AUTHOR: Steve Spinella on 8/17/2025 FIRST: Richard Hayman on 8/17/2025 | RECENT: David Powell on 8/31/2025
Comments
I suspect you probably do know how to value an annuity in your asset allocation, but if you want to convert it to a lump sum for the purposes of portfolio management, an easy approximation is to value it as the amount of money that would be throwing off that income with an equivalent level of risk. For instance, a traditional annuity might have about the level of risk of a home mortgage, now paying perhaps 5% depending on origination date, so 10,000 in annual cash represents about $200000. Of course it's not precise, but I think it works pretty well for allocation purposes.
Sweet, Mike. I love hearing your story and find points of resonance with my own journey. As a Doctor of Ministry in Marriage and Family and LMFT, I have thought about providing more financial coaching to people in ministry. I agree with a recurring theme in this discussion--it's only fun coaching people who have ears to hear! But as I approach 70, that's okay because I don't need the money and I like to do a lot of other things, like "coach" grandkids about whatever they have ears to hear at the moment.
As a Rice grad I'm always interested in things including the words "Rice U" so I've noticed that a number of courses related to finance offered at Rice are also available via Coursera--they may even be free if you don't need a certificate, I haven't explored further.
I thoroughly enjoyed Robert Schiller's "Financial Markets" which I found on Coursera a while back. It sounded like one of those courses that becomes famous on a given campus, inviting many diverse majors to find room for it in their schedules.
I do have a classmate (chemical engineer in his case) who did a CFP in his 40s. He ended up contenting himself with managing the family funds without taking on the everpressing and complex client relationships which are the heart of any service profession.
Congratulations, Javier, in not only educating yourself but also completing the demands of both a graduate education and a certification process!
I read all the comments to date and I appreciate this thoughtful discussion, as well as Keith's thoughtful launch of the topic. Having now made three placements for two people in 3 categories (cottage care, assisted living, and memory care) and visited about 20 sites in our area, I can agree with both sides of this discussion. (There are now hundreds of sites in our area!)
First, running these facilities can be a passion project, but more typically it is a big business with a lot of marketing involved and healthy profit margins. The first person you see is usually a pure and simple salesperson who comes across as caring and empathetic, but is focused on doing their job of signing people up for an expensive service operated by a rich person or group whom you will never see. Often this is called something along the lines of a "community care representative."
Regarding cost, in a larger community like ours, just under a million, but serving a larger catchment area that adds another 50%, in a desirable lifestyle area, there is a complete range of options from those who take medicaid (or do after a period of time) to those over $10k per month and only private pay. The CCRC's are just moving in.
And I know for a fact that buying what you don't yet need in advance always comes at a premium, so yes the market plays to the needs, fantasies, fears, and anxieties of people in the target audience.
BTW, if there is a waiting list and it is not a CCRC, usually you can get a place on it for a refundable deposit, typically a check not cashed. This gives you priority on the list when you do need a spot. Also, while some communities may always be full, more typically the flow is rough--people do not die or otherwise leave on a schedule, so a facility with 40 units might be full in December, but have 5 units available in early February. (That also speaks to the unevenness of when people are looking to enter, and yes, we moved our mom into a secure unit mid-February.)
Finally, the two factors that I leaned on the most are proximity to family and quality of staff. Every other factor ends up being more sizzle than steak. I didn't figure this out myself, I had to be told and then also experience it. I also learned that facilities (and teams) dedicated to memory care do a better job than ones that just include it--if 80% of the residents are in assisted living, that's where the focus of management and facility will be, same if most of the residents are in independent living.
Thanks, Mark. Lots to resonate with here. Our own 94 you mom with VD is more worried about letting her parents know where she is than the money, although that has come up.
I do direct investing, but not using a financial product. Rather I have a list of 25 companies and I invest approximately equal dollar amounts in each one. This is a form of direct investing because I have an "index" that I am buying directly. There are various benefits to this:
1) It is like the Dow Jones industrials, but a different set of equities, which I have selected based on my preferences regarding fundamentals, diversification, and analytics.
2) Because I own each equity directly I can select shares to sell based on tax considerations. This is a form of heightened tax efficiency.
3) Abitragers regularly skim money off the market. Direct investing enables me to keep some of this money through active trading strategies.
4) While past results are no guarantee of future performance and DI will not exactly follow any index, this strategy has over 1,3, and 5 year horizons provided lower risk and higher return than owning a total market fund.
5) Obviously there are no management fees, but equally obviously I must make the management decisions. The size of the portfolio and the value of my time influence whether this is a good strategy.
I enjoyed reading the discussion of joint marital vs separate accounts. I'm like RQuinn, but it helps me to remember that our experiences so impact our perspectives. As for legacy, my mother was reminding my father about the soldering iron he bought without consulting for years. I certainly didn't find that constructive. Neither of them developed much insight into investments, but that was common in their era. I learned much from my father-in-law after their early demise.
Regarding what happens when I die, I wrote a set of alternatives for my wife and mother-in-law to consider after my father-in-law died, as an appendix to a family planning document, and that appendix is still there and provides the just-in-time alternatives for my wife or children to choose between when I'm gone.
In practice I am the family full service financial advisor, but my fees are very low. Still, it's fair to say that I do better when they do better (because of joint finances and shared inheritances!) (My annual fee is running about 0.1% of AUM and it's voluntary at that.)
In tax estimating, I estimate. Missing a marginal breakpoint is usually a marginal error. I also plan without including any traditional IRA contributions so I have a (married older) $16k margin. And with these things I also comfort myself :-).
Comments
I suspect you probably do know how to value an annuity in your asset allocation, but if you want to convert it to a lump sum for the purposes of portfolio management, an easy approximation is to value it as the amount of money that would be throwing off that income with an equivalent level of risk. For instance, a traditional annuity might have about the level of risk of a home mortgage, now paying perhaps 5% depending on origination date, so 10,000 in annual cash represents about $200000. Of course it's not precise, but I think it works pretty well for allocation purposes.
Post: What’s in your portfolio ?
Link to comment from June 21, 2026
"That’s just basic financial planning: managing risk to a comfortable level instead of spending a fortune to eliminate it completely."
Post: Close to Everything I Need
Link to comment from June 21, 2026
Sweet, Mike. I love hearing your story and find points of resonance with my own journey. As a Doctor of Ministry in Marriage and Family and LMFT, I have thought about providing more financial coaching to people in ministry. I agree with a recurring theme in this discussion--it's only fun coaching people who have ears to hear! But as I approach 70, that's okay because I don't need the money and I like to do a lot of other things, like "coach" grandkids about whatever they have ears to hear at the moment.
Post: The Quiet Failure of Good Advice
Link to comment from June 6, 2026
As a Rice grad I'm always interested in things including the words "Rice U" so I've noticed that a number of courses related to finance offered at Rice are also available via Coursera--they may even be free if you don't need a certificate, I haven't explored further. I thoroughly enjoyed Robert Schiller's "Financial Markets" which I found on Coursera a while back. It sounded like one of those courses that becomes famous on a given campus, inviting many diverse majors to find room for it in their schedules. I do have a classmate (chemical engineer in his case) who did a CFP in his 40s. He ended up contenting himself with managing the family funds without taking on the everpressing and complex client relationships which are the heart of any service profession. Congratulations, Javier, in not only educating yourself but also completing the demands of both a graduate education and a certification process!
Post: The Quiet Failure of Good Advice
Link to comment from June 6, 2026
I read all the comments to date and I appreciate this thoughtful discussion, as well as Keith's thoughtful launch of the topic. Having now made three placements for two people in 3 categories (cottage care, assisted living, and memory care) and visited about 20 sites in our area, I can agree with both sides of this discussion. (There are now hundreds of sites in our area!) First, running these facilities can be a passion project, but more typically it is a big business with a lot of marketing involved and healthy profit margins. The first person you see is usually a pure and simple salesperson who comes across as caring and empathetic, but is focused on doing their job of signing people up for an expensive service operated by a rich person or group whom you will never see. Often this is called something along the lines of a "community care representative." Regarding cost, in a larger community like ours, just under a million, but serving a larger catchment area that adds another 50%, in a desirable lifestyle area, there is a complete range of options from those who take medicaid (or do after a period of time) to those over $10k per month and only private pay. The CCRC's are just moving in. And I know for a fact that buying what you don't yet need in advance always comes at a premium, so yes the market plays to the needs, fantasies, fears, and anxieties of people in the target audience. BTW, if there is a waiting list and it is not a CCRC, usually you can get a place on it for a refundable deposit, typically a check not cashed. This gives you priority on the list when you do need a spot. Also, while some communities may always be full, more typically the flow is rough--people do not die or otherwise leave on a schedule, so a facility with 40 units might be full in December, but have 5 units available in early February. (That also speaks to the unevenness of when people are looking to enter, and yes, we moved our mom into a secure unit mid-February.) Finally, the two factors that I leaned on the most are proximity to family and quality of staff. Every other factor ends up being more sizzle than steak. I didn't figure this out myself, I had to be told and then also experience it. I also learned that facilities (and teams) dedicated to memory care do a better job than ones that just include it--if 80% of the residents are in assisted living, that's where the focus of management and facility will be, same if most of the residents are in independent living.
Post: Percentage that “age in place”
Link to comment from June 4, 2026
Thanks, Mark. Lots to resonate with here. Our own 94 you mom with VD is more worried about letting her parents know where she is than the money, although that has come up.
Post: Deeply Rooted
Link to comment from May 27, 2026
I do direct investing, but not using a financial product. Rather I have a list of 25 companies and I invest approximately equal dollar amounts in each one. This is a form of direct investing because I have an "index" that I am buying directly. There are various benefits to this: 1) It is like the Dow Jones industrials, but a different set of equities, which I have selected based on my preferences regarding fundamentals, diversification, and analytics. 2) Because I own each equity directly I can select shares to sell based on tax considerations. This is a form of heightened tax efficiency. 3) Abitragers regularly skim money off the market. Direct investing enables me to keep some of this money through active trading strategies. 4) While past results are no guarantee of future performance and DI will not exactly follow any index, this strategy has over 1,3, and 5 year horizons provided lower risk and higher return than owning a total market fund. 5) Obviously there are no management fees, but equally obviously I must make the management decisions. The size of the portfolio and the value of my time influence whether this is a good strategy.
Post: Direct Indexing Anyone?
Link to comment from May 17, 2026
I enjoyed reading the discussion of joint marital vs separate accounts. I'm like RQuinn, but it helps me to remember that our experiences so impact our perspectives. As for legacy, my mother was reminding my father about the soldering iron he bought without consulting for years. I certainly didn't find that constructive. Neither of them developed much insight into investments, but that was common in their era. I learned much from my father-in-law after their early demise. Regarding what happens when I die, I wrote a set of alternatives for my wife and mother-in-law to consider after my father-in-law died, as an appendix to a family planning document, and that appendix is still there and provides the just-in-time alternatives for my wife or children to choose between when I'm gone. In practice I am the family full service financial advisor, but my fees are very low. Still, it's fair to say that I do better when they do better (because of joint finances and shared inheritances!) (My annual fee is running about 0.1% of AUM and it's voluntary at that.)
Post: One Good Call?
Link to comment from April 18, 2026
Point made, Elaine. Thanks. I will ask myself what story I have to tell in the months ahead, not just what I would like to read.
Post: Note to HD Writers and Contributors
Link to comment from April 4, 2026
In tax estimating, I estimate. Missing a marginal breakpoint is usually a marginal error. I also plan without including any traditional IRA contributions so I have a (married older) $16k margin. And with these things I also comfort myself :-).
Post: Yes, I am a NIIT wit
Link to comment from February 14, 2026