio Value
Replies: 14
Views: 1690

Re: Assuming Retirement Withdrawal from Portfolio Value

The other issue is that the annuity calculator that cranks out $40k per year for a $700k SPIA is NOT inflation indexed--it is a fixed $40k per year not adjusted for inflation. The 4% recommendation assumes the payout is corrected for inflation, thus maintaining purchasing power over the 30 years.
by Frugal Al
Wed Jun 24, 2015 3:43 pm
Forum: Personal Finance (Not Investing)
Topic: [CNBC article: Social Security Denying Delayed Benefits]
Replies: 23
Views: 3166

Re: [CNBC article: Social Security Denying Delayed Benefits]

No doubt Kotlikoff is trying to sell columns and books, but he is not wrong that the system really needs improvement. It needn't be as complex as it is. My experience with my local office was pathetic. I was amazed by the overall lack of knowledge there. I love it when governments and/or corporation...
by Frugal Al
Sat Jun 20, 2015 2:18 pm
Forum: Personal Consumer Issues
Topic: Anyone have A/C fail on an older Honda CRV?
Replies: 30
Views: 3140

Re: Anyone have A/C fail on an older Honda CRV?

Sorry about your A/C, Browser. As vehicles age things start to fail. What amazes me are the types of failures we see. Of course we know about some of the larger issues, such as their automatic transmissions in the 6 cylinder vehicles, and some of their bad cylinder blocks. But I never thought I'd se...
by Frugal Al
Fri Jun 05, 2015 8:44 am
Forum: Personal Consumer Issues
Topic: New car warranty about to expire
Replies: 18
Views: 1883

Re: New car warranty about to expire

If the vehicle is running normally, there are no leaks, and all fluids that can easily be checked look and smell normal (especially the tranny oil if an automatic) I'd save my time and money. If you take it to the dealer for an inspection you will be charged, and they will most likely find nothing. ...
by Frugal Al
Thu Jun 04, 2015 9:49 am
Forum: Personal Finance (Not Investing)
Topic: ACA and retiring before 65
Replies: 28
Views: 3368

Re: ACA and retiring before 65

As others have noted, a threshold benefit of ACA is getting coverage and it seems to have bent the cost curve in a good direction.If people with means manipulate their income to achieve undeserved subsidies, $5,000 per year in the example on the blog, then the system will fail and/or the rest of us...
by Frugal Al
Tue Jun 02, 2015 12:11 pm
Forum: Investing - Help with Personal Investments
Topic: Annuities the Fixed Index Annuity FIA
Replies: 30
Views: 2022

Re: Annuities the Fixed Index Annuity FIA

Why is the SPIA a bad deal? I'd bet there are a lot of people out there in retirement right now that would consider 4.2% ROI guaranteed for the rest of their lives as a good thing? SPIA's are not necessarily a bad deal when used properly. In this case, however, it is a pretty bad deal? You're confl...
by Frugal Al
Sun May 31, 2015 6:32 am
Forum: Personal Finance (Not Investing)
Topic: Pension or Unfair Lump Sum
Replies: 39
Views: 5067

Re: Pension or Unfair Lump Sum

I think the OP is saying that the $1M lump sum would only buy a $3900 monthly annuity, whereas the pension would pay $4900. That's a 20% haircut, and probably more than I'd want to take just to have the lump sum. There are many other variables, however, that should be considered. If married, are you...
by Frugal Al
Tue May 19, 2015 7:53 am
Forum: Personal Consumer Issues
Topic: Estate Trustee Auto Title Transfer
Replies: 7
Views: 560

Re: Estate Trustee Auto Title Transfer

I appreciate the insights by all. Carefreeap, I wouldn't have to go to Florida as the seller has the car and the FL title in MD. Dolphin, I agree that this would be much more palatable if this were a MD title in the name of the trust.
by Frugal Al
Mon May 18, 2015 9:06 am
Forum: Personal Consumer Issues
Topic: Estate Trustee Auto Title Transfer
Replies: 7
Views: 560

Re: Estate Trustee Auto Title Transfer

I think I'll probably pass on the deal at this time. One of my concerns is that beneficiaries of the trust might come back and argue against the trustee's actions. Still, I suspect that wouldn't impact my ownership provided the alleged trustee had the right to sell the property, even if negligent in...
by Frugal Al
Mon May 18, 2015 6:28 am
Forum: Personal Consumer Issues
Topic: Estate Trustee Auto Title Transfer
Replies: 7
Views: 560

Estate Trustee Auto Title Transfer

I ran across a great deal on a not too expensive sports car, in a hard to find configuration. The previous owner was a professional in Florida that passed away. His estate trustee lives in Maryland, where the car is now, but the title is a FL title with no liens. I live in Ohio. So, if I want this c...
by Frugal Al
Thu May 14, 2015 8:18 am
Forum: Personal Finance (Not Investing)
Topic: Pension (annuity) vs lump sum decision
Replies: 10
Views: 817

Re: Pension (annuity) vs lump sum decision

I didn't look at every option due to taxation rendering most of them a poor choice. However, even assuming a conservative 5% nominal return over the next 23 years or so until age 65, the annuity payout then needed to provide $636 would be about 7.6% for a 100% jt survivorship SPIA. Today that annuit...
by Frugal Al
Thu May 07, 2015 1:48 pm
Forum: Personal Consumer Issues
Topic: New car vs used car -- what's your approach?
Replies: 57
Views: 3023

Re: New car vs used car -- what's your approach?

The TLX is available with a fairly potent 4 cylinder and with that engine the car is a very good value, though probably not quite as good as an Accord 4 cylinder that has almost as much power. Before you totally rule out a 4 cyl you should at least test drive it. I can't recommend Honda/Acura's V6 a...
by Frugal Al
Thu Apr 30, 2015 8:09 am
Forum: Personal Consumer Issues
Topic: Help re Car [convertible]
Replies: 43
Views: 3249

Re: Help re Car [convertible]

Since the OP wants to buy new rather than used, the MX-5/Miata and Mustang are great possibilities at a reasonable cost and inexpensive maintenance--as others have pointed out. I don't think a 2009 Honda S2000 (last year made) would be a good choice, but it's a great sports car in its own right. The...
by Frugal Al
Tue Apr 28, 2015 9:06 am
Forum: Investing - Help with Personal Investments
Topic: Help with SIMPLE IRA
Replies: 6
Views: 563

Re: Help with SIMPLE IRA

The Simple IRA will not effect the eligibility to contribute in a personal Roth IRA. For 2015 the Simple IRA contribution limit is $12,500 for those under age 50, and the make-up contribution has been increased to $3,000 for those over age 50, for a max Simple IRA contribution of $15,500 for 2015.
by Frugal Al
Sat Apr 25, 2015 3:15 pm
Forum: Investing - Help with Personal Investments
Topic: Retiring August 31, Company terminating pension plan
Replies: 16
Views: 2596

Re: Retiring August 31, Company terminating pension plan

What should I be concerned with in the coming announcements? Should I take the lump sum and be done with it? What sort of "due dilligence" is required when I get the name of the insurance company? Every case is different, and there's not necessarily a right or wrong answer for everyone, e...
by Frugal Al
Thu Apr 23, 2015 10:50 am
Forum: Personal Consumer Issues
Topic: Cocktail Hobby
Replies: 11
Views: 2020

Re: Cocktail Hobby

For those with the same hobby, any favorite bitters or other ingredients to recommend? We've also found our favorite rum - Pyrat is so far above the rest (not affiliated, arrgr, not a pirate :) +1 on the Pyrat Rum XO Reserve. I first tried Pyrat at their blending operation in Anguilla, and was frus...
by Frugal Al
Wed Apr 08, 2015 3:19 pm
Forum: Personal Finance (Not Investing)
Topic: Lump sum pension vs future annuity
Replies: 7
Views: 1093

Re: Lump sum pension vs future annuity

Are you married or will you be married? Is the $1112 per month 100% survivorship? If not, what is the 100% survivorship payout?
by Frugal Al
Thu Mar 12, 2015 3:47 pm
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

And it sounds like you've been doing the calculation before just recently receiving some key tidbits from G$$ . I don't see any benefit to the "key tidbits" that G$$ provided regarding the interest rate used for corporate pension obligations. We're talking different purposes/objectives he...
by Frugal Al
Wed Mar 11, 2015 10:07 am
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

We're kind of getting off-topic here. Why do you need to know these rates? Not off topic at all. We need to understand the lookback rates and their timing to determine when the lump sum might change, as well as estimate the direction of that change. I agree with the OP, the timing probably won't ge...
by Frugal Al
Wed Mar 11, 2015 8:19 am
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

Plan sponsors are allowed to take an average of any one or more of the five months proceeding the "stability period". The "stability period" can be one month, one quarter, or one year. Most don't average because it is a hassle. Al, that's probably why you haven't seen this avera...
by Frugal Al
Wed Mar 11, 2015 8:15 am
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

3.8% to 4.5% seems like an OK assumption to me if you're trying to get an IRR for the annuity. I would use a rate similar to that mandated by the IRS (high quality corporate bonds rated AA or above with an emphasis on long duration). Coincidentally, this is the same kind of rate plan sponsors use t...
by Frugal Al
Wed Mar 11, 2015 8:08 am
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

g$$ wrote:Interest rates used by the plan sponsor for funding purposes (i.e. the actuarial valuation) are generally smoothed over 24 months. Interest rates used to calculate lump sums are snapshot.

And how do you think they come up with the segment interest rates for the snapshot? They are an average.
by Frugal Al
Wed Mar 11, 2015 8:02 am
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

g$$ wrote:They can't cherry-pick

Established plans can't cherry-pick, but new lump sum offers can initially cherry-pick. I've seen it done.
by Frugal Al
Tue Mar 10, 2015 3:36 pm
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

You're right, Uber. I've never seen nor read of this machanation either. And although my initial thinking was that it seemed fair, it's only fair when compared to new lump sum offers that often cherry-pick the lookback month. In an established plan with a lump offer, and in a market whose overall di...
by Frugal Al
Tue Mar 10, 2015 2:22 pm
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

that's interesting - Frugal , does this answer your question ? Yes, that is interesting. Averaging over 3 month increments certainly seems like a fair way of doing it. So I take it Mar/Apr/May will be the rates used for 3rd quarter. I'd be surprised if they are much lower than for 2nd quarter. I ha...
by Frugal Al
Tue Mar 10, 2015 12:50 pm
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

Does this make sense? Pension option income at age 70.5 = 32k rental + 56k pension + 70k socsec + 47k RMD on 1.3M = 205k taxable inc Lump option income at age 70.5 = 32k rental + 70k socsec + 80k RMD on 2.1M = 182K taxable inc Yes, it makes sense. Your RMD's wouldn't hit the 6% level (the pension p...
by Frugal Al
Tue Mar 10, 2015 12:42 pm
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

Nobody knows, but going by W. Bernstein's opinon, 5% is unreasonable to say the least. He thinks more like 2% real. The 2% real plus average inflation gets to about 5% nominal, as I stated. It's important to keep it apples to apples, as the pension isn't COLA'd. It's an imperfect planning number, b...
by Frugal Al
Mon Mar 09, 2015 3:14 pm
Forum: Personal Finance (Not Investing)
Topic: Pension vs. Lump
Replies: 58
Views: 3669

Re: Pension vs. Lump

The part of the retirement puzzle we don't know is the amount of social security payments, which would further offset the $54k of necessary retirement income, $80k - 26k ( $32k house rental income less vacancy/misc expense). If it's significant, it really makes the decision to take the lump sum that...
by Frugal Al
Sun Mar 08, 2015 6:34 am
Forum: Investing - Help with Personal Investments
Topic: Pension as a substitute for bond funds
Replies: 17
Views: 1465

Re: Pension as a substitute for bond funds

I don't see anything not to like with this plan. I'd be all over it.
by Frugal Al
Wed Mar 04, 2015 4:41 pm
Forum: Investing - Help with Personal Investments
Topic: Betting on your life expectancy with an SPIA
Replies: 18
Views: 1827

Re: Betting on your life expectancy with an SPIA

Sure, but don't purchase the SPIA until you are at least age 75 and you can hedge it by requiring a term certain return of principal. That may lower the return paid to you but should still be worth it, if you believe you will outlive the 20 year guarantee period. These hedges can be useful in some ...
by Frugal Al
Mon Mar 02, 2015 4:58 pm
Forum: Investing - Theory, News & General
Topic: ...it is madness to risk losing what you need in pursuing wh
Replies: 48
Views: 5635

Re: ...it is madness to risk losing what you need in pursuin

According to firecalc.com a 3.7% withdrawal rate succeeded in 99% of historical scenarios with many of them leaving a a hefty legacy. Why would someone go for an annuity? The difference between guaranteed and theoretical comes to mind. Some people have no legacy intent. Some people can't stand the ...
by Frugal Al
Mon Mar 02, 2015 4:34 pm
Forum: Investing - Theory, News & General
Topic: ...it is madness to risk losing what you need in pursuing wh
Replies: 48
Views: 5635

Re: ...it is madness to risk losing what you need in pursuin

To compare with SWR, USA Today got quotes of 3.79% and 3.63% payouts for an inflation adjusted annuity for a 65 year old man:http://www.usatoday.com/story/money/col ... y/1639119/ The USA Today article is a little old now. I'd still be surprised if that was for a single life payout in 2013. When I ...
by Frugal Al
Sat Feb 28, 2015 6:25 am
Forum: Investing - Help with Personal Investments
Topic: Help with retirement pension
Replies: 2
Views: 519

Re: Help with retirement pension

For a 70-year-old at retirement age, based on the limited info you've provided, converting the pension to a commercially available annuity generally isn't the way to go. However, that assumes the pension is PBGC guaranteed and not in danger of getting a haircut due to underfunding, such as some mult...
by Frugal Al
Fri Feb 27, 2015 2:03 pm
Forum: Investing - Help with Personal Investments
Topic: How much is a pension worth?
Replies: 23
Views: 3860

Re: How much is a pension worth?

TwoByFour wrote:A pension that includes COLA is a huge benefit to a retirement plan.

Did the OP state that this was a COLA'd pension? But you're correct, a COLA'd pension changes everything, assuming it actually delivers on its promises.
by Frugal Al
Fri Feb 27, 2015 8:58 am
Forum: Investing - Help with Personal Investments
Topic: How much is a pension worth?
Replies: 23
Views: 3860

Re: How much is a pension worth?

What is the OP's current age? It's very difficult to value something that might not even be around very long, given the current trend in DB plan terminations. This Single Premium Immediate Annuity ("SPIA") calculator has been recommended here in the past. You can enter either lump sum inve...
by Frugal Al
Thu Feb 26, 2015 7:22 am
Forum: Investing - Help with Personal Investments
Topic: Immediate Pension Benefit Offering
Replies: 8
Views: 1330

Re: Immediate Pension Benefit Offering

I figure that I can invest the lump sum in an IRA of Vanguard's standard four-fund portfolio (probably 70/30 or 60/40 stocks/bonds). I'll probably double the money before 12/23. I'm generally not a fan of long time horizons and non-COLA'd annuities. I think you're on the right track, but I don't th...
by Frugal Al
Mon Feb 23, 2015 4:32 pm
Forum: Investing - Help with Personal Investments
Topic: Yes, another Pension / Lump Sum dilemma !
Replies: 15
Views: 1513

Re: Yes, another Pension / Lump Sum dilemma !

It doesn't matter how many income streams it --matters what the total the steams equal. Your right, but my point is, and according to the OP, the 3 current streams more than cover his needs. These 3 sources of COLA pensions will cover essential living expenses with a little left over. Adding yet an...
by Frugal Al
Mon Feb 23, 2015 8:52 am
Forum: Investing - Help with Personal Investments
Topic: Yes, another Pension / Lump Sum dilemma !
Replies: 15
Views: 1513

Re: Yes, another Pension / Lump Sum dilemma !

If you take the IRA option you will be forced to take increasingly large RMDs that you probably won't need. Use a RMD calculator to see if this is an issue. I also like the predictable steady stream of income. No worries about managing that extra investment, taking RMDs etc. Taking RMD's needn't be...
by Frugal Al
Mon Feb 23, 2015 4:58 am
Forum: Investing - Help with Personal Investments
Topic: Yes, another Pension / Lump Sum dilemma !
Replies: 15
Views: 1513

Re: Yes, another Pension / Lump Sum dilemma !

Is the payout shown below for the 20 year Certain and Continuous a good rate? If my math is correct, it gives about a 6.6% annual return. Although the "payout rate" is about 6.6% and can serve as a useful number to compare like annuities, the rate of return on a cash flow stream is time d...
by Frugal Al
Tue Feb 17, 2015 4:08 pm
Forum: Investing - Theory, News & General
Topic: Pfau: Four Risks of Retirement Income
Replies: 31
Views: 4661

Re: Pfau: Four Risks of Retirement Income

I thought that there were inflation-adjusted SPIAs, although there was some disagreement about whether the cost for the adjustment made sense. However, I'm not easily finding any tables for anything other than simple SPIAs, without any COLA. Last month I was checking current payout rates for inflat...
by Frugal Al
Tue Feb 17, 2015 9:15 am
Forum: Investing - Help with Personal Investments
Topic: Pension Withdrawal Options
Replies: 10
Views: 989

Re: Pension Withdrawal Options

I do like the "3-legged stool" of SS, pension, and savings that is becoming rare these days. I like the three legged stool concept as well, but I'm only willing to pay so much for it. The pension is not a screaming deal. I was generous in my IRR calculation of 4.2%, going out 33 years, as...
by Frugal Al
Mon Feb 16, 2015 8:52 am
Forum: Investing - Help with Personal Investments
Topic: Pension Withdrawal Options
Replies: 10
Views: 989

Re: Pension Withdrawal Options

This pension amount is actually a very small portion of the overall retirement portfolio--about 10%. That combined with the relatively low anticipated expenses (as compared to potential income), and the low imputed rate of return make the argument for the non-COLA pension rather weak, in my opinion ...
by Frugal Al
Sun Feb 15, 2015 7:10 am
Forum: Investing - Help with Personal Investments
Topic: Pension Withdrawal Options
Replies: 10
Views: 989

Re: Pension Withdrawal Options

It's very difficult to provide suggestions with limited info, and there's not nearly enough info here. What is your current age (and spouse's?) and age at retirement, longevity expectancy, other retirement assets, Social Security strategy, health of pension plan, legacy intent, anticipated retiremen...
by Frugal Al
Fri Jan 30, 2015 10:25 am
Forum: Investing - Theory, News & General
Topic: "Retiring in a Low-Return Environment"
Replies: 71
Views: 7986

Re: "Retiring in a Low-Return Environment"

2% is too low when CPI adjusted annuities for 65 yr olds pay ~4%... I agree 2% is too low, but please show me where I can get a CPI (truly) adjusted annuity with a 4% payout, 65 year old, male? Not to mention that a 100% joint survivorship, inflation indexed, annuity won't come close, which many re...
by Frugal Al
Mon Jan 26, 2015 3:33 pm
Forum: Investing - Help with Personal Investments
Topic: Pension plan lump sum for low balance?
Replies: 11
Views: 762

Re: Pension plan lump sum for low balance?

I'll add that it can be a lump sum or an immediate annuity after I leave. Wow, what monthly amount did they offer for the immediate annuity at such a young age, probably around $20/month--hardly worth the administrative fees. I agree with Gill. It's such a small amount, both in absolute size and in...
by Frugal Al
Tue Jan 20, 2015 10:35 am
Forum: Personal Finance (Not Investing)
Topic: Decision time- lump sum vs pension
Replies: 12
Views: 1225

Re: Decision time- lump sum vs pension

The subject pension does not offer a compelling payout, at about a 6.8% rate, resulting in a 4.75% IRR through age 86, or 5.6% through age 91. However, the return is nearly guaranteed and the OP has no legacy intent. The OP has adequate other assets with which to assume more risk if desired, and SS ...
by Frugal Al
Tue Jan 20, 2015 9:47 am
Forum: Personal Finance (Not Investing)
Topic: Feedback please: Lump Sum vs Pension
Replies: 8
Views: 851

Re: Feedback please: Lump Sum vs Pension

But, one recent comment suggests that the Wiki article is still incomplete, it does not address the reality that this is a very long term decision. The part that is a long term decision is the decision to NOT take the lump sum. Once the pension annuitization is decided, little can be done to change...
by Frugal Al
Sun Jan 18, 2015 2:04 pm
Forum: Personal Finance (Not Investing)
Topic: A quick poll--pension annuity vs. lump sum
Replies: 62
Views: 4559

Re: A quick poll--pension annuity vs. lump sum

We recently wrote a Wiki article to answer exactly this question: https://www.bogleheads.org/wiki/Lump_sum_vs_pensionL. The Wiki is a OK, if a bit basic. The "Fair Choice" section is misleading, poorly worded, and has some incorrect information in it. The choice is neither fair, nor unfai...
by Frugal Al
Sat Jan 17, 2015 11:02 am
Forum: Personal Finance (Not Investing)
Topic: A quick poll--pension annuity vs. lump sum
Replies: 62
Views: 4559

Re: A quick poll--pension annuity vs. lump sum

This is really a question that is very dependent upon the specific pension payout situation (health of plan sponsor, payout rate, term until vested retirement, COLA or non-COLA, etc.), health of the prospective pensioner and survivorship, the percentage of the retirement portfolio the pension repres...
by Frugal Al
Wed Jan 14, 2015 9:38 am
Forum: Personal Finance (Not Investing)
Topic: Milevsky's got me thinking immediate annuity????
Replies: 28
Views: 2612

Re: Milevsky's got me thinking immediate annuity????

Why annuitize more of your retirement income when you are not maximizing the value of the inflation indexed annuity you already have: Social Security. Your $3200/month SS will be worth about $4224/month if deferred to age 70. That plus your $1800 pension will provide over $6k/month in income, with t...

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