4 ms·

At an individual level, You can invest the same way, the problem is, you don't know how long you will live. Which was my main point. There are annuities, but m

At an individual level, You can invest the same way, the problem is, you don't know how long you will live. Which was my main point. There are annuities, but my research into those has come up with very high costs with lots of fees.

lotsofpulp 7y ago
>There are annuities, but my research into those has come up with very high costs with lots of fees. Yes, as most non taxpayer funded employers have found out, and reduced their offering of defined benefit pensions accordingly. My point is that no one has the ability to protect and afford against the kind of long term risk that you are talking about, and the best model I've seen to address it is when children and grandchildren take care of their elders.
- Spivak 7y ago
  I agree that no individual can reasonably plan for to have enough money for 0-30 years but I disagree that nobody has the ability to spread that risk around. If your pool is the whole country then it’s very manageable sans the human problems that any large government / financial institutions run into at scale.
  - lotsofpulp 7y ago
    Why would one ignore "the human problems"? It's the very reason defined benefit pensions don't work outside of a population and economic boom. Pretty much every developed nation is raising retirement ages and reducing benefits to grapple with the fact that there is less wealth being created in their countries. No one can "manage" automation and labor from China/India/etc taking out a huge portion of your middle class.
skybrian 7y ago
But why is that? It seems like there should be a way to offer a simple annuity product profitably.
- lotsofpulp 7y ago
  Predicting the future is extremely difficult (if not impossible).
- ghaff 7y ago
  There are. But I think you're hearing a lot of people not liking the cost associated with significantly de-risking a future annual income stream. Annuities can certainly make sense, including ones that, for example, you can get by donating appreciated assets.
  - skybrian 7y ago
    How does that work? If you're getting an annuity in return for donating something, that doesn't sound like a donation?
    - ghaff 7y ago
      Charitable organizations (basically 501(c)3s in the US) don't have to pay tax on the appreciated value. So annuities offered by those organizations may take advantage of that tax benefit. In many cases, it will still be a net donation relative to other options, especially insofar as you can't pass on residual assets to beneficiaries, but it is one way of taking advantage of tax law to create an annuity.

lotsofpulp 7y ago

>There are annuities, but my research into those has come up with very high costs with lots of fees. Yes, as most non taxpayer funded employers have found out, and reduced their offering of defined benefit pensions accordingly. My point is that no one has the ability to protect and afford against the kind of long term risk that you are talking about, and the best model I've seen to address it is when children and grandchildren take care of their elders.

Spivak 7y ago
I agree that no individual can reasonably plan for to have enough money for 0-30 years but I disagree that nobody has the ability to spread that risk around. If your pool is the whole country then it’s very manageable sans the human problems that any large government / financial institutions run into at scale.
- lotsofpulp 7y ago
  Why would one ignore "the human problems"? It's the very reason defined benefit pensions don't work outside of a population and economic boom. Pretty much every developed nation is raising retirement ages and reducing benefits to grapple with the fact that there is less wealth being created in their countries. No one can "manage" automation and labor from China/India/etc taking out a huge portion of your middle class.

skybrian 7y ago

But why is that? It seems like there should be a way to offer a simple annuity product profitably.

lotsofpulp 7y ago
Predicting the future is extremely difficult (if not impossible).
ghaff 7y ago
There are. But I think you're hearing a lot of people not liking the cost associated with significantly de-risking a future annual income stream. Annuities can certainly make sense, including ones that, for example, you can get by donating appreciated assets.
- skybrian 7y ago
  How does that work? If you're getting an annuity in return for donating something, that doesn't sound like a donation?
  - ghaff 7y ago
    Charitable organizations (basically 501(c)3s in the US) don't have to pay tax on the appreciated value. So annuities offered by those organizations may take advantage of that tax benefit. In many cases, it will still be a net donation relative to other options, especially insofar as you can't pass on residual assets to beneficiaries, but it is one way of taking advantage of tax law to create an annuity.