Well. Michael, the good news is the older you are when you purchase the annuity, the higher the payout, as a general rule. In addition, Annuities purchased with Roth Dollars are income tax-free.
Having a defined-benefit pension in retirement would have a major impact on whether annuities would be desirable for someone whose "pension" was a defined-contribution plan, like a 403 (b) or 401 (k).I actually had two pensions from two previous employers,both of whom offered me a cash-out offer shortly after I turned 55. One fromFord Motor Company. It was $296.00 per month with a 50% survivor's benefit. Thesecond was from Mitsubishi Motors of America. It was almost double at $597.00per month. It also had a 50% survivor's benefit. Together, they totaled@$114,600. I took the cashouts and deposited the funds into a rollover IRA.As I was approaching retirement (self-selected) at age 70, 2020 happened, and I put off retirement FOMY! As you know, the market in 2020 recovered, in record time, but it reminded me of a lesson I had been discussing with students academically, which I now understand in reality. The concept of the sequence-of-returns risk. It is not just an academic theory.My employment contract was renewed for an additional 5 years in 2021, so I figured, "Why not stay for another 12-18 months and stuff money into my 403b Roth account?' Then came 2022? Recovery wasn't quiteas fast, and the lesson from 2020 about the sequence-of-returns risk wasbrought home again.The good news is that in 2023, right before the late spring market drop, I bought a series of income rider annuities. Three of them were paid for with Roth money from my 403(b), establishing tax-free income for life, with joint-life survivor benefits and an LTC rider as well. The fourth one was paid for through a rollover from my rollover IRA.As 2023 was drawing to a close, I had built up what JL Collin refers to as “FU Money.” That gave me pause, and cause to reconsider my current situation, and I decided I would retire, for real, this time. After giving 90 days’ notice, I established my final work day as 1 January 2024. Why not 31 December 2023? Because that date took me into a new year, entitling me to one final Roth 403 (b) contribution to be matched by my employer. In addition, it gave me a final paycheck, an additional payment for 300 hours of unused vacation (maximum allowable), and a payment for a contract job completed just before YE 2023.Today, my wife and I are enjoying retirement, secure in the knowledge that our guaranteed income far exceeds our retirement expenses, for the next few years anyway, with minimal income tax due. In the words of Beldar Conehead, “Life on Earth is good.”
If you insist on rebalancing, that's not a bad approach. Jack Bogle said, " Rebalancing is a personal choice, not a choice that statistics can validate." He wasn't dogmatically against it — he said if you must rebalance, once a year is enough, but argued that over the long term, the strategy is unlikely to boost returns, and you may end up with taxable gains and trading costs."Based on your post, you appear to have taken the taxes & trading costs into account, so continued success.
I remember that in @ 1983-84, I was giving a presentation to a group of new employees about the benefits of participating in the company 401 (k) plan. The level of ignorance was almost as bad as the level of interest. Apparently, getting free money with a 100% guaranteed return was too hard for some people to grasp. Since that time, I have never been surprised by the financial illiteracy of my fellow Americans. I also suspect that the ignorance is not accidental. After all, 99% of graduating high school students fail the simplest personal finance quiz... and 65%-75% of adults over 50 do not do much better. It's almost like our government and financial institutions prefer an ignorant, financially illiterate population. My stepfather discovered mutual funds in the late 1950s. He retired in 1985, after 24 years in the US Army and 16 years as a Capital Police officer. He began investing in his late 20s. Over 40 years, he amassed $1.3 M and had a paid-for home and car. And he did it without a 401 (k) or Roth Account. I retired in 2024 with $1.3M, a paid-for home, and 2 cars. As I shared in a recent post, over my lifetime, I earned @$4,233,495. 59.95% of that money was earned in the last 15 years of my 58-year working career. During those 15 years, I earned my highest annual income and maxed out my 403 (b) and Roth IRA. It's never too late to start, but the earlier the better!
In this man's opinion, it applies to all people... albeit it can certainly manifest in different ways. One thing is for sure: those who do not try, do not succeed.
Dennis: I too am 75, and I had a recent health scare myself, so your article hit home with me. My mother passed away at 82, after a brief stay in Hospice, the result of previously undiagnosed pancreatic cancer. My stepmother passed in her sleep, from a heart attack. While my mother lived with her husband, my stepmother had been widowed for 20 years, as my father died from service-connected illnesses, after serving 30 years in the US Army. My stepfather lived until one month before his 94th birthday, and he spent his last 5 years living with my wife and me, until he had a stroke, on Mother's Day, 2017. The stroke required hospitalization and follow-up rehab, and then assisted living. The financial part of all of this was never an issue, as he was a retired military member and had an excellent income and assets. My stepdad, Ed, spent his last 11 months on earth in a memory care unit of an assisted living facility, where he received excellent care. My sister and I lived in the same community, as did one of her daughters, so one of us was at the ALF every evening to have dinner with him. On Sundays, we took him to lunch at different restaurants of his choosing. Years earlier, he had investigated CCC's but ruled them out when he learned that he might be separated from his wife, should they not have the same health care needs. He was not willing to be separated from her, ever again. He, too, had been a career military and felt he had been gone far too often. When he had 24 years in for a planned 30-year career, he retired rather than accept an unaccompanied tour to Korea. He had spent 2 years in Korea during the Korean Conflict and was not going back. Today, his younger brother, who just turned 91, and his wife live in a CCC in Richmond, VA. It is a very nice facility, and he too was financially successful in life and is not financially concerned. My wife and I have a different situation. My wife refuses to realize we are getting older, and eventually, we will not need, and I will not want, to be living 15 miles outside of town, on six acres, in the woods. We built this house specifically as it is, with side doorways, no steps, all-wood or laminate floors, a walk-in and sit-down ceramic shower in the master, and a Jacuzzi tub. In addition, there is a standard bathroom with a tub-and-shower combination and two half baths. Thenetoire hime is wheelchair- and walker-accessible. She has not been open to considering CCCs, and to be honest, I am wary of the costs. Like you, we have the portfolio needed to hire help as we might need it, and I have a very benefit-rich LTC insurance policy, as well as LTC riders on our joint life annuities. We actually built the home to allow for a door to be closed (a pocket hallway door), which would separate a full bath and a large and a small bedroom from the rest of the home, if we hired a live-in caretaker. I even have a third garage for that caretaker's vehicle. With my mom's, it was never a choice we had to make. With my dad, the need for memory care, the structure of our original home (45 years old, steps, narrow hallways, and doors, etc.), made the decision for us. Hopefully, neither of us will be so severely ill that we will need ALF or Nursing home care, but if we ever do, at least we will be financially able to weather the storm. Thanks for your thought-provoking article.
This is a wonderful article, and I hope those among us who are still young enough to make a meaningful change in their lives read it and take the message to heart. As my wife and I approach our 52nd wedding anniversary next week, on the 23rd of June, I am thankful that on the occasions when I placed work and earning a higher income before my family, which was not an uncommon event, she was there to carry the load on the home front. We are comfortably retired. Our children are well-balanced, college-educated, taxpaying citizens, so I didn't miss the boat entirely, but if I had it to do over again, there would be changes. One of those changes might have been retiring a few years earlier, instead of "socking more away for retirement."
Living out in the country seems to have solved that problem. We moved into our (at the time) newly built home the week of Thanksgiving, 2018. I had my FIRST solicitor knock on our door this week. After seeing if I knew who he was (apparently an "influencer" well known on Facebook), he started his spiel. I politely cut him short and explained my "children" were in their mid-forties and had selfishly denied me any grandchildren, so I didn't need the books he was selling. I then offered him a bottle of water and wished him well.
That is correct, as I pointed out in my second post. You called it actuarial gain...I called it "interest earned and the benefits that inured to the SS Program because of people like my father, who, after working a lifetime and contributing to the SS system, died without collecting a penny of their benefits."
Comments
Well. Michael, the good news is the older you are when you purchase the annuity, the higher the payout, as a general rule. In addition, Annuities purchased with Roth Dollars are income tax-free.
Post: Automatic Income stream? How important to you?
Link to comment from June 28, 2026
Having a defined-benefit pension in retirement would have a major impact on whether annuities would be desirable for someone whose "pension" was a defined-contribution plan, like a 403 (b) or 401 (k). I actually had two pensions from two previous employers, both of whom offered me a cash-out offer shortly after I turned 55. One from Ford Motor Company. It was $296.00 per month with a 50% survivor's benefit. Thesecond was from Mitsubishi Motors of America. It was almost double at $597.00per month. It also had a 50% survivor's benefit. Together, they totaled@$114,600. I took the cashouts and deposited the funds into a rollover IRA. As I was approaching retirement (self-selected) at age 70, 2020 happened, and I put off retirement FOMY! As you know, the market in 2020 recovered, in record time, but it reminded me of a lesson I had been discussing with students academically, which I now understand in reality. The concept of the sequence-of-returns risk. It is not just an academic theory. My employment contract was renewed for an additional 5 years in 2021, so I figured, "Why not stay for another 12-18 months and stuff money into my 403b Roth account?' Then came 2022? Recovery wasn't quite as fast, and the lesson from 2020 about the sequence-of-returns risk was brought home again. The good news is that in 2023, right before the late spring market drop, I bought a series of income rider annuities. Three of them were paid for with Roth money from my 403(b), establishing tax-free income for life, with joint-life survivor benefits and an LTC rider as well. The fourth one was paid for through a rollover from my rollover IRA. As 2023 was drawing to a close, I had built up what JL Collin refers to as “FU Money.” That gave me pause, and cause to reconsider my current situation, and I decided I would retire, for real, this time. After giving 90 days’ notice, I established my final work day as 1 January 2024. Why not 31 December 2023? Because that date took me into a new year, entitling me to one final Roth 403 (b) contribution to be matched by my employer. In addition, it gave me a final paycheck, an additional payment for 300 hours of unused vacation (maximum allowable), and a payment for a contract job completed just before YE 2023. Today, my wife and I are enjoying retirement, secure in the knowledge that our guaranteed income far exceeds our retirement expenses, for the next few years anyway, with minimal income tax due. In the words of Beldar Conehead, “Life on Earth is good.”
Post: Automatic Income stream? How important to you?
Link to comment from June 28, 2026
Post: Automatic Income stream? How important to you?
Link to comment from June 28, 2026
If you insist on rebalancing, that's not a bad approach. Jack Bogle said, " Rebalancing is a personal choice, not a choice that statistics can validate." He wasn't dogmatically against it — he said if you must rebalance, once a year is enough, but argued that over the long term, the strategy is unlikely to boost returns, and you may end up with taxable gains and trading costs." Based on your post, you appear to have taken the taxes & trading costs into account, so continued success.
Post: When to Leave Your Portfolio Alone
Link to comment from June 28, 2026
I remember that in @ 1983-84, I was giving a presentation to a group of new employees about the benefits of participating in the company 401 (k) plan. The level of ignorance was almost as bad as the level of interest. Apparently, getting free money with a 100% guaranteed return was too hard for some people to grasp. Since that time, I have never been surprised by the financial illiteracy of my fellow Americans. I also suspect that the ignorance is not accidental. After all, 99% of graduating high school students fail the simplest personal finance quiz... and 65%-75% of adults over 50 do not do much better. It's almost like our government and financial institutions prefer an ignorant, financially illiterate population. My stepfather discovered mutual funds in the late 1950s. He retired in 1985, after 24 years in the US Army and 16 years as a Capital Police officer. He began investing in his late 20s. Over 40 years, he amassed $1.3 M and had a paid-for home and car. And he did it without a 401 (k) or Roth Account. I retired in 2024 with $1.3M, a paid-for home, and 2 cars. As I shared in a recent post, over my lifetime, I earned @$4,233,495. 59.95% of that money was earned in the last 15 years of my 58-year working career. During those 15 years, I earned my highest annual income and maxed out my 403 (b) and Roth IRA. It's never too late to start, but the earlier the better!
Post: How financially illiterate are Americans?
Link to comment from June 21, 2026
In this man's opinion, it applies to all people... albeit it can certainly manifest in different ways. One thing is for sure: those who do not try, do not succeed.
Post: How financially illiterate are Americans?
Link to comment from June 21, 2026
Dennis: I too am 75, and I had a recent health scare myself, so your article hit home with me. My mother passed away at 82, after a brief stay in Hospice, the result of previously undiagnosed pancreatic cancer. My stepmother passed in her sleep, from a heart attack. While my mother lived with her husband, my stepmother had been widowed for 20 years, as my father died from service-connected illnesses, after serving 30 years in the US Army. My stepfather lived until one month before his 94th birthday, and he spent his last 5 years living with my wife and me, until he had a stroke, on Mother's Day, 2017. The stroke required hospitalization and follow-up rehab, and then assisted living. The financial part of all of this was never an issue, as he was a retired military member and had an excellent income and assets. My stepdad, Ed, spent his last 11 months on earth in a memory care unit of an assisted living facility, where he received excellent care. My sister and I lived in the same community, as did one of her daughters, so one of us was at the ALF every evening to have dinner with him. On Sundays, we took him to lunch at different restaurants of his choosing. Years earlier, he had investigated CCC's but ruled them out when he learned that he might be separated from his wife, should they not have the same health care needs. He was not willing to be separated from her, ever again. He, too, had been a career military and felt he had been gone far too often. When he had 24 years in for a planned 30-year career, he retired rather than accept an unaccompanied tour to Korea. He had spent 2 years in Korea during the Korean Conflict and was not going back. Today, his younger brother, who just turned 91, and his wife live in a CCC in Richmond, VA. It is a very nice facility, and he too was financially successful in life and is not financially concerned. My wife and I have a different situation. My wife refuses to realize we are getting older, and eventually, we will not need, and I will not want, to be living 15 miles outside of town, on six acres, in the woods. We built this house specifically as it is, with side doorways, no steps, all-wood or laminate floors, a walk-in and sit-down ceramic shower in the master, and a Jacuzzi tub. In addition, there is a standard bathroom with a tub-and-shower combination and two half baths. Thenetoire hime is wheelchair- and walker-accessible. She has not been open to considering CCCs, and to be honest, I am wary of the costs. Like you, we have the portfolio needed to hire help as we might need it, and I have a very benefit-rich LTC insurance policy, as well as LTC riders on our joint life annuities. We actually built the home to allow for a door to be closed (a pocket hallway door), which would separate a full bath and a large and a small bedroom from the rest of the home, if we hired a live-in caretaker. I even have a third garage for that caretaker's vehicle. With my mom's, it was never a choice we had to make. With my dad, the need for memory care, the structure of our original home (45 years old, steps, narrow hallways, and doors, etc.), made the decision for us. Hopefully, neither of us will be so severely ill that we will need ALF or Nursing home care, but if we ever do, at least we will be financially able to weather the storm. Thanks for your thought-provoking article.
Post: Close to Everything I Need
Link to comment from June 20, 2026
This is a wonderful article, and I hope those among us who are still young enough to make a meaningful change in their lives read it and take the message to heart. As my wife and I approach our 52nd wedding anniversary next week, on the 23rd of June, I am thankful that on the occasions when I placed work and earning a higher income before my family, which was not an uncommon event, she was there to carry the load on the home front. We are comfortably retired. Our children are well-balanced, college-educated, taxpaying citizens, so I didn't miss the boat entirely, but if I had it to do over again, there would be changes. One of those changes might have been retiring a few years earlier, instead of "socking more away for retirement."
Post: Risk Adjusted: The Family Ledger
Link to comment from June 19, 2026
Living out in the country seems to have solved that problem. We moved into our (at the time) newly built home the week of Thanksgiving, 2018. I had my FIRST solicitor knock on our door this week. After seeing if I knew who he was (apparently an "influencer" well known on Facebook), he started his spiel. I politely cut him short and explained my "children" were in their mid-forties and had selfishly denied me any grandchildren, so I didn't need the books he was selling. I then offered him a bottle of water and wished him well.
Post: He Said I Wasn’t Very Nice
Link to comment from June 19, 2026
That is correct, as I pointed out in my second post. You called it actuarial gain...I called it "interest earned and the benefits that inured to the SS Program because of people like my father, who, after working a lifetime and contributing to the SS system, died without collecting a penny of their benefits."
Post: Many seniors think we paid for our Social Security benefits based on the FICA taxes we paid. Let’s dispel that myth- we didn’t
Link to comment from June 19, 2026