swill453 wrote:To me it seems a bit of a desperate last gasp, and not really relevant to me (retired 5 years ago at 53, 100% equities + big cash buffer, happy with risk of running out of money).
Scott.
Not relevent to you apparently, but I stongly disagree with the desperate last gasp bit.
I too am unlikely to ever want an annuity. I hope that my children won't. I believe that my wife doesn't. But EVERYONE?
I haven't made it past the opening part of the pdf yet, but it's already using phrases that should resound in the ears of anyone who considers portfolio theory. It's pure CAPM.
To me the huge issue with annuities was that they were a BAD deal dictated by the government. Indeed the pdf just about admits that fact. Because they were dictated there was no need for them to try to offer a good deal. For those who don't know private pensions HAD to be spent on an annuity, while company pensions were paid "by the company", though in fact by the pension scheme.
So on the one hand, we have the people who want certainty, the other we have those who realy dislike volatility. Given that market, I can quite see annuities continuing.
Scott, even if you have no intention of buying an annuity or changing your ways, please look up CAPM and study the theory. Feel free to reject it as not for you (I have for me), but it is important to know what you have chosen to reject. Arguably annueties can take the place of bonds or government debt in CAPM.
PS. I believe that William Sharpe was given a nobel prize for CAPM in 1990.