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Re: S&P 500 guarantee without the annuity

Actually what you have is something that will perform slightly better or slightly worse than bond performance with those products. Most of the ones I have seen give a guaranteed return that was the same as a long term bond. There is also a really good chance I didn't exactly do all the math right w...
by dhodson
Tue Sep 23, 2014 4:28 pm
 
Forum: Investing - Theory, News & General
Topic: S&P 500 guarantee without the annuity
Replies: 15
Views: 1108

Re: S&P 500 guarantee without the annuity

Every single one of the annuities I have seen cap the market gain. That cap is a huge part of why they can provide "insurance" against market losses. If it was possible to make a product that gave market returns and no risk of capital, we would all stick 100% of our investment money. The ...
by dhodson
Tue Sep 23, 2014 2:27 pm
 
Forum: Investing - Theory, News & General
Topic: S&P 500 guarantee without the annuity
Replies: 15
Views: 1108

Re: You may want to rethink the odds of ever needing LTCi

I handled my bachelor Uncle's finances for the last 9 years while he was in a nursing home sans LTC insurance.....he passed in April of this year....how does 425k in expenses over a 9 year period sound. Do my wife and I have a policy......what do you think? With all sympathy for what must have been...
by dhodson
Mon Sep 22, 2014 1:20 pm
 
Forum: Personal Finance (Not Investing)
Topic: You may want to rethink the odds of ever needing LTCi
Replies: 75
Views: 7202

Re: Variable Annuity: add to it? why?

I don't think you are but some might argue the other insurance features such as asset protection
by dhodson
Mon Sep 22, 2014 1:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Variable Annuity: add to it? why?
Replies: 13
Views: 525

Re: Cancel NWM's supp disability income policies?

One more thing I forgot to mention. When we were going through the process of deciding whether or not I should purchase the Term 80 product or just Level Term, our NWM guy kept stating that he gets paid more if I purchase the level Term policy instead of the Term 80 product; and he was using this a...
by dhodson
Mon Sep 22, 2014 11:31 am
 
Forum: Personal Finance (Not Investing)
Topic: Cancel NWM's supp disability income policies?
Replies: 3
Views: 163

Re: Are SPIA's fairly priced? - A quick and dirty analysis

well IF they need it at 65 then you still NEED it. They take the risk of unlucky sequence of events if they continue to invest their small savings. I do agree that if they are planning on buying it later on then its a different situation. Your health might have changed and maybe you no longer need i...
by dhodson
Sun Sep 21, 2014 1:00 pm
 
Forum: Investing - Theory, News & General
Topic: Are SPIA's fairly priced? - A quick and dirty analysis
Replies: 75
Views: 3476

Re: Are SPIA's fairly priced? - A quick and dirty analysis

Longevity is unknown, and this is what drives the "cost" of either. And, in either case "this cost" is higher if we get hit by the probervial truck at an early age. The opposite is also true. There, I ran the numbers. :) IMO, you've completely missed the point of this thread. As...
by dhodson
Sun Sep 21, 2014 9:22 am
 
Forum: Investing - Theory, News & General
Topic: Are SPIA's fairly priced? - A quick and dirty analysis
Replies: 75
Views: 3476

Re: Variable Annuity: add to it? why?

Well if no favorable schedule then I'd only add if the difference between basis and current value is so large that it would take an eon to get back to basis. Otherwise I'd just use it for my tax inefficient assets assuming that I'm also investing within a taxable.
by dhodson
Sat Sep 20, 2014 7:37 pm
 
Forum: Investing - Help with Personal Investments
Topic: Variable Annuity: add to it? why?
Replies: 13
Views: 525

Re: Variable Annuity: add to it? why?

Is there some favorable annuitization schedule with this annuity? If not then why do you think there is an advantage over just buying a SPIA later on if necessary or desired?
by dhodson
Sat Sep 20, 2014 7:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Variable Annuity: add to it? why?
Replies: 13
Views: 525

Re: Variable Annuity: add to it? why?

why not just surrender this thing once you get back to your cost basis. That way there wont be any penalties or taxes.
by dhodson
Sat Sep 20, 2014 6:05 pm
 
Forum: Investing - Help with Personal Investments
Topic: Variable Annuity: add to it? why?
Replies: 13
Views: 525

Re: Are SPIA's fairly priced? - A quick and dirty analysis

What seems to happen though is they spin off the bad assets to insulate the company in my view.
by dhodson
Sat Sep 20, 2014 11:02 am
 
Forum: Investing - Theory, News & General
Topic: Are SPIA's fairly priced? - A quick and dirty analysis
Replies: 75
Views: 3476

Re: Are SPIA's fairly priced? - A quick and dirty analysis

The OP's analysis fails in the most fundamental aspect: he has converted a problem with a crucial unknown, actual individual lifespan, into a problem that ignores this aspect completely, a fixed period annuity or mortgage. If we actually knew how long we will live, then financial planning would be ...
by dhodson
Sat Sep 20, 2014 8:46 am
 
Forum: Investing - Theory, News & General
Topic: Are SPIA's fairly priced? - A quick and dirty analysis
Replies: 75
Views: 3476

Re: Term Care 80 Northwestern Mutual - What to do for Life I

That's an understatement. They expect the great majority to lapse or surrender. The return on these products are poor. The lower return compounds over decades. Might as well invest in a mutual fund with a high load and 3% AUM fees.

I would recommend you look at cheaper term than nwm.
by dhodson
Fri Sep 19, 2014 8:42 pm
 
Forum: Personal Finance (Not Investing)
Topic: Term Care 80 Northwestern Mutual - What to do for Life Ins.
Replies: 15
Views: 933

Re: Are SPIA's fairly priced? - A quick and dirty analysis

This topic can be talked to death without any resolution. Too many variables ... human longevity has increased over time, new conditions that were once considered fatal or nearly so are now controllable (i.e. HIV), so how does the insurance company plan for paying out over a lengthening human lifes...
by dhodson
Fri Sep 19, 2014 8:26 pm
 
Forum: Investing - Theory, News & General
Topic: Are SPIA's fairly priced? - A quick and dirty analysis
Replies: 75
Views: 3476

Re: Are SPIA's fairly priced? - A quick and dirty analysis

Swaption- good point. Let me try and model that. Dhogson - agreed that self insurance is always cheapest. I was just trying to see how bad a deal SPIA's are. They don't seem to be all that bad. Swampy - that may be true of other types of annuities, but SPIA's seem reasonably priced. I don't think i...
by dhodson
Fri Sep 19, 2014 2:23 pm
 
Forum: Investing - Theory, News & General
Topic: Are SPIA's fairly priced? - A quick and dirty analysis
Replies: 75
Views: 3476

Re: Are SPIA's fairly priced? - A quick and dirty analysis

I understand the desire to come to a conclusion about good deals or not but it doesn't work for insurance. Insurance is always a bad deal for anything other than the insurance component although sometimes a really really bad. In this case, does one NEED some sort of a guarantee that they will get X ...
by dhodson
Fri Sep 19, 2014 2:02 pm
 
Forum: Investing - Theory, News & General
Topic: Are SPIA's fairly priced? - A quick and dirty analysis
Replies: 75
Views: 3476

Re: The Annuity Puzzlement

It doesn't really make a lot of sense for us to argue about the meaning of terms when not even the industry defines them all the same. The only important part for discussion is either to be very specific about what type of annuity you are referring to or what features you desire in either a product/...
by dhodson
Fri Sep 19, 2014 1:35 pm
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 6074

Re: Adj Complife (whole life ins) advice

Almost certainly you have made a bad decision to purchase this product. That can't be changed. You now need to decide if you should make the most of it or just totally move on. The major costs are sunk and going forward the return improves although as mentioned above, dividends have been going down ...
by dhodson
Wed Sep 17, 2014 10:15 pm
 
Forum: Personal Finance (Not Investing)
Topic: Adj Complife (whole life ins) advice
Replies: 10
Views: 486

Re: Macbook Air; how much RAM?

If I'm not mistaken taking the 4 to 8 will help with the onboard video so id go with 8. I think 16 would be over doing it.
by dhodson
Wed Sep 17, 2014 12:53 pm
 
Forum: Personal Consumer Issues
Topic: Macbook Air; how much RAM?
Replies: 59
Views: 3039

Re: The Annuity Puzzlement

During that time a lot of people have seen pensions go south and insurance companies go under as well. Those events likely have shaped the thinking. Additionally in the past, you didn't really have a choice but were given a pension. Then there was a time period where you could have either or and po...
by dhodson
Wed Sep 17, 2014 9:43 am
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 6074

Re: a look at equity indexed annuities

There just isn't any magic in this world. Why should a strategy of mostly bonds with a small slice of options plus high fees work better? It doesn't.
by dhodson
Wed Sep 17, 2014 8:48 am
 
Forum: Investing - Theory, News & General
Topic: a look at equity indexed annuities
Replies: 1
Views: 207

Re: The Annuity Puzzlement

The paradox here is that people of my generation retired and happily took a Defined Benefit pension, which is? An annuity. Now, people retire with some lump sum in a Defined Contribution plan, and purchasing a simple annuity is evil or unreasonably risky? I don't get it. L. During that time a lot o...
by dhodson
Tue Sep 16, 2014 11:21 pm
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 6074

Re: How much to self insure LTC and longevity? hypothetical

Some thoughts: If you're looking to a possible Medicaid situation, the 5 year "look-back" rule exempts assets placed into an single premium immediate annuity (with no period certain) for the life of a healthy spouse. LTC carriers having been consistently raising premiums, with the excuse ...
by dhodson
Tue Sep 16, 2014 5:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: How much to self insure LTC and longevity? hypothetical
Replies: 13
Views: 699

Re: What evidence would prove the Boglehead mentality wrong?

given the amount of evidence currently available, it is unlikely that a different method could be proven superior within our lifetimes. For instance lets just say that I have a strategy that outperforms indexing when including costs. I would need 20 years or more of data on it and id need others to ...
by dhodson
Tue Sep 16, 2014 5:19 pm
 
Forum: Investing - Theory, News & General
Topic: What evidence would prove the Boglehead mentality wrong?
Replies: 109
Views: 7495

Re: How much to self insure LTC and longevity? hypothetical

Say you are a married couple about to retire at age 65, in average health neither better nor worse than average with average family history. You will receive SS of $2500 per month and have $6000 per month in expenses. Your home is paid off and you have no debt and your kids if any are self sufficie...
by dhodson
Tue Sep 16, 2014 1:17 pm
 
Forum: Personal Finance (Not Investing)
Topic: How much to self insure LTC and longevity? hypothetical
Replies: 13
Views: 699

Re: Strange Billing Practice by Medical Provider

I would contact the PPO. I can see this being acceptable if the amount is what he/she will get and your policy allows you to be reimbursed the same (or counted towards deductible as appropriate). While I say acceptable, it probably isn't optimal since it transfers risk of not getting paid to you fro...
by dhodson
Tue Sep 16, 2014 12:49 pm
 
Forum: Personal Consumer Issues
Topic: Strange Billing Practice by Medical Provider
Replies: 38
Views: 2698

Re: Strange Billing Practice by Medical Provider

the provider either does not want to go through the hassle of billing (which is not that big a deal really) or is afraid the patient will not pay the balance or does not want to pay his biller. Collecting up front is fine, but I would still request that the provider submit the claim. That way the p...
by dhodson
Tue Sep 16, 2014 11:00 am
 
Forum: Personal Consumer Issues
Topic: Strange Billing Practice by Medical Provider
Replies: 38
Views: 2698

Re: Young Guy, Probably Not Going To Live A Long Time

Sorry for your difficulties.

I'd recommend though giving some of it away while you are alive instead of waiting until afterwards.

I would hope that your good deeds provide you some satisfaction in the time you have remaining.
by dhodson
Mon Sep 15, 2014 8:44 pm
 
Forum: Personal Finance (Not Investing)
Topic: Young Guy, Probably Not Going To Live A Long Time
Replies: 30
Views: 4287

Re: You may want to rethink the odds of ever needing LTCi

I believed that we had enough in our accounts to cover LTC, but my wife wanted LTCi. So, we bought LTCi. My policy only costs $283 per year, with a one year elimination period and $100/day for six months. My wife's policy costs $2,800 per year, with a one year elimination period and a $200/day paym...
by dhodson
Mon Sep 15, 2014 4:46 pm
 
Forum: Personal Finance (Not Investing)
Topic: You may want to rethink the odds of ever needing LTCi
Replies: 75
Views: 7202

Re: You may want to rethink the odds of ever needing LTCi

Universal life would provide less ltci dollars then a standard ltci policy so it will never be the answer for the tail risk Right, which is why I bought term , not universal life, with a living needs rider. Glad you are happy with that decision. If I'm not mistaken its been discussed about the conc...
by dhodson
Mon Sep 15, 2014 1:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: You may want to rethink the odds of ever needing LTCi
Replies: 75
Views: 7202

Re: Buying Annuity at Young Age for Retirement?

Return will be so low that your spending power will be less.

Insurance companies don't have magical investments.
by dhodson
Mon Sep 15, 2014 10:21 am
 
Forum: Investing - Help with Personal Investments
Topic: Buying Annuity at Young Age for Retirement?
Replies: 6
Views: 643

Re: You may want to rethink the odds of ever needing LTCi

Universal life would provide less ltci dollars then a standard ltci policy so it will never be the answer for the tail risk
by dhodson
Mon Sep 15, 2014 9:58 am
 
Forum: Personal Finance (Not Investing)
Topic: You may want to rethink the odds of ever needing LTCi
Replies: 75
Views: 7202

Re: DINK 200K household income - ways to reduce taxable inco

Focusing on taxes alone will result in being sold a bad investment option.
by dhodson
Sun Sep 14, 2014 5:32 pm
 
Forum: Personal Finance (Not Investing)
Topic: DINK 200K household income - ways to reduce taxable income?
Replies: 31
Views: 3575

Re: You may want to rethink the odds of ever needing LTCi

Additionally, the higher the chances become the less likely the insurance companies will stay in business without additional rate increases. reduced lapse rates spiked rates. If utilization also goes up then it won't be pretty.
by dhodson
Sat Sep 13, 2014 9:28 pm
 
Forum: Personal Finance (Not Investing)
Topic: You may want to rethink the odds of ever needing LTCi
Replies: 75
Views: 7202

Re: Help with annuity questions

They won't share their own tables IRA stands for both individual retirement account and individual retirement annuity. Might want to be sure which we are talking about Likely the reason is bc an insurance agent sold it to him. They are good at selling. There isn't a magic bullet here. Sounds like su...
by dhodson
Sat Sep 13, 2014 6:25 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with annuity questions
Replies: 13
Views: 947

Re: Help with annuity questions

I dont think you are going to find "an answer" the way you are looking at this. A few reasons, first off is that those tables arent what the insurance company uses. In the end that doesnt matter to you. What i would look at (assuming you want an income payment stream) is the payment from t...
by dhodson
Sat Sep 13, 2014 5:42 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with annuity questions
Replies: 13
Views: 947

Re: Cash Balance Defined Benefit Plan

OP, give Vanguard a call , they may administer DB plans as well as handle the money , I know a few years ago they had K administrators as well as actuaries on board - and as we know they tend to be low cost . unless things are different last time i checked (a few years ago), they did not act as a T...
by dhodson
Sat Sep 13, 2014 5:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: Cash Balance Defined Benefit Plan
Replies: 8
Views: 798

Re: Help with annuity questions

you do need to call the insurance company as suggested.

be careful with interpreting the return. Typically the number they provide includes return of principal.
by dhodson
Sat Sep 13, 2014 5:00 pm
 
Forum: Investing - Help with Personal Investments
Topic: Help with annuity questions
Replies: 13
Views: 947

Re: The Annuity Puzzlement

Things can change over the term of the contract - do you really think an insurance company will necessarily stay viable for the 30 years or so it's paying out money? Are you really willing to bet on that up front? Also, I have never understood - and will never understand - why people are willing to...
by dhodson
Sat Sep 13, 2014 3:52 pm
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 6074

Re: Could you sleep with all your money in Berkshire Hathawa

I could sleep but i know it wouldn't be a wise choice.

I can sleep under such pressure.
by dhodson
Sat Sep 13, 2014 12:32 pm
 
Forum: Investing - Theory, News & General
Topic: Could you sleep with all your money in Berkshire Hathaway?
Replies: 49
Views: 3867

Re: The Annuity Puzzlement

At what age should you buy a SPIA with the low interest rates we now have? Thanks You dont get to pick interest rates. SPIAs do produce less at the moment but if you NEED a SPIA then you dont have a choice. Its pretty hard to "market time" interest rates and know interest rates and inflat...
by dhodson
Sat Sep 13, 2014 11:31 am
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 6074

Re: The Annuity Puzzlement

People here are talking about the possibility of market crashes every day, why has there been no talk about the possibility of SPIA going under? The market can crash at any time, bring down the SPIA insurance company with it. Is an SPIA insurance company stronger than many biggest U.S. banks? It ha...
by dhodson
Fri Sep 12, 2014 9:46 pm
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 6074

Re: The Annuity Puzzlement

This has been discussed multiple times

You may wish to search spia

A few points though

That 5.5% you gave included return of principal

Likely you looked at a non inflation protected product


I plan to buy a spia at age 80 if in good health.
by dhodson
Fri Sep 12, 2014 8:50 pm
 
Forum: Investing - Theory, News & General
Topic: The Annuity Puzzlement
Replies: 95
Views: 6074

Re: Cash Balance Defined Benefit Plan

OP, I'd just talk to a few TPA and/or pension consulting firms in your area and see what they charge - many accountants also have relationships with these firms and could quarterback the administration for you. Bigvol , the TPA firm just grabs asset info from Vanguard periodically to do the adminis...
by dhodson
Fri Sep 12, 2014 11:58 am
 
Forum: Personal Finance (Not Investing)
Topic: Cash Balance Defined Benefit Plan
Replies: 8
Views: 798

Re: Is there a "catch" in this Xfinity offer ?

Both are decent speeds. If you are truly getting around 18 with your ATT then id probably just stick with what you got unless you notice problems with video such as Netflix. If all you do is surf the web then likely you wont notice any improvements. As others have mentioned the speed they tell you i...
by dhodson
Fri Sep 12, 2014 11:43 am
 
Forum: Personal Consumer Issues
Topic: Is there a "catch" in this Xfinity offer ?
Replies: 23
Views: 1598

Re: What's your take on this article about annuities vs 10/9

My take is that it is loony. If I'm reading the numbers right they are saying that It is better to invest in a 90%-safe-bond portfolio that returns around 10% annually than to buy a single-premium annuity that pays out 6.5% per year annually. Well, OK. But I can top that. Even better to invest in a...
by dhodson
Thu Sep 11, 2014 9:58 pm
 
Forum: Investing - Theory, News & General
Topic: What's your take on this article about annuities vs 10/90?
Replies: 9
Views: 914

Re: What's your take on this article about annuities vs 10/9

First off, the article and your topic is only about lifetime SPIAs. There are lots of different types of annuities. 2nd it isnt that most of us are either pro or against a SPIA. Its IF a SPIA makes sense and when. A lifetime SPIA is most useful when you want an insurance company's guarantee to make ...
by dhodson
Thu Sep 11, 2014 9:42 pm
 
Forum: Investing - Theory, News & General
Topic: What's your take on this article about annuities vs 10/90?
Replies: 9
Views: 914

Re: Captive Insurance

A captive insurance company is actually a well accepted investment vehicle, as long as you're insuring actual risks and paying reasonable premiums. I am not an expert in them by any means, but I don't believe they are a gray area. I do know that your friend will need very experienced attorneys and ...
by dhodson
Thu Sep 11, 2014 11:27 am
 
Forum: Investing - Help with Personal Investments
Topic: Captive Insurance
Replies: 11
Views: 800

Re: Professional indemnity insurance

Why not get a 2nd opinion?

In the end though I imagine you won't be able to avoid any blame if things go sour.
by dhodson
Wed Sep 10, 2014 8:50 pm
 
Forum: Personal Finance (Not Investing)
Topic: Professional indemnity insurance
Replies: 4
Views: 288
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