Taylor's Post on Tontines

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Glen Davenport
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Taylor's Post on Tontines

Post by Glen Davenport »

Ten years ago, Taylor Larimore posted an article written by York University Finance Professor Moshe Milevsky, "Moshe Milevsky on Tontines."

https://retirementincomejournal.com/art ... -tontines/

It got at least a few of us thinking that tontines would be a great longevity solution that could be structured in a variety of ways to improve benefits for retirees.

I have heard that tontines are becoming more popular again around the world, and that tontine-like structures will be available in Canada and the US.

Wondering if anyone has done any research, or may be able to provide any updates as to the availability of tontines in the US.

Glen
petulant
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Re: Taylor's Post on Tontines

Post by petulant »

There has been some recent discussion:

viewtopic.php?t=406312

It doesn't seem much has changed as far as product introductions:

https://www.thinkadvisor.com/2022/07/21 ... n-the-u-s/
https://www.investmentnews.com/retireme ... vie-230183

There is a product that says it's a real tontine inside IRAs, fueled entirely by bank deposits. I can't find any news or reviews about it. No idea if it's legitimate.
https://tontine.com

There are also a small number of participating annuity offerings, which would presumably pay out more to surviving annuitants if early mortality for other annuitants was high:

https://www.newyorklife.com/assets/docs ... -Sheet.pdf
https://news.northwesternmutual.com/new ... 33&asPDF=1

I don't see why we would want tontine products to be engineered instead of engineering annuities to be more practical/attractive.
toddthebod
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Re: Taylor's Post on Tontines

Post by toddthebod »

Seems like a bad annuity.
Dregob
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Re: Taylor's Post on Tontines

Post by Dregob »

Glen Davenport wrote: Mon Jan 22, 2024 3:05 pm Ten years ago, Taylor Larimore posted an article written by York University Finance Professor Moshe Milevsky, "Moshe Milevsky on Tontines."

https://retirementincomejournal.com/art ... -tontines/

It got at least a few of us thinking that tontines would be a great longevity solution that could be structured in a variety of ways to improve benefits for retirees.

I have heard that tontines are becoming more popular again around the world, and that tontine-like structures will be available in Canada and the US.

Wondering if anyone has done any research, or may be able to provide any updates as to the availability of tontines in the US.

Glen
Imagine I set one up with a dozen friends all about the same age. The money is invested until one remains standing. But by that time I (assuming I die last) have lived in poverty or don't need the money (and at that age what am I going to do with a windfall).
No thanks.
GaryA505
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Re: Taylor's Post on Tontines

Post by GaryA505 »

Dregob wrote: Mon Jan 22, 2024 3:38 pm
Glen Davenport wrote: Mon Jan 22, 2024 3:05 pm Ten years ago, Taylor Larimore posted an article written by York University Finance Professor Moshe Milevsky, "Moshe Milevsky on Tontines."

https://retirementincomejournal.com/art ... -tontines/

It got at least a few of us thinking that tontines would be a great longevity solution that could be structured in a variety of ways to improve benefits for retirees.

I have heard that tontines are becoming more popular again around the world, and that tontine-like structures will be available in Canada and the US.

Wondering if anyone has done any research, or may be able to provide any updates as to the availability of tontines in the US.

Glen
Imagine I set one up with a dozen friends all about the same age. The money is invested until one remains standing. But by that time I (assuming I die last) have lived in poverty or don't need the money (and at that age what am I going to do with a windfall).
No thanks.
That's what I was just thinking. It would pay the most when you're almost dead!
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
ScubaHogg
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Re: Taylor's Post on Tontines

Post by ScubaHogg »

Dregob wrote: Mon Jan 22, 2024 3:38 pm
Glen Davenport wrote: Mon Jan 22, 2024 3:05 pm Ten years ago, Taylor Larimore posted an article written by York University Finance Professor Moshe Milevsky, "Moshe Milevsky on Tontines."

https://retirementincomejournal.com/art ... -tontines/

It got at least a few of us thinking that tontines would be a great longevity solution that could be structured in a variety of ways to improve benefits for retirees.

I have heard that tontines are becoming more popular again around the world, and that tontine-like structures will be available in Canada and the US.

Wondering if anyone has done any research, or may be able to provide any updates as to the availability of tontines in the US.

Glen
Imagine I set one up with a dozen friends all about the same age. The money is invested until one remains standing. But by that time I (assuming I die last) have lived in poverty or don't need the money (and at that age what am I going to do with a windfall).
No thanks.
That's not the only way to set one up
The trick is to use the tontine principle—the idea that the share of each investor, at death, will be enjoyed by the survivors—to design tontines so that they benefit multiple survivors, not just the last survivor.
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
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StevieG72
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Re: Taylor's Post on Tontines

Post by StevieG72 »

I am ready for the Boglehead tontine!
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ScubaHogg
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Re: Taylor's Post on Tontines

Post by ScubaHogg »

GaryA505 wrote: Mon Jan 22, 2024 3:49 pm
That's what I was just thinking. It would pay the most when you're almost dead!
That's kinda the point of longevity insurance
“Conventional Treasury rates are risk free only in the sense that they guarantee nominal principal. But their real rate of return is uncertain until after the fact.” -Risk Less and Prosper
GaryA505
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Re: Taylor's Post on Tontines

Post by GaryA505 »

ScubaHogg wrote: Mon Jan 22, 2024 4:25 pm
GaryA505 wrote: Mon Jan 22, 2024 3:49 pm
That's what I was just thinking. It would pay the most when you're almost dead!
That's kinda the point of longevity insurance
I think you missed something there. :wink:
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
petulant
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Re: Taylor's Post on Tontines

Post by petulant »

StevieG72 wrote: Mon Jan 22, 2024 4:25 pm I am ready for the Boglehead tontine!
I don't think I want to be in a tontine with Taylor Larimore
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Svensk Anga
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Re: Taylor's Post on Tontines

Post by Svensk Anga »

StevieG72 wrote: Mon Jan 22, 2024 4:25 pm I am ready for the Boglehead tontine!
I want to sneak into the extreme sports tontine. :D
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Glen Davenport
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Re: Taylor's Post on Tontines

Post by Glen Davenport »

Thank you for the very interesting information Petulant.
petulant wrote: Mon Jan 22, 2024 3:29 pm There has been some recent discussion:

viewtopic.php?t=406312

It doesn't seem much has changed as far as product introductions:

https://www.thinkadvisor.com/2022/07/21 ... n-the-u-s/
https://www.investmentnews.com/retireme ... vie-230183

There is a product that says it's a real tontine inside IRAs, fueled entirely by bank deposits. I can't find any news or reviews about it. No idea if it's legitimate.
https://tontine.com

There are also a small number of participating annuity offerings, which would presumably pay out more to surviving annuitants if early mortality for other annuitants was high:

https://www.newyorklife.com/assets/docs ... -Sheet.pdf
https://news.northwesternmutual.com/new ... 33&asPDF=1

I don't see why we would want tontine products to be engineered instead of engineering annuities to be more practical/attractive.
I agree that if annuity providers engineered products that provide real risk pooling and mortality, credits there would not be a need for tontines.

However, even the information you shared seems to indicate that mortality credits are more at the discretion of the Insurance Carriers. In addition, it is the academic community who are advocates for improvement in retirement products and speak highly of the benefits of tontines to pool risk more favorably for retirees.

I have reached out to tontine.com to get more information. Have you tried to review any of the other tontine providers mentioned in the articles you referenced? I briefly looked at them and like what I see so far.

Thanks again Petulant,

Glen
rkhusky
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Re: Taylor's Post on Tontines

Post by rkhusky »

Isn’t SS sort of like a tontine, in that if you don’t make it to a certain age you don’t get any benefit?
petulant
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Re: Taylor's Post on Tontines

Post by petulant »

Glen Davenport wrote: Mon Jan 22, 2024 9:56 pm Thank you for the very interesting information Petulant.
petulant wrote: Mon Jan 22, 2024 3:29 pm There has been some recent discussion:

viewtopic.php?t=406312

It doesn't seem much has changed as far as product introductions:

https://www.thinkadvisor.com/2022/07/21 ... n-the-u-s/
https://www.investmentnews.com/retireme ... vie-230183

There is a product that says it's a real tontine inside IRAs, fueled entirely by bank deposits. I can't find any news or reviews about it. No idea if it's legitimate.
https://tontine.com

There are also a small number of participating annuity offerings, which would presumably pay out more to surviving annuitants if early mortality for other annuitants was high:

https://www.newyorklife.com/assets/docs ... -Sheet.pdf
https://news.northwesternmutual.com/new ... 33&asPDF=1

I don't see why we would want tontine products to be engineered instead of engineering annuities to be more practical/attractive.
I agree that if annuity providers engineered products that provide real risk pooling and mortality, credits there would not be a need for tontines.

However, even the information you shared seems to indicate that mortality credits are more at the discretion of the Insurance Carriers. In addition, it is the academic community who are advocates for improvement in retirement products and speak highly of the benefits of tontines to pool risk more favorably for retirees.

I have reached out to tontine.com to get more information. Have you tried to review any of the other tontine providers mentioned in the articles you referenced? I briefly looked at them and like what I see so far.

Thanks again Petulant,

Glen
To be clear, the two products I linked are very niche participating annuities where actual performance of the mortality pool and investment portfolio should be allocated to annuitants. They do reserve discretion with the insurance company since it has to manage its reserves so it's not the same thing as a tontine. They are just an example of innovation in the annuity marketplace.

But a normal single premium immediate annuity (SPIA) absolutely provides risk pooling and mortality credits.
grog
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Re: Taylor's Post on Tontines

Post by grog »

petulant wrote: Mon Jan 22, 2024 3:29 pm I don't see why we would want tontine products to be engineered instead of engineering annuities to be more practical/attractive.
The theoretical benefit of the tontine would be that it should not require any risk capital or discretionary management. I say theoretical since in practice there would still be overhead to administer it and those costs might actually be high unless or until the pools for these get really big.

The increasing payments are also a plus in a way, but the excessive back-loading is the fatal flaw with these things, imo. With the most basic design where the tontine pays out the interest to the survivors every year, this will always be less than what you could get with a SPIA and it is too much lower and for too long to be enticing. You can improve it a little bit by structuring it to pay out some of the principal along the way, but I don't think there's any way to make the numbers work for most people (at least I'm not seeing it with my back of the spreadsheet calculations). How many people would take a pension that is substantially less from say ages 65-85 but that start exploding when you are over 100? I just don't see it. It's the vice of playing a lottery but for people with extremely low time preference, something of a contradiction.
GaryA505
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Re: Taylor's Post on Tontines

Post by GaryA505 »

grog wrote: Tue Jan 23, 2024 12:22 pm
petulant wrote: Mon Jan 22, 2024 3:29 pm I don't see why we would want tontine products to be engineered instead of engineering annuities to be more practical/attractive.
The theoretical benefit of the tontine would be that it should not require any risk capital or discretionary management. I say theoretical since in practice there would still be overhead to administer it and those costs might actually be high unless or until the pools for these get really big.

The increasing payments are also a plus in a way, but the excessive back-loading is the fatal flaw with these things, imo. With the most basic design where the tontine pays out the interest to the survivors every year, this will always be less than what you could get with a SPIA and it is too much lower and for too long to be enticing. You can improve it a little bit by structuring it to pay out some of the principal along the way, but I don't think there's any way to make the numbers work for most people (at least I'm not seeing it with my back of the spreadsheet calculations). How many people would take a pension that is substantially less from say ages 65-85 but that start exploding when you are over 100? I just don't see it. It's the vice of playing a lottery but for people with extremely low time preference, something of a contradiction.
For the reasons you stated, I believe it is a "non-starter". It just wouldn't sell very well.
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
Lumpr
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Re: Taylor's Post on Tontines

Post by Lumpr »

People seem to have a negative visceral reaction to tontines. Probably because all they really know about tontines they learned from the movies, tv, novels (i.e. dramatizations). Not all tontines are a last person breathing/winner take all lottery.

For example there is a 'tontine like'* product coming to market that offers inflation adjusted payments until age 100 backed by a pool of US TIPS. The pools are segregated by age/gender (e.g. all 75 year old males would be in the same pool). At age 100 the residual is distributed to survivors, but I think it designed in such a way that at age 100 there will not be anything more than a de minimis residual.

At first glance one might think, why wouldn't I just buy my own TIPS ladder. But this product purportedly pays more dollar for dollar than a TIPS ladder.

I haven't thoroughly reviewed the prospectus, but it seems like an interesting concept and potentially useful. Of course it all depends on how it is priced (i.e. the relative cost).

*This is tontine like and not annuity like, because the owners of the product bear the actuarial risk rather than an insurance company.
GaryA505
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Re: Taylor's Post on Tontines

Post by GaryA505 »

Lumpr wrote: Tue Jan 23, 2024 2:37 pm People seem to have a negative visceral reaction to tontines. Probably because all they really know about tontines they learned from the movies, tv, novels (i.e. dramatizations). Not all tontines are a last person breathing/winner take all lottery.

For example there is a 'tontine like'* product coming to market that offers inflation adjusted payments until age 100 backed by a pool of US TIPS. The pools are segregated by age/gender (e.g. all 75 year old males would be in the same pool). At age 100 the residual is distributed to survivors, but I think it designed in such a way that at age 100 there will not be anything more than a de minimis residual.

At first glance one might think, why wouldn't I just buy my own TIPS ladder. But this product purportedly pays more dollar for dollar than a TIPS ladder.

I haven't thoroughly reviewed the prospectus, but it seems like an interesting concept and potentially useful. Of course it all depends on how it is priced (i.e. the relative cost).

*This is tontine like and not annuity like, because the owners of the product bear the actuarial risk rather than an insurance company.
This sounds attractive. Do you have a link?
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
Lumpr
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Re: Taylor's Post on Tontines

Post by Lumpr »

GaryA505 wrote: Tue Jan 23, 2024 3:40 pm
This sounds attractive. Do you have a link?
I provide this with some hesitation. I'm not sure these funds have completed SEC registration, and I haven't done anything more than skim the prospectus. As indicated before, I think it is interesting but caveat emptor.

https://www.lifexfunds.com/content/aa06 ... pectus.pdf

It's a voluminous document and a little hard to wade through because it's a prospectus for like 30 different funds (so a lot of repetitive information).

There is some estimated pricing information in the appendix. I intended to model out the pricing, but haven't gotten around to it.

The management fee is 1%, which is of course high relative to the typical fund we'd be looking at. But it's probably comparable (maybe less) than what one effectively pays on a immediate pay annuity. If this product gains traction maybe competitors enter the market and drive the management fee down.
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Glen Davenport
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Re: Taylor's Post on Tontines

Post by Glen Davenport »

StevieG72 wrote: Mon Jan 22, 2024 4:25 pm I am ready for the Boglehead tontine!
Several posters have expressed similar interest on other threads.

What would a "Boglehead tontine" look like?

Personally I would like the Tontine to be set up where a small portion of ones portfolio could be invested near their retirement age. Then a large payout (returns plus mortality credits) would be available 10 to 20 years later to help alleviate the tail risk associated with longevity. That would include both running out of money, and or needing a lot of expensive Long Term Care. For me this would reduce a lot of worries and allow me to retire with peace of mind.

What features and benefits would others want to differentiate a "Boglehead tontine" from other Tontine solutions entering the marketplace?

Glen
tj
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Re: Taylor's Post on Tontines

Post by tj »

Glen Davenport wrote: Fri Jan 26, 2024 7:58 am
StevieG72 wrote: Mon Jan 22, 2024 4:25 pm I am ready for the Boglehead tontine!
Several posters have expressed similar interest on other threads.

What would a "Boglehead tontine" look like?

Personally I would like the Tontine to be set up where a small portion of ones portfolio could be invested near their retirement age. Then a large payout (returns plus mortality credits) would be available 10 to 20 years later to help alleviate the tail risk associated with longevity. That would include both running out of money, and or needing a lot of expensive Long Term Care. For me this would reduce a lot of worries and allow me to retire with peace of mind.

What features and benefits would others want to differentiate a "Boglehead tontine" from other Tontine solutions entering the marketplace?

Glen
How is this different from a deferred income annuity?
tman9999
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Re: Taylor's Post on Tontines

Post by tman9999 »

Here’s another older thread on the subject from 2017, which is when I started researching these. viewtopic.php?p=3590689#p3590689

Also, not sure if this has already been mentioned, but in Canada they have something set up on this front: https://www.guardiancapital.com/investm ... n-tontine/
protagonist
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Re: Taylor's Post on Tontines

Post by protagonist »

When Taylor posted that a decade ago, you couldn't get close to a guaranteed 2% real in a TIPS ladder.
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Glen Davenport
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Re: Taylor's Post on Tontines

Post by Glen Davenport »

tj wrote: Sat Jan 27, 2024 9:12 am
Glen Davenport wrote: Fri Jan 26, 2024 7:58 am
StevieG72 wrote: Mon Jan 22, 2024 4:25 pm I am ready for the Boglehead tontine!
Several posters have expressed similar interest on other threads.

What would a "Boglehead tontine" look like?

Personally I would like the Tontine to be set up where a small portion of ones portfolio could be invested near their retirement age. Then a large payout (returns plus mortality credits) would be available 10 to 20 years later to help alleviate the tail risk associated with longevity. That would include both running out of money, and or needing a lot of expensive Long Term Care. For me this would reduce a lot of worries and allow me to retire with peace of mind.

What features and benefits would others want to differentiate a "Boglehead tontine" from other Tontine solutions entering the marketplace?

Glen
How is this different from a deferred income annuity?
That is an excellent question! Especially since DIAs (Deferred Income Annuities) and Tontines are considered to be the best tools to counteract longevity tail risk.

The simple answer is cost.

Think about someone buying a mutual fund. The investor can choose between a loaded fund with a high expense ratio, or a no load fund with a low expense ratio.

Annuities come with a load: Quoting Moshe Milevsky in Annuity Digest "The typical loading is 3% to 15% depending on which mortality table you use to determine the mark-up."

Annuities come with higher cost: In order to provide a guarantee, annuities have higher cost structures.

An investor can choose between the value of the "guaranteed income" of an Annuity, or the higher expected payout of a Tontine. In addition, some Tontines offer a large lump some option, and or, even a liquidity provision.

Hope that answers your excellent question.

Glen
GaryA505
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Re: Taylor's Post on Tontines

Post by GaryA505 »

So tontines have two issues - the payments are not known in advance and the payments would be higher when you're older and the extra income is less useful.
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
tj
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Re: Taylor's Post on Tontines

Post by tj »

Glen Davenport wrote: Mon Jan 29, 2024 5:51 am
tj wrote: Sat Jan 27, 2024 9:12 am
Glen Davenport wrote: Fri Jan 26, 2024 7:58 am
StevieG72 wrote: Mon Jan 22, 2024 4:25 pm I am ready for the Boglehead tontine!
Several posters have expressed similar interest on other threads.

What would a "Boglehead tontine" look like?

Personally I would like the Tontine to be set up where a small portion of ones portfolio could be invested near their retirement age. Then a large payout (returns plus mortality credits) would be available 10 to 20 years later to help alleviate the tail risk associated with longevity. That would include both running out of money, and or needing a lot of expensive Long Term Care. For me this would reduce a lot of worries and allow me to retire with peace of mind.

What features and benefits would others want to differentiate a "Boglehead tontine" from other Tontine solutions entering the marketplace?

Glen
How is this different from a deferred income annuity?
That is an excellent question! Especially since DIAs (Deferred Income Annuities) and Tontines are considered to be the best tools to counteract longevity tail risk.

The simple answer is cost.

Think about someone buying a mutual fund. The investor can choose between a loaded fund with a high expense ratio, or a no load fund with a low expense ratio.

Annuities come with a load: Quoting Moshe Milevsky in Annuity Digest "The typical loading is 3% to 15% depending on which mortality table you use to determine the mark-up."

Annuities come with higher cost: In order to provide a guarantee, annuities have higher cost structures.

An investor can choose between the value of the "guaranteed income" of an Annuity, or the higher expected payout of a Tontine. In addition, some Tontines offer a large lump some option, and or, even a liquidity provision.

Hope that answers your excellent question.

Glen
Interesting that DIA's would be considered the best tool for longevity risk. The inflation loss for the years of deferral could be large. I would have though SPIA's purchased at an older age would be better.
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Glen Davenport
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Re: Taylor's Post on Tontines

Post by Glen Davenport »

GaryA505 wrote: Mon Jan 29, 2024 9:14 am So tontines have two issues - the payments are not known in advance and the payments would be higher when you're older and the extra income is less useful.
Yes the future payments are not known but could be estimated based on actuarial tables.

Longevity tail risk and the cost of living very long, and perhaps needing care can be seriously substantial. That’s why a small investment may pay that extra income out later, when it is needed the most.

Rather than thinking of it as simply future income, one could think of it as a longevity risk hedge.

Glen
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Glen Davenport
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Re: Taylor's Post on Tontines

Post by Glen Davenport »

A SPIA being an immediate annuity, pays out immediate income for life based on the starting Premium paid.

A DIA has the Premium, and then that can compound both earnings and mortality credits, which will result in a much larger amount of money to pay a huge amount of income later in life.

Longevity Insurance can be described as a pooling of risk among retirees. If everyone contributes a small amount, those who live longer then expected, will have the resources to pay for the long life they are blessed with.

Glen

PS: Look for me to post more specific examples later when I can get some quotes.
Last edited by Glen Davenport on Mon Jan 29, 2024 4:10 pm, edited 2 times in total.
grog
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Re: Taylor's Post on Tontines

Post by grog »

Lumpr wrote: Tue Jan 23, 2024 2:37 pm People seem to have a negative visceral reaction to tontines. Probably because all they really know about tontines they learned from the movies, tv, novels (i.e. dramatizations). Not all tontines are a last person breathing/winner take all lottery.

For example there is a 'tontine like'* product coming to market that offers inflation adjusted payments until age 100 backed by a pool of US TIPS. The pools are segregated by age/gender (e.g. all 75 year old males would be in the same pool). At age 100 the residual is distributed to survivors, but I think it designed in such a way that at age 100 there will not be anything more than a de minimis residual.

At first glance one might think, why wouldn't I just buy my own TIPS ladder. But this product purportedly pays more dollar for dollar than a TIPS ladder.

I haven't thoroughly reviewed the prospectus, but it seems like an interesting concept and potentially useful. Of course it all depends on how it is priced (i.e. the relative cost).

*This is tontine like and not annuity like, because the owners of the product bear the actuarial risk rather than an insurance company.
For me, my "visceral" reaction is that it sounds cool/novel, but upon reflection it just doesn't seem to fit well with rational economic behavior/normal human preferences. I refer here to basic economic concepts like diminishing marginal utility of wealth, time preference, intertemporal consumption smoothing, etc. Longevity insurance of some sort can make sense, but the tontine design will generally overshoot and skew things too much toward very old age. And the designs that try to fix this essentially seem like attempts to turn it into something less like a tontine and closer to a SPIA (i.e., attenuating the extreme upward slope of the payments). And at that point I don't see much reason to bother with the tontine chassis.

Regarding the idea of a TIPS-backed tontine, I'm not sure I see the need for that. Sounds like a marketing gimmick to me. TIPS are not a free lunch. I suppose you could use TIPS, but the tontine design should already provide increasing payments even with nominal bonds, and this would effectively be like an inflation adjustment, probably more in most cases. In fact, I believe one of Milevsky's arguments for tontines was that you could achieve an effective (pseudo) inflation adjustment but without inflation-protected securities.
orlandoman
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Re: Taylor's Post on Tontines

Post by orlandoman »

New Advisor Perspectives article on the LifeX Funds, does have some interesting concepts ... https://www.advisorperspectives.com/art ... awal-rates

Quotes available on their site, offers options both with and without inflation protection https://www.lifexfunds.com/
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GaryA505
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Re: Taylor's Post on Tontines

Post by GaryA505 »

"Each open-end mutual fund is offered exclusively to investors of a particular birth year and gender (currently born between 1948 and 1963) and is only available through the advisor channel."

So you have to add the cost of the advisor (DIYers need not apply) to the 1% fee.
Get most of it right and don't make any big mistakes. All else being equal, simpler is better. Simple is as simple does.
bikechuck
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Joined: Sun Aug 16, 2015 9:22 pm

Re: Taylor's Post on Tontines

Post by bikechuck »

toddthebod wrote: Mon Jan 22, 2024 3:32 pm Seems like a bad annuity.
Interesting take ... from my imperfect understanding I fel that tontines would be an improvement to existing annuity offerings because they would result in continuously increasing payments for the oldest survivors.

Why do you feel they seem like a bad annuity?
toddthebod
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Re: Taylor's Post on Tontines

Post by toddthebod »

bikechuck wrote: Tue Apr 02, 2024 5:24 pm
toddthebod wrote: Mon Jan 22, 2024 3:32 pm Seems like a bad annuity.
Interesting take ... from my imperfect understanding I fel that tontines would be an improvement to existing annuity offerings because they would result in continuously increasing payments for the oldest survivors.

Why do you feel they seem like a bad annuity?
The math doesn't make sense. Why do you need hundreds of times more income when you are 100 than when you are 70?
dcabler
Posts: 4638
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Location: TX

Re: Taylor's Post on Tontines

Post by dcabler »

orlandoman wrote: Tue Apr 02, 2024 4:31 pm New Advisor Perspectives article on the LifeX Funds, does have some interesting concepts ... https://www.advisorperspectives.com/art ... awal-rates

Quotes available on their site, offers options both with and without inflation protection https://www.lifexfunds.com/
Also discussed some back in February, including a link to a Morningstar article.
viewtopic.php?t=423692
https://www.morningstar.com/retirement/ ... ent-income

The 1% e/r + having to use an advisor who will also charge, makes these less than attractive. Both Roth's article and the morningstar article are pointing that out as well.

Cheers.
bikechuck
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Joined: Sun Aug 16, 2015 9:22 pm

Re: Taylor's Post on Tontines

Post by bikechuck »

toddthebod wrote: Tue Apr 02, 2024 7:13 pm
bikechuck wrote: Tue Apr 02, 2024 5:24 pm
toddthebod wrote: Mon Jan 22, 2024 3:32 pm Seems like a bad annuity.
Interesting take ... from my imperfect understanding I fel that tontines would be an improvement to existing annuity offerings because they would result in continuously increasing payments for the oldest survivors.

Why do you feel they seem like a bad annuity?
The math doesn't make sense. Why do you need hundreds of times more income when you are 100 than when you are 70?
As someone who is self insured for Long term care I would welcome that.

I would forsee committing no more than 20% to the tontine so it would be one smallish piece of a well constructed portfolio.
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