Evaluating and annuity (SPIA) with the planner
Posted: Fri Feb 29, 2008 9:16 pm
Dear Jim,
I've followed your web-article suggestion and used the flexible
planner for evaluating an SPIA with inflation protection. I'd
appreciate your comments on how I've used the planner to take into
account certain limitations in my figures.
This option could mean that my fixed-income sources will cover
80-90% of my basics right away. However, 38% of that income isn't
COLA. To compensate for this, I've used 6.8% as my total portfolio rate
of return instead of 7 or more. I haven't used the Additional buttons
to handle this detail. Maybe I should lower that rate? I'm assuming
that even though the Detailed Report shows everything in "constant"
dollars, behind the scenes it's taking inflation into account. Is that
right?
I'm also now puzzled about what this "floor" means for my asset
allocation in my portfolio. That is, how much should I allocate to
bonds? A remark by Zev Bodie on SPIAs in a Wash Post conversation with
Margaret Hamilton suggests that if one has the SPIA infla-prot then the
rest of the portfolio could be more speculative. But I can't imagine
eliminating bond funds (I'd certainly use one for "cash" reserves).
Many thanks --
I've followed your web-article suggestion and used the flexible
planner for evaluating an SPIA with inflation protection. I'd
appreciate your comments on how I've used the planner to take into
account certain limitations in my figures.
This option could mean that my fixed-income sources will cover
80-90% of my basics right away. However, 38% of that income isn't
COLA. To compensate for this, I've used 6.8% as my total portfolio rate
of return instead of 7 or more. I haven't used the Additional buttons
to handle this detail. Maybe I should lower that rate? I'm assuming
that even though the Detailed Report shows everything in "constant"
dollars, behind the scenes it's taking inflation into account. Is that
right?
I'm also now puzzled about what this "floor" means for my asset
allocation in my portfolio. That is, how much should I allocate to
bonds? A remark by Zev Bodie on SPIAs in a Wash Post conversation with
Margaret Hamilton suggests that if one has the SPIA infla-prot then the
rest of the portfolio could be more speculative. But I can't imagine
eliminating bond funds (I'd certainly use one for "cash" reserves).
Many thanks --