fredflinstone wrote: ↑
Thu Nov 14, 2019 11:17 am
Boglehead doctrine is to "stay the course" with a mix of low-cost passively managed stock and bond funds. However, for reasons I cannot discuss here (political discussions are prohibited on this forum), I am pessimistic about both stocks and bonds going forward. Without getting into the reasons for my pessimism, I wonder if Bogleheads can tell me if a SPIA is a good alternative for someone like me who is unenthusiastic about both Boglehead asset classes. If it matters, my wife Wilma and I are currently in our late 40s or so. We will probably retire within the next few years. I'd be really happy with a 3 percent withdrawal rate. Thanks!
I'd echo the comments of most posters here -- an SPIA is a poor/very poor idea because
1) the payout at your age is low, and
2) the decision is irrevocable; if things get "better" you can't go back and undo your decision.
I will ask one question another poster did; is your pessimism US-only, or do you believe the entire world is headed in the wrong direction? If the former, then perhaps moving to a (much) heavier weighting in foreign equities (not sure about bonds) might make you more comfortable. If the latter, I do not believe there is a good option for you.
For example, suppose you looked at commodities ... that might work if we hit inflation, but I'd think shrinking economies are more likely, in which we'll likely have some deflation, boding ill for commodities.
It's hard for me to think of the current global situation as being worse/a lot worse than the 1930s and 1940s when we went through a depression and world war. It was a brutal era, but we got through it.
If I was overcome with pessimism about the US (I'm not, though I can't say I'm wild about some political developments) I'd probably hunker down with a mix of short and longer term high quality fixed income, and a low percent of global non-US equities (20% of portfolio?). I'm assuming you are not worried about the US defaulting on treasuries, or bank failures with CDs not being paid out.
If you are worried about true hyperinflation in the US, I think (not trying to be funny) the only solution is to immigrate. There is nowhere to hide if a country goes into hyperinflation. The same would be true if you were concerned about a government breakdown. If you look at Venezuela for example, the only intelligent decision has been to leave. And if immigration was part of the plan, I'd start researching the best way to preserve assets in the move. [I repeat, I'm not trying to be sarcastic here, if I truly felt the US situation was sufficiently dire, this is how I would look at it]