4 ms·

I recognized them the same, but $5,000 a month is $5,000 a month, even if the market tanks the first few years of retirement. My retirement strategy will use S

I recognized them the same, but $5,000 a month is $5,000 a month, even if the market tanks the first few years of retirement. My retirement strategy will use SOME annuities, but not all, though if I had to choose all or nothing, an annuity ensures I will NEVER be broke, I will always have $5,000/mo. Old and broke is a combination I don't want to try. Read Tony Robbins "Money"

cortesoft 10y ago
Even an annuity is not guaranteed; the issuing company could go out of business, or we could have rampant inflation that wipes out the value. Of course, those things might have a very low probability of happening, but there is also a low probability of a well-diversified portfolio from being wiped out.
PavleMiha 10y ago
Then again, taking the 1,000,000 and taking out some slightly lower annuity leaves you the million at the end to give away to family.
- finnh 10y ago
  No, because the "slightly lower annuity" will cost you only "slightly less" than one million dollars.
JumpCrisscross 10y ago
> if I had to choose all or nothing, an annuity ensures I will NEVER be broke, I will always have $5,000/mo $1 million is 16⅔ years of $5,000 a month. The cumulative rate of inflation since 2000 has been -29% [1]. That $5,000 would buy today what $3,500 bought then. Also, keep in mind that someone is paying you that $5,000 a month. They could go bankrupt one month into their obligation to you. Inflation risk, foreign exchange risk, counterparty risk and tax consequences are just some of the risks one would need to consider when weighing lump sums versus annuities. [1] http://www.usinflationcalculator.com http://www.usinflationcalculator.com
- theandrewbailey 10y ago
  How so? That site says the inflation since 2000 is 41%.
  - tehlike 10y ago
    3500 * 1.41 = 4935 It is close enough. 1/(1-0.29)=1.4 Depends on if you are going back or forward in time.

cortesoft 10y ago

Even an annuity is not guaranteed; the issuing company could go out of business, or we could have rampant inflation that wipes out the value. Of course, those things might have a very low probability of happening, but there is also a low probability of a well-diversified portfolio from being wiped out.

PavleMiha 10y ago

Then again, taking the 1,000,000 and taking out some slightly lower annuity leaves you the million at the end to give away to family.

finnh 10y ago
No, because the "slightly lower annuity" will cost you only "slightly less" than one million dollars.

JumpCrisscross 10y ago

> if I had to choose all or nothing, an annuity ensures I will NEVER be broke, I will always have $5,000/mo $1 million is 16⅔ years of $5,000 a month. The cumulative rate of inflation since 2000 has been -29% [1]. That $5,000 would buy today what $3,500 bought then. Also, keep in mind that someone is paying you that $5,000 a month. They could go bankrupt one month into their obligation to you. Inflation risk, foreign exchange risk, counterparty risk and tax consequences are just some of the risks one would need to consider when weighing lump sums versus annuities. [1] http://www.usinflationcalculator.com http://www.usinflationcalculator.com

theandrewbailey 10y ago
How so? That site says the inflation since 2000 is 41%.
- tehlike 10y ago
  3500 * 1.41 = 4935 It is close enough. 1/(1-0.29)=1.4 Depends on if you are going back or forward in time.