Investment Help

If you are seeking investment help, look at the video here on my services. If you are seeking a different approach to managing your assets, you have landed at the right spot. I am a fee-only advisor registered in the State of Maryland, charge less than half the going rate for investment management, and seek to teach individuals how to manage their own assets using low-cost indexed exchange traded funds. Please call or email me if interested in further details. My website is at If you are new to investing, take a look at the "DIY Investor Newbie" posts here by typing "newbie" in the search box above to the left. These take you through the basics of what you need to know in getting started on doing your own investing.

Thursday, May 24, 2012

Create Income in Retirement

There are two kinds of people in my world:  accumulators and decumulators.  I try to get the accumulators - those contributing to their nest egg on a regular basis - to look at the current market craziness as an opportunity.  They should care about the market 10, 20, 30 years from now.  Volatility presents an opportunity. Decumulators, on the other hand, have to be careful and ensure that they have a plan to handle volatile markets.

One product that can help in this, and which I've discussed on several occasions, is the single premium immediate pay annuity (SPIA).  This creates an income stream and essentially is a way to get back to a defined benefit situation.

One product I haven't mentioned is longevity insurance.  The concept is similar.  Pay a lump sum today for a guaranteed income when you reach 85 years old, say. This is an insurance product.  Die at 84, and you have received the comfort of knowing you would not run out of money but nothing more.  Live to 108 years old and you win, and you have an income to the end.  Best of all, it is relatively inexpensive.

An excellent overview of these products is given in Seeking Pension Replacement in Retirement by Mark Miller of Morningstar.  I would recommend that retirees and those entering retirement carefully read this article.  In fact, if you know any retirees (your parents, for example), have them read the article.

Also, if you are a member of AARP, send in the postcard from their monthly magazine to New York Life to get a quote.  Get a quote from Met Life.  A little research can save a couple of bucks.

Important caveats:  only consider a SPIA (other types of annuities can be hazardous to your financial health) and understand that, when you purchase an annuity, you lose control of the funds!

Disclosure:  I don't sell insurance and do not have a license to sell insurance.  This information is for educational purposes only.  Individuals should get professional advice based on their specific situation before making investment decisions.


  1. We are programed from the time we are five years old to get a job and work for someone else. Where does this notion come from. Why not instead concentrate one's efforts at being free of the dependency of a company and be self employed. When I talk self employed I do not mean starting a business and employing 10 people. I mean being self employed working for yourself and at most having one other full time employee. When one works for someone else they must agree to all the terms and conditions of their employment they really have few rights a good example is in most states you can be fired at will for any reason if you work somewhere where theirs no union. There Is no democracy on the job as it were. When one works for someone else they are totally and completely dependent upon whom they are employed by for their livelihood. What's so great about that. They are also a heart beat away from being without a job and having no income. If those three things are not enough to make a person tremendously enthusiastic about working for themselves I don't know what else is.

    1. Interesting. There are of course tradeoffs. It is not easy starting a business. And once in business you realize you don't just have one boss you have many! Each customer is a boss to satisfy. There is something to be said, I think, for bringing your expertise to a business that has been built up and is florishing versus starting from scratch.
      To me this goes into the "different strokes for different folks" bin.

  2. Interesting. I haven't heard of longevity insurance. I'm surprised that it is cheap, but I guess they are banking on the odds...

    It's very morbid and fatalistic, but I can understand why the market for this kind of insurance exist.

  3. The good thing about longevity insurance is that it takes away the fear of running out of money in the events the markets don't behave and it enables one to take greater risk today to achieve a higher expected return.