returning to work
POSTED Mon, 04/13/2009 - 15:43 | POSTED BY Anonymous
many people who thought they would be retiring in the short term, are now realizing that due to losses in their current portfolio, they have to to back to work.
what can the younger generations learn from this and how can annuity products play a role for future retirees?
tom wrote on Tue, 02/23/2010 - 10:43:
Capital markets--equity in particular--are very risky. This is the case no matter what the time horizon.
Preservation of principal is critical.
Human capital is the most important asset for most people.
Financial capital should be diversified relative to human capital.
Pay attention to sequence of returns risk--meaningful losses of financial capital at the wrong time can be catastrophic.
Annuities are not a panacea. Annuities are useful in: 1) creating guaranteed income that lasts a lifetime, 2) hedging longevity risk, and; 3) hedging sequence of returns risk.
Each of the above strengths of annuities have some relevance to the financial crisis. As indicated elsewhere on the site, many owners of variable annuities have fared pretty well over the past several years: http://annuitydigest.com/forum/case-variable-annuities
The "case for annuities" is unfortunately not something that most folks will hear about in the broader financial media or from their financial advisor.