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Re: Why would anyone buy a deferred income annuity?

... but I notice that you don't seem to give much value to the mortality credits between say 70 and 85. I'm confused by this. Based on the SSA calculator it looks to me that at 70 a male has about a 50% chance of making it to 85. For me that seems like the mortality credit have kicked in pretty wel...
by magellan
Sun Aug 10, 2014 5:31 pm
 
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 4583

Re: Why would anyone buy a deferred income annuity?

Maybe TIPS will pay more then too, but they have no mortality credits. Annuities from non-government sources and "safe real retirement income" are not related. Do you only have "safe real retirement income" sources? My view is that a two bucket approach to retirement funding may...
by magellan
Sun Aug 10, 2014 8:00 am
 
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 4583

Re: Why would anyone buy a deferred income annuity?

Do you have a citation for your 15% figure? As I understand it, a cost between 10-20% is pretty well accepted by folks that study this stuff. Here's a link: http://business.illinois.edu/ormir/AER%20December%201999.pdf This paper presents new evidence on the expected discounted value of payments for...
by magellan
Sun Aug 10, 2014 7:35 am
 
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 4583

Re: Why would anyone buy a deferred income annuity?

The criticism implies that annuities are nothing but flawed. How about some diversification of various risks using a variety of products in spite of their known flaws? As I tried to show in my post above, if the goal is a relatively safe real retirement income, these products just can't do the job ...
by magellan
Sat Aug 09, 2014 2:10 pm
 
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 4583

Re: Why would anyone buy a deferred income annuity?

The volatility of annual inflation between the time you purchase the DIA and start receiving income is irrelevant. There is no analogy to sequence of returns risk for SWR. Sequence of returns arises only because you are taking withdrawals. There are no withdrawals during the period in question here...
by magellan
Sat Aug 09, 2014 7:09 am
 
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 4583

Re: "Russan Gang Amasses Over A Billion Stolen Passwords"

I do have unique passwords for every site except the ones I don't care about, and I do check my financial accounts often. Reusing passwords for sites you don't care about is sort of bad manners. It causes grief for website owners and users at the other sites where you reused credentials. Following ...
by magellan
Wed Aug 06, 2014 8:39 am
 
Forum: Personal Consumer Issues
Topic: "Russan Gang Amasses Over A Billion Stolen Passwords"
Replies: 87
Views: 7333

Re: What counts as "income" for PPACA subsidies?

So, what would I do in my case? Anyone have an idea? I could be mistaken, but I think you could do ROTH IRA conversions each year, in an amount sufficient to increase your income just above the medicaid limit. With such a low income, the tax on the roth conversions should be smaller than the value ...
by magellan
Tue Aug 05, 2014 1:24 pm
 
Forum: Personal Finance (Not Investing)
Topic: What counts as "income" for PPACA subsidies?
Replies: 143
Views: 23646

Re: Window Wells Filling / Contractor Question

This is a long shot, but is there any way to redirect some of the water that's coming off the roof before it reaches the ground? In a previous home, we solved a "wet basement after torrential rain" problem by installing a gutter and placing the downspouts far away from the wet side of the ...
by magellan
Tue Aug 05, 2014 1:16 pm
 
Forum: Personal Consumer Issues
Topic: Window Wells Filling / Contractor Question
Replies: 12
Views: 798

Re: Why would anyone buy a deferred income annuity?

There's also explicit public back stop to insurance company obligations at the state level, though one has to be aware of the details and even within the limits it's state credit risk, unlike TIPS which is federal risk. This mistaken understanding of how state guaranty programs work is very common,...
by magellan
Tue Aug 05, 2014 11:21 am
 
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 4583

Re: Why would anyone buy a deferred income annuity?

I agree with the OP. For most, the lack of inflation protection makes these products unworkable. The problem is that you can't create an guaranteed income by simply plugging in an average for inflation. Inflation is highly volatile. This is exactly analogous to using average portfolio return to choo...
by magellan
Tue Aug 05, 2014 8:13 am
 
Forum: Investing - Theory, News & General
Topic: Why would anyone buy a deferred income annuity?
Replies: 59
Views: 4583

Re: Central AC replacement decision

IMO, the optimal install cost vs SEER tradeoff depends on personal preference and usage patterns. Do you use setbacks or prefer a set-it-and-forget-it approach? Do you like to open the windows when it's coolish or would you rather just have the system keep your home comfortable without any input fro...
by magellan
Sun Aug 03, 2014 8:56 am
 
Forum: Personal Consumer Issues
Topic: Central AC replacement decision
Replies: 54
Views: 3943

Re: Surge protectors

If the blender plug mates with countertop receptacles, then household wiring will and must provide more than sufficient power even if wires were 1930 vintage. In a perfect world that's true, but the OP doesn't know the condition of the wiring and there are several things that could prevent it from ...
by magellan
Wed Jul 30, 2014 1:45 pm
 
Forum: Personal Consumer Issues
Topic: Surge protectors
Replies: 41
Views: 3560

Re: Surge protectors

There is nothing unusual about the power rating of this blender. It is 1500 watts which is less than the typical counter-top microwave, toaster oven or hair dryer. It should operate fine on a typical 15 amp circuit assuming there are no other high power devices on the same circuit operating at the ...
by magellan
Tue Jul 29, 2014 11:28 pm
 
Forum: Personal Consumer Issues
Topic: Surge protectors
Replies: 41
Views: 3560

Re: Surge protectors

One other thought. If you're not comfortable sticking multi-meter probes into a live outlet, another option is to get a $25 kill-a-watt device. These are sometimes available to borrow for free at town libraries. Since the kill-a-watt is rated for 15 amps, I wouldn't plug the blender into it. That'll...
by magellan
Tue Jul 29, 2014 11:53 am
 
Forum: Personal Consumer Issues
Topic: Surge protectors
Replies: 41
Views: 3560

Re: Surge protectors

As others have pointed out, this appliance pushes the limits of normal home kitchen wiring. However, IMO, it's also possible that this behavior is alerting you to a dangerous problem in the wiring of the circuit you're using. I wouldn't ignore this and I would strongly encourage you to do the work n...
by magellan
Tue Jul 29, 2014 11:12 am
 
Forum: Personal Consumer Issues
Topic: Surge protectors
Replies: 41
Views: 3560

Re: Brick patio question

We had a concrete paver patio professionally installed about 15 years ago for around $6k and it still looks great. We later put a hot tub on the patio and I had to remove and replace some pavers to run an electrical conduit. It was a relatively easy job and to this day the rework is completely undet...
by magellan
Fri Jul 04, 2014 10:43 am
 
Forum: Personal Consumer Issues
Topic: Brick patio question
Replies: 8
Views: 965

Re: Commodity no longer a good diversifier?

...If you're afraid of inflation, buy TIPS. IMO, if we experience a nasty bout of unexpected inflation, TIPS are unlikely to help much at the portfolio level. They're great at protecting themselves from inflation, but TIPS are unlikely to be volatile enough to protect an entire portfolio against in...
by magellan
Fri Jul 04, 2014 9:48 am
 
Forum: Investing - Help with Personal Investments
Topic: Commodity no longer a good diversifier?
Replies: 22
Views: 1871

Re: American Automobile Assn (AAA)

Peterjens wrote:Lodging includes free parking and free breakfast (La Quinta).

Just don't forget your card. You should have it with you anyway, but in my experience, La Quinta's front desk folks always make you show your card at check in.
by magellan
Tue Jul 01, 2014 3:28 pm
 
Forum: Personal Consumer Issues
Topic: American Automobile Assn (AAA)
Replies: 51
Views: 3445

Re: Bernstein: Don’t Bother With International Bonds

I don't know what the optimal allocation to foreign bonds is, but I find Bernstein's logic very unconvincing... I'm in about the same place myself. I'm also troubled by Dr. Bernstein's use of the often repeated slogan to 'take your risk on the equity side.' Many experts say this, but despite trying...
by magellan
Mon Jun 30, 2014 10:54 am
 
Forum: Investing - Theory, News & General
Topic: Bernstein: Don’t Bother With International Bonds
Replies: 112
Views: 9181

Re: N+ Routers

If there is no coax conduit, you can either pull all the new wires (and new coax while you're at it) from the existing coax cable or use it to bring in new conduit. Unless the coax was added after the home was built, it almost certainly has staples that keep it centered on the stud and safe from na...
by magellan
Sun Jun 29, 2014 7:34 pm
 
Forum: Personal Consumer Issues
Topic: N+ Routers
Replies: 27
Views: 1721

Re: N+ Routers

In general, is it better to have the router on the first or second floor for best range? I have the best results with the wifi access point in the kitchen on top of a tallish freestanding cabinet. It's out of sight and I get coverage throughout the house, including a room above the garage. When we ...
by magellan
Sun Jun 29, 2014 12:55 pm
 
Forum: Personal Consumer Issues
Topic: N+ Routers
Replies: 27
Views: 1721

Re: Bernstein: Don’t Bother With Intnational Bonds

What heavy manipulation do you believe is going on? As I understand it, every central bank is currently managing its yield curve at multiple points along the term axis. This isn't secret or disputed, but rather it's the essence of quantitative easing. Added to this overt manipulation, there's also ...
by magellan
Sun Jun 29, 2014 12:47 pm
 
Forum: Investing - Theory, News & General
Topic: Bernstein: Don’t Bother With International Bonds
Replies: 112
Views: 9181

Re: N+ Routers

I think the main issue I would like improve is signal strength throughout my house and backyard. Does AC give a range advantage over N? Generally, you'll get higher speeds and more reliable connections at any given distance, but not more range. Keep in mind that the new capabilities of 802.11ac onl...
by magellan
Sun Jun 29, 2014 8:50 am
 
Forum: Personal Consumer Issues
Topic: N+ Routers
Replies: 27
Views: 1721

Re: Bernstein: Don’t Bother With Intnational Bonds

I am on this camp as well. Give me a premium to TBM, or I am not going to bother. I've long been an advocate of a permanent allocation to foreign bonds and I've held 20 percent of our portfolio's bonds in foreign bonds for over a decade. However in my opinion if there's a sound argument against for...
by magellan
Sun Jun 29, 2014 8:16 am
 
Forum: Investing - Theory, News & General
Topic: Bernstein: Don’t Bother With International Bonds
Replies: 112
Views: 9181

Re: Bernstein: Don’t Bother With Intnational Bonds

And the unhedged currency exposure with unhedged international bonds is very risky. All you have to do is look to what happened to the euro and the yen in the last crisis—they cratered. That’s a risk you simply don’t want to take. I have enormous respect for Dr. Bernstein, but IMO this is way overs...
by magellan
Sat Jun 28, 2014 7:19 pm
 
Forum: Investing - Theory, News & General
Topic: Bernstein: Don’t Bother With International Bonds
Replies: 112
Views: 9181

Re: N+ Routers

I recently upgraded from an N router to AC. I also bought a $25 Intel 7260AC wifi card for my dell laptop to take advantage AC's faster speeds. I tried an Asus RT-AC66U AC-1750 router first. The laptop with the AC card worked flawlessly and the connection was very fast. Unfortunately, two other lapt...
by magellan
Sat Jun 28, 2014 8:00 am
 
Forum: Personal Consumer Issues
Topic: N+ Routers
Replies: 27
Views: 1721

Re: To HSA or not to HSA

As others have mentioned, if you know what your expenses will be, you can do the math to choose the best option. If you don't have extra knowledge about likely expenses, the best bet is generally to take the plan with the highest deductible/out of pocket max that you can handle without financial rui...
by magellan
Sat Jun 28, 2014 6:47 am
 
Forum: Personal Finance (Not Investing)
Topic: To HSA or not to HSA
Replies: 12
Views: 1529

Re: What is the risk of having too much house

The other option would be to make a larger downpayment by selling some of the stock that you have. You probably want to learn the exact details of California's non-recourse mortgage rules. http://realtytimes.com/agentnews/agentconcerns1/item/728-20121023_antideficiency If you can just walk away fro...
by magellan
Fri Jun 27, 2014 8:26 am
 
Forum: Personal Finance (Not Investing)
Topic: What is the risk of having too much house
Replies: 51
Views: 4525

Re: What is the risk of having too much house

I don't see a mention of the total monthly carrying cost of the home including taxes, maintenance, insurance and other expenses. Without this number, you can't make an informed decision. I'm particularly interested in the cost of earthquake insurance, even assuming a crazy high deductible. Earthquak...
by magellan
Fri Jun 27, 2014 8:13 am
 
Forum: Personal Finance (Not Investing)
Topic: What is the risk of having too much house
Replies: 51
Views: 4525

Re: Keeping mold out of bath/shower

As others have mentioned, good ventilation is the key for managing mold and mildew in a shower. However, no matter how much you ventilate and wipe, mold and mildew eventually will gain a foothold unless you apply something to kill it. IMO, you have to pick your poison between very frequent regroutin...
by magellan
Thu Jun 26, 2014 8:57 am
 
Forum: Personal Consumer Issues
Topic: Keeping mold out of bath/shower
Replies: 27
Views: 2288

Re: LMP at age 50 (help with TIPS Ladder)

This discussion nicely shows how maintaining the real value of a low-risk taxable portfolio is a very big challenge. TIPS are a special challenge because of immediate taxes due on the inflation adjustments paid out later. But nominal bonds are also a challenge. As inflation increases, the tax bill d...
by magellan
Tue Jun 24, 2014 7:50 am
 
Forum: Investing - Help with Personal Investments
Topic: LMP at age 50 (help with TIPS Ladder)
Replies: 26
Views: 1678

Re: LMP at age 50 (help with TIPS Ladder)

You have a large taxable account. If the very inflation that TIPS are bought to protect against ever rears it's ugly head, you will have a TAXFLATION problem. I agree. Consider a $1m portfolio of TIPS in taxable. When inflation is at 2%, the phantom income on the inflation adjustment of TIPS princi...
by magellan
Mon Jun 23, 2014 9:01 pm
 
Forum: Investing - Help with Personal Investments
Topic: LMP at age 50 (help with TIPS Ladder)
Replies: 26
Views: 1678

Re: out of residency since 07 - please advise

Also, you might want to check out EmergDoc's excellent website:
http://whitecoatinvestor.com/
by magellan
Sun Jun 22, 2014 6:40 pm
 
Forum: Investing - Help with Personal Investments
Topic: out of residency since 07 - please advise
Replies: 29
Views: 3813

Re: Barron's top 50 annuities

I searched the article text for words like inflation and purchasing power and got zero hits. Perhaps I missed it, but IMO any article about annuities that doesn't even once mention the word inflation is journalistic malpractice. Longevity insurance is a great idea, but only if you can distill it out...
by magellan
Sun Jun 22, 2014 7:50 am
 
Forum: Investing - Theory, News & General
Topic: Barron's top 50 annuities
Replies: 13
Views: 1966

Re: [Morningstar article] the best fixed income investment

Magellan et al.: I may be dense, but I'm still having trouble understanding whether I ought to readjust my assumptions downward regarding the value of a bond fund (such as VWITX) by looking at the lower (SEC) yield. All you really need to know is that SEC yield is the ONLY yield that matters, excep...
by magellan
Sat Jun 21, 2014 11:21 am
 
Forum: Investing - Theory, News & General
Topic: [Morningstar article] the best fixed income investment
Replies: 55
Views: 3909

Re: Best Fixed Income Investment - Morningstar article

What about interest rate risk? When/if the Fed starts raising short-term rates, will that affect the duration of intermediate-term corporate bonds? Fixed income instruments with roughly the same duration have roughly the same interest rate risk. So a bond fund with a duration of 5 years has about t...
by magellan
Sat Jun 21, 2014 9:22 am
 
Forum: Investing - Theory, News & General
Topic: [Morningstar article] the best fixed income investment
Replies: 55
Views: 3909

Re: Best Fixed Income Investment - Morningstar article

... However, that leaves us in the same position we started in, which is that the fund is paying out what it receives in payments from the bonds it holds. It doesn't matter if it is one bond or 1000. Fund income less expenses equals the payout to the funds shareholders... I'm not doing a very good ...
by magellan
Sat Jun 21, 2014 9:11 am
 
Forum: Investing - Theory, News & General
Topic: [Morningstar article] the best fixed income investment
Replies: 55
Views: 3909

Re: Best Fixed Income Investment - Morningstar article

What the fund pays out is what it collects. If the fund has a NAV of $100 and pays out $3.00 in dividends annully thats a 3% distribution. You can cite any accounting rules you like but at a $100 NAV if I'm paid $3.00, cash in hand, on a fund that sells for $100, that is a 3% dividend yield (distri...
by magellan
Fri Jun 20, 2014 8:34 pm
 
Forum: Investing - Theory, News & General
Topic: [Morningstar article] the best fixed income investment
Replies: 55
Views: 3909

Re: Best Fixed Income Investment - Morningstar article

In my Vanguard IRA I have short term investment grade fund and intermediate term investment grade fund. Does it make sense to replace either of these with 5 year CDs from Vanguard in the IRA brokerage account? IMO, it depends on your overall investment plan and how much extra work you're up for. Ow...
by magellan
Fri Jun 20, 2014 3:37 pm
 
Forum: Investing - Theory, News & General
Topic: [Morningstar article] the best fixed income investment
Replies: 55
Views: 3909

Re: Best Fixed Income Investment - Morningstar article

Just so I'm a bit clearer Jim... you are saying the income that the fund pays out is not from the income from it's holdings? It's complicated, but distributions are determined by rules about how bond premiums and discounts have to be amortized by the fund. The best way to understand this is with a ...
by magellan
Fri Jun 20, 2014 3:01 pm
 
Forum: Investing - Theory, News & General
Topic: [Morningstar article] the best fixed income investment
Replies: 55
Views: 3909

Re: Best Fixed Income Investment - Morningstar article

Not to mention that the actual dividend yield of the Intermediate Term Tax-Ex is >3.0% Dividend yield isn't relevant for this comparison. The income that a fund pays out as dividends is determined by arcane tax laws and isn't always indicative of the actual SEC yield of the fund's holdings (as we s...
by magellan
Fri Jun 20, 2014 2:45 pm
 
Forum: Investing - Theory, News & General
Topic: [Morningstar article] the best fixed income investment
Replies: 55
Views: 3909

Re: American Automobile Assn (AAA)

We save $10 or more on each night's hotel reservations so that generally covers the cost of the membership for us. We use the tow service rarely, maybe every third year but the peace of mind seems worth the price. Another benefit of AAA that I use and not yet covered here is that at local Outlet Ma...
by magellan
Fri Jun 20, 2014 1:59 pm
 
Forum: Personal Consumer Issues
Topic: American Automobile Assn (AAA)
Replies: 51
Views: 3445

Re: Short Term Bonds or 2 Year CD's

As with any CD play, if you have a multiple of $250k to put to work, you would have to spread it among more than one bank, but Everbank and CIT now have the same rate, per Bankrate.com It's generally easy to get FDIC coverage well over $1m per bank by titling your accounts carefully. With just a sp...
by magellan
Thu Jun 19, 2014 2:22 pm
 
Forum: Investing - Theory, News & General
Topic: Short Term Bonds or 2 Year CD's
Replies: 13
Views: 1377

Re: Will adding returns cool the upstairs bedrooms?

I talked to my HVAC guy about it and he suggested to keep it cooler during the day, 74-75 and then it will not take as long to cool down. That makes sense, however especially with an older system, doing this will tend to increase cooling costs, perhaps significantly. Newer systems are usually much ...
by magellan
Tue Jun 17, 2014 4:19 pm
 
Forum: Personal Consumer Issues
Topic: Will adding [air duct] returns cool the upstairs bedrooms?
Replies: 60
Views: 4993

Re: Annuitizing for retirement - what if the market is down?

I understand the concern about privacy and I don't think net worth numbers are necessary exactly. However, it would be helpful to know what percent of your total portfolio you plan to annuitize. Also, what's your plan in terms of overall risk-level glide path? In particular, on the day you retire, w...
by magellan
Mon Jun 16, 2014 9:46 am
 
Forum: Investing - Help with Personal Investments
Topic: Annuitizing for retirement - what if the market is down?
Replies: 43
Views: 3945

Re: Will adding [air duct] returns cool the upstairs bedroom

A trip into the attic with the unit running to check for leaks in the duct work might make sense. I had a few smallish leaks in my system that were easily found just by passing my hand across the duct work with the unit running. There are some great youtube videos that show how to fix the leaks once...
by magellan
Sun Jun 15, 2014 3:03 pm
 
Forum: Personal Consumer Issues
Topic: Will adding [air duct] returns cool the upstairs bedrooms?
Replies: 60
Views: 4993

Re: HSA as an investment vehicle for retirement income

I think only part of Medicare premiums are qualified. Think Part B is and Medigap is not although I could have that reversed That sounds right. I think everything except premiums on medigap policies is qualified. Question 27 (page 9) in this IRS doc from 2004 says part A and part B premiums are ok....
by magellan
Sun Jun 15, 2014 2:50 pm
 
Forum: Personal Finance (Not Investing)
Topic: HSA as an investment vehicle for retirement income
Replies: 15
Views: 1280

Re: HSA as an investment vehicle for retirement income

My guess is that most people will have enough in medical expenses to draw down their HSA accounts tax-free during retirement. Medicare premiums are qualified expenses as well as dental and eye care expenses. That's probably $2k-3k per person per year of guaranteed expenses before the first medical i...
by magellan
Sun Jun 15, 2014 8:20 am
 
Forum: Personal Finance (Not Investing)
Topic: HSA as an investment vehicle for retirement income
Replies: 15
Views: 1280

Re: Health Insurance for physician - HSA?

Differences in provider networks and drug formularies can easily result in premium differences of 25-30% for otherwise identical plans. Many insurers are restricting provider networks and formularies to make their premiums seem more competitive. Sometimes, different plans offered by an insurer will ...
by magellan
Sun Jun 15, 2014 7:47 am
 
Forum: Personal Finance (Not Investing)
Topic: Health Insurance for physician - HSA?
Replies: 5
Views: 365

Re: Annuitizing for retirement - what if the market is down?

I don't know how to optimize these contradictory factors, but it would be a mistake to assume that waiting for higher interest rates is a strategy that is necessarily going to payoff even if interest rates actually do rise. I agree that delaying a purchase in hopes of higher interest rates doesn't ...
by magellan
Sat Jun 14, 2014 3:35 pm
 
Forum: Investing - Help with Personal Investments
Topic: Annuitizing for retirement - what if the market is down?
Replies: 43
Views: 3945
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