I never understood why Bernstein was so against using SPIAs. I've read two of Wade Pfau's books "How Much Can I Spend in Retirement" and "Safety-First Retirement Planning" where he made some convincing arguments on how to create income streams using SPIAs. I didn't understand the more complicated annuities but I was sold on the concept of using SPIAs. For many, trying to plan for a lifetime stream of income, SPIAs are a great tool to use. I don't need an SPIA yet since I have a significant pension, but I can see why many would want to purchase an SPIA to cover essential spending. At some point in the future in my mid-70s I might be an owner of a SPIA.When I said "an" SPIA, I was not intending to be that finite. It is reasonable to purchase multiples from different companies.
We Bernstein disciples do not believe in buying annuities since as he has several times pointed out you are basically just buying a company's bonds. I don't want to have my future dependent financial security be dependent on the fortunes of one specific company. Could be likened to having all your equity investment in just one company's stock?
I love reading Bernstein, especially his histories such as "The Birth of Plenty", but I have to disagree with him here. Annuities have lifetime guarantees (as long as you stay under the state guarantee association limits). That is inherently different from purchasing specified-duration bonds.
Statistics: Posted by 2pedals — Wed Oct 16, 2024 10:50 pm