Just a short message here...
Joseph Tomlinson is on a roll. His new article at Advisor Perspectives called "New Tools to Manage Longevity Risk" provides an exploration of deferred income annuities (which means, pay now but defer the date that benefits arrive). It's an interesting article related to what I recently discussed in "Safe Retirement income with TIPS and a deferred annuity." I also appreciate more and more how his Monte Carlo simulations start with inputs for the current bond yields (not historical averages) and the average guess of many "experts" about what the future equity premium will be. This does result in lower success rates for the 4% rule than just basing the simulations on historical averages. Especially considering that I wrote "Can We Predict Sustainable Withdrawal Rates for New Retirees," I'm guilty of basing Monte Carlo simulations too frequently on historical averages as a convenient shortcut. Joe is doing it the right way.
Second, in the past year I've had an opportunity to develop some valued friendships with individuals I've connected with through research. Bob Seawright writes frequently about the value of single-premium immediate annuities for one's portfolio, and my research does tend to validate this. I'm still researching annuities myself, but I am coming to think that partially annuitizing one's nest egg may make sense for a lot of people. Another friendship I've developed is with Dan Moisand, who recently cited my research to help make a case against annuities in his article "An Unattractive Proposition" at Financial Advisor magazine. The research he cites is a blog post "Retirement Withdrawals and Leftover Wealth" in which I describe about an issue Bill Bengen mentioned in an interview with Forbes last May.
