Retirementresearcher.com

Retirement Researcher - by Wade Pfau, Ph.D. CFA & McLean

There is no one best practice for retirement income. What will work for you depends not only on your goals, but on your comfort level. We’re here to help you identify your personal retirement income style, and let that dictate the framework you use to reach your best retirement.

Actived: Saturday Nov 28, 2020

URL: https://retirementresearcher.com/

Insurance Archives - Retirement Researcher

Details: Life insurance can be confusing. Especially since so many people want it to be. But it doesn’t need to be. Life insurance is one of the simplest financial tools out there – as long as you use it correctly. There are two basic components to your wealth: Your Financial Capital – All the stuff you… Read More

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Which Is Better for Retirement Income: Insurance or

Details: Insurance companies pool sequence and longevity risks across a large base of retirees, as a traditional defined-benefit pension does, allowing for retirement income spending that is more closely aligned with average long-term fixed income returns and longevity. This may support a higher lifestyle than what is feasible for someone self-managing

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Retirement Researcher - by Wade Pfau, Ph.D. CFA & McLean

Details: There is no one best practice for retirement income. What will work for you depends not only on your goals, but on your comfort level. We’re here to help you identify your personal retirement income style, and let that dictate the framework you use to reach your best retirement.

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How to Use Life Insurance | McLean Asset Management

Details: Insurance companies want to sell you all sorts of “extras.” These are usually really good deals – for the insurance company. Generally, you’ll want the boring, plain vanilla, term life policy. There are always exceptions, such as if you’re using your life insurance policy for estate planning, but term life does the job in most cases.

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Retirement Income Strategies with Annuities

Details: A deferred income annuity purchased at retirement with income beginning at age 80 or 85 is referred to as “longevity insurance.” After the Treasury Department updated regulations in 2014 to facilitate the use of longevity insurance inside retirement plans, longevity insurance is now also known as a QLAC, or a Qualified Longevity Annuity

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What Are Annuities? | Retirement Researcher

Details: But insurance companies aren’t planning for individuals. They’re working with really big pools of people, so they use statistics to understand what the pool is likely to look like. You might blow way past your life expectancy, but someone else in the pool will come up short.

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Annuity Pricing Sensitivity - Retirement Researcher

Details: This way, the insurance company can focus on the longer-end of the yield curve. While I cannot consider all of the factors insurance companies use to adjust their interest-rate and mortality-rate assumptions (insurance companies don’t like sharing this information), these seem to be reasonable estimates for actual annuity payout rates.

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Income Annuity 101 - Retirement Researcher

Details: Securing Longevity Insurance Through Income Annuities on August 20, 2015 at 10:01 am For instance, a 55-year old might purchase a deferred income annuity which will begin income at 65. We have already determined that the cost of a life-only income annuity at 65 is $148,492.

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Do You Need an Emergency Fund in Retirement? | McLean

Details: Insurance. I’ve saved the most important piece of your retirement emergency fund for last. Insurance is the backbone of your emergency fund. In fact, it probably has been throughout your life, but you didn’t realize it. Insurance is there to pay for those large unexpected issues that would (in many cases) cripple you financially.

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Does Your Retirement Plan Account For Your Own Cognitive

Details: In this regard, advisors serve as a type of insurance policy. They provide support to avoid normal life mistakes that come with a lack of experience. Life consists of many economic milestones like retirement, as well as spurious “opportunities” like buying into a time-share, and various potential mistakes driven by behavioral considerations.

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Examining Long-Term Care Insurance | Retirement Researcher

Details: Originally published at Forbes. The traditional health-based long-term care insurance strategy involves paying an ongoing premium for long-term care insurance until a long-term care event takes place, and then being eligible to receive a defined amount of long-term care benefits for a defined period of time based on the costs of care.

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Two Options for Funding Long-Term Care - Retirement Researcher

Details: Long-term care insurance combined with life insurance or annuity; I will discuss the first two of these today and go into the others in subsequent posts. The overall cost of long-term care can be defined as: LTC Cost = LTC Expenses + LTC Insurance Premiums – LTC Insurance Benefits.

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Dashboard 2020 - Retirement Researcher

Details: Finally, we could consider a case that integrates insurance and investments. To be consistent, let’s suppose a spending goal with 2% spending growth throughout retirement. Using only investments, a moderate couple would be looking at a 2.87% spending rate. Suppose they place 30% of their assets into a SPIA. It offers a 3.76% withdrawal rate.

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The Retirement Researcher Manifesto – Part Two

Details: On the insurance side, the natural conflict is that insurance agents receive commissions for selling insurance products and may only need to meet a requirement that their suggestions be suitable for their clients. On the investments side, those charging for a percentage of assets they manage naturally wish to make the investment portfolio as

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Coverage Options for Long-Term Care Insurance Policies, Pt

Details: Most traditional insurance policies allow for care coverage from one to five years. Lifetime coverage is rare for traditional policies, though some hybrid policies offer additional continuation of benefit riders which may allow it. Inflation protection. Should the allowed long-term care benefit grow over time?

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Hybrid Long-Term Care Insurance Policies | RR

Details: These new approaches generally combine long-term care funding with life insurance or an annuity. For instance, one asset-based strategy involves the purchase of a long-term care insurance policy bundled with a whole life insurance policy. This strategy may be done with a single upfront premium, a set of premiums for a fixed term, or ongoing

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What is Risk? - Retirement Researcher

Details: Risk is a tricky concept to pin down in the investing world. There’s no good definition of what it truly is, or how people relate to it. And it’s – by far – the most important concept in finance.

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The Continuum of Long-Term Care - Retirement Researcher

Details: Health insurance and Medicare do not cover custodial care, as they are reserved for care relating to acute medical conditions with expected recovery. Custodial care must be funded by other means such as personal savings, Medicaid, or long-term care insurance. Home Care

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Retirement Income Planning Is As Easy As PAY | Retirement

Details: Factors to consider in choosing parameters for the PAY Rule™ include flexibility to reduce spending, fear of outliving the planning horizon, legacy goals, and the availability of other contingency assets or insurance to protect from spending shocks.

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Blog - Retirement Researcher

Details: Interest rates are one of the key tools that the Federal Reserve has to manage the economy. Changing how much it costs to borrow money can slow down an economy or give a the economy a nudge.

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Risks for Traditional Long-Term Care Insurance | RR

Details: Long-term care insurance has traveled a rocky road since its inception. When people entered a nursing home after a hospital stay, early long-term care insurance policies of the 1960s generally only supported stays in nursing home facilities that required skilled care rather than custodial care.

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Long-Term Care Insurance Policies, Pt. 2

Details: Another consideration is the degree of underwriting and the classification provided for insurance premiums. It is worthwhile to shop among different companies, because they may arrive at competing conclusions about appropriate premiums based on their underwriting. Those in good health will likely benefit from more stringent underwriting.

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What’s the Most Appropriate Planning Age for Retirees

Details: The relationship between how long you’ll live and your sustainable spending rate is a difficult piece of the retirement planning puzzle. Ultimately, a longer retirement horizon means spending less in order to sustain the available resources.

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Evaluating Investments vs Insurance in Retirement

Details: Meanwhile, those favoring insurance believe that contractual guarantees are reliable and that an overreliance on the assumption that favorable market returns will eventually arrive is emotionally overwhelming and dangerous for retirees. Indeed, they are more concerned about the implications of market risk than those favoring investments.

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Your Retirement Number Is Meaningless | Retirement Researcher

Details: Cash you’ve set aside is definitely part of it, but it also includes your insurance policies, home equity line of credit or reverse mortgage, and your family and social safety net. These resources can be counted on if something terrible happens.

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Improving Retirement Outcomes with Investments, Life

Details: The financial services industry offers different tools for meeting these objectives, ranging from investment portfolios to insurance products. While some view these choices as either/or, what I have found in my research is that integrated approaches which draw from both investments and insurance can create more efficient retirement outcomes.

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How to Build a TIPS Bond Ladder for Retirement Income

Details: Insurance companies with large fixed income portfolios do duration matching; they don’t bother with cash flow matching. If this were my own investment portfolio, I’d be looking at costs. If laddering was more costly than using funds, I wouldn’t bother. Reply.

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How Much Can Retirees Spend On March 11, 2020? It May Not

Details: Finally, we could consider a case that integrates insurance and investments. To be consistent, let’s suppose a spending goal with 2% spending growth throughout retirement. Using only investments, a moderate couple would be looking at a 2.88% spending rate. Suppose they place 30% of their assets into a SPIA. It offers a 3.8% withdrawal rate.

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Securing Longevity Insurance Through Income Annuities

Details: Longevity insurance carries two key differences here: 20 years of asset growth within the contract, and the discount a 65-year-old receives thanks to his less than stellar chances of living to 85 (less than a 50% chance). Waiting until 85 to make the purchase means sharing fewer mortality credits with the pool.

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How Much Income do I Need in Retirement? | Retirement

Details: Most people are focused on saving for retirement so they’ll have the money they need to fund their income in retirement. However, ask most people how much they’re going to spend in retirement and they have no idea.

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Annuities Archives - Retirement Researcher

Details: The Federal Reserve’s decision to cut its benchmark federal funds rate from 1% to a range of 0% raises significant questions for those reassessing their retirement nest egg—a common occurrence following a dramatic selloff in equities according to research conducted by Indiana University’s Alessandro Previtero —and the value of annuities in providing guaranteed lifetime income.

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Long-Term Care Archives - Retirement Researcher

Details: The range of expenses covered by long-term care insurance varies, and it is important to understand what exactly is covered by a contract under consideration. Read More. Examining Long-Term Care Insurance. By Wade Pfau, Ph.D., CFA | January 14, 2016.

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20 Questions to Test Your Retirement Expertise

Details: 20 Questions to Test Your Retirement Expertise Welcome to the Retirement Literacy Quiz! These questions were designed to span all of retirement income planning, so you might find that you know a lot about certain areas but really struggle with others. No problem. Just do the best you can! When you’re finished, we’ll send you…

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Social Security as an Investment | Retirement Researcher

Details: The alternative to treating Social Security as insurance is to view it as an investment, or as a gamble on how long one lives. This can be problematic. The investment approach focuses more on the breakeven age for when it finally pays to delay benefits. With inflation-adjusted discount rates of 0% to 2%, the breakeven age is 80 to 84.

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How Does the Line Of Credit for a Reverse Mortgage Work

Details: Though interest and insurance premiums are not levied on set-asides or the line of credit, both of these components also grow as if these costs had been charged, as they are components in the effective rate. The ability to have an unused line of credit grow is a valuable consideration for opening a reverse mortgage sooner rather than later. It

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Reduce Retirement Costs with Deferred Income Annuities

Details: Unlike long-term deferral period annuities (longevity insurance) that are primarily meant to protect against longevity risk, a short-term deferral period annuity can provide a steady income to pre-fund retirement spending over the entire retirement life cycle.

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Upfront Costs of Opening a Reverse Mortgage | RR

Details: The margin rate and the ongoing mortgage insurance premium are set contractually at the onset of the loan and cannot change. Especially for lenders who have forgone the origination and servicing fees, the margin rate charged on the loan balance is the primary way the lender—or any buyer on the secondary market—earns revenue.

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Strategies To Consider When Building An Effective

Details: Insurance companies can pool sequence and longevity risks across a large base of retirees, allowing for retirement spending that is greater than the sustainable withdrawal rate from investments for someone self-managing these risks. When bonds are replaced with insurance-based risk pooling assets, retirees can improve the odds of meeting their

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Dashboard 2020 - Retirement Researcher

Details: Finally, we could consider a case that integrates insurance and investments. To be consistent, let’s suppose a spending goal with 2% spending growth throughout retirement. Using only investments, a moderate couple would be looking at a 2.84% spending rate. Suppose they place 30% of their assets into a SPIA. It offers a 3.73% withdrawal rate.

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Are Annuities (SPIAs) Okay When Interest Rates are Low?

Details: The insurance companies must adjust for that, though perhaps if they have a life insurance business too then the two business components might hedge one another. But also, insurance companies must deal with adverse selection. That is, the people who buy annuities tend to know they are in good health (people with terminal illnesses have no

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Using Reverse Mortgages In A Responsible Retirement Income

Details: Especially since 2013, the federal government has been refining regulations for its HECM program in order to improve the sustainability of the underlying mortgage insurance fund, to better protect eligible non-borrowing spouses, and to ensure borrowers have sufficient financial resources to meet their homeowner obligations.

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4 Ways to Manage Sequence of Returns Risk in Retirement

Details: The two main alternatives that I have discussed here and at my website are to use the cash value of permanent life insurance policies as a reserve, and to open a line of credit with a reverse mortgage to serve as a reserve. I discuss the latter strategy extensively in my previous book,

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Lifecycle Finance: An Alternative For A Lifetime Financial

Details: The output of this process is the sustainable standard of living per adult through maximum age of life. The sustainable living standard is calculated in terms of spending after accounting for taxes, housing, insurance premiums, and loan payments. It is the spending for everything else.

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Justifying a Delayed Claiming Age for Social Security

Details: Social Security as Insurance. Blaise Pascal was a seventeenth century French philosopher whose “Pascal’s Wager” posed the argument that it is best, for self-serving reasons, to believe in God. If God does not exist, then a misplaced belief in God will have relatively minor consequences.

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Reverse Mortgage Calculator - Retirement Researcher

Details: Monthly Insurance Premium: Age of Youngest Eligible (Borrower or Non-Borrower) Spouse Note: Round age up if birthday falls within six months of the first day of the month that the loan will close: Age: Modified Expected Rate: Principal Limit Factor: Maximum Possible Amount: Loan origination fee: Initial mortgage insurance

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Income Annuity Archives - Retirement Researcher

Details: Investments vs Insurance – each has its advantages. Read More. White Paper: Reduce Retirement Costs with Deferred Income Annuities Purchased Before Retirement. By Wade Pfau, Ph.D., CFA | July 6, 2015.

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Retirement Risks Archives - Page 6 of 9 - Retirement

Details: Hybrid Long-Term Care Insurance Policies By Wade Pfau, Ph.D., CFA | January 21, 2016 Attempts to combat concerns about traditional long-term care insurance have resulted in combination or hybrid products using an asset-based approach to fund long-term care.

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Two Philosophies for Retirement Income Planning Part One

Details: Within the world of retirement income planning, the siloed nature of financial services between investments and insurance leads to two opposing philosophies about how to build a retirement plan. There is an old saying that if the only tool you have is a hammer, then everything starts to look like a nail. This tendency is…

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Eligibility Requirements for a Reverse Mortgage | RR

Details: Click here to download Dr. Pfau’s reverse mortgages fact sheet. The requirements to become an eligible HECM (Home Equity Conversion Mortgage) borrower include age (at least 62), equity in your home (any existing mortgage can be paid off with loan proceeds), financial resources to cover tax, insurance, and maintenance expenses, no other federal debt, competency, and the receipt of a

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Tax Considerations When Delaying Social Security

Details: Tax bracket management is relevant as well because Social Security benefits may also be taxable. Those who are married and filing jointly, as shown in the table, may pay income tax on up to 85% of their Social Security benefits if their provisional income exceeds $44,000.

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