Life After Work - Will I Be "OK"?

  Last week I shared my theory as to why it’s possible to get for guaranteed lifetime income from a fixed indexed annuity (FIA) versus either a single premium immediate annuity (SPIA) despite that fact that the FIA can be cashed it at anytime and a SPIA cannot ( Understand Your Options Before Committing a Large Sum to Providing Guaranteed Income For Life by Scott Stolz, CFP, RICP (week 32) .   I explained that some insurance companies are counting on a significant percentage of the policyholders to use these policies inefficiently by either waiting until an advanced age to begin taking the income or cashing the policy in.   Either of these choices would mean the insurance company would never have to pay the guaranteed income amount out of its own pocket.   The company would essentially only distribute the policyholder’s own money back to him or her. But what if this assumption turns out to be wrong?   What if everyone actually starts taking the income in the...

  A friend called me last week to get my opinion on an annuity recommendation he received from his financial advisor.   Here’s the scenario.   He’s looking to retire at the end of 2028 when he will be 67 and his wife will be 65.   He plans to apply for Social Security at that time.   Based on his expected expenses and Social Security benefits he wants to add $40,000 per year in guaranteed income in order to cover his essential expenses.   His financial advisor recommended he fill the income gap by putting $745,000 into an annuity that will pay $40,000 a year for as long as he or his wife is alive, with a minimum guarantee period of 20 years should they both die prior to 2048 (joint life with 20 years certain).   He liked the idea of getting the income for life, but he was uncomfortable with putting so much of his retirement savings into any single investment – especially an annuity.   Hence, his call to me.   While everyone likes the idea...

 When I was 5 years old, I discovered baseball cards.  The older kids in the neighborhood collected them and since I wanted to be like them, I had to collect them too.  Not coincidentally, that’s when I started playing baseball as well.  Every Sunday after church my dad would take my brother and I to Hood’s Pharmacy in Urbana, IL.  He would give us a each a quarter so we could buy five 5-cent packs of cards – complete with gum.  Of course I was too young to know any of the players, so I aways had to ask my dad if I got any good players amongst by 25 cards.  I remember asking him if some guy named Mickey Mantle was any good.  He confirmed that he was.  I was glad because I thought he looked really cool on his 1965 card.  I’ve collected cards ever since.  And I was lucky, because my mom never threw my cards out when I got older.  Now, if I had only left some packs unopened. The picture below is a 5-cent pack from 1960 that rece...

  I’m going to warn everyone that not only am I going to go on a bit of a rant this week, but the topic I’m going to rant about isn’t really going to be about retirement.   Now that you’re forewarned, I’m going to start with a question.   When did it become OK for businesses to quit answering the phone?   Or for that matter, force us to talk to a chatbot rather than an actual person?   Last week I realized I had to reschedule a dentist appointment.   I called and worked my way through the numerous prompts only to find my call going to voicemail.   The recording said I would be called back by the end of the day.   I wasn’t.   So, the next day I tried again with the exact same result.   Still no call back.   Since my dentist’s office is just 3 blocks away, I realized I would save time if I just walked over and handled this face to face with the receptionist.   But what if their office was across town?   Would I still be wait...

  About 35 years ago I began regularly asking audiences at my speaking engagements whether or not they expected to receive Social Security benefits when they retired.   Even back then, I would see about 1/3 of the crowd raise their hand to vote “no”.   But I noticed something interesting when conducting this very informal and unscientific poll.   Virtually every raised hand belonged to someone below the age of 50.   The older people in the audience seemed to consistently believe they were going to squeeze by before Social Security ran out of money.   Interestingly, these percentages have not changed much over time.   According to a 2023 survey conducted by the Nationwide Retirement Institute® (of Nationwide Life Insurance Co.), more than 40% of those surveyed below the age of 42 believe they will never receive Social Security Benefits.   That compares to just 12% for those 59 years old or older. 1      However, three of four o...

  The Wall Street Journal recently published an article entitled “ Five Financial Blind Spots that Burden Grieving Spouses.” ( Five Financial Blind Spots That Burden Grieving Spouses - WSJ   These blind spots included unexpected debt and/or expenses, potentially higher tax brackets, challenges due to a lack of credit history and being locked out of financial accounts if that account(s) is only in the deceased spouses name.   The article correctly suggests that spouses have regular financial discussions so that both spouses understand their financial situation.   It goes on to recommend that “… If a spouse won’t commit to learning the details, it’s especially important for the other spouse to keep detailed records for the survivor….”   I’m going to take that advice one step further.   If you only do one thing I suggest in these blogs, it’s that you go to Everplans.com and open an account.   And no, Everplans is not paying me to say this.   Although...