How to Enjoy Retirement Without Going Broke

[Established]

There is not necessarily an added security or guaranteed performance. This is not a CD, Term-deposit, or time deposit which are usually insured.

Here is a good primer on the shortcoming of annuities.

http://apps.suzeorman.com/igsbase/igste ... tiseID=107

CAVEAT EMPTOR.

You can't really comment on Tokyo's product without access to the terms and conditions. It sounds more like Japanese 'pension insurance' than a US annuity, which would not be available in Japan either.

You are 100% right, I do not have the language skills or the background to vet these products. That does go to my point, but there are certainly many people more capable than me.

There may indeed be people for who these products are perfect. I would caution them as a means to "diversify" your portfolio though.

米国ドル建年金支払型特殊養老保険 -> https://www.pgf-life.co.jp/weby/1702.html

[fools_gold]

I had a brief look at annuities in Japan a couple of years ago, but didn't really find anything attractive.

Any good options?

I didn't find any either, but I believe there is a separate tax break for contributions to 個人年金保険, if you're into that kind of thing.

[Tokyo]

@Established. If you are assailing annuities as a lazy way to invest, I agree. And I have made that point more than once. (By the way, the Prudential 手数料 charged for payment in US$ is hardly exclusive to annuities is it?)

Sure there have been scams in annuities but there have been many investment, real estate, art and other scams too. Should we therefore not invest in these other areas either?

I know some advise against annuities. But many of her peers also publicly put down Suzy Orman, big time. The original NYTimes article heading up this thread, however, promotes annuities. As do others in the sample below. I don’t think these pros would make recommendations if these products were half as evil as you make them out to be. And given your vehemence on the subject, I assume you don’t have any actual experience you can share either.

https://www.washingtonpost.com/business ... story.html

https://www.investopedia.com/best-annuity-rates-5179335

https://www.forbes.com/advisor/retireme ... g-annuity/

[Established]

@Established. If you are assailing annuities as a lazy way to invest, I agree. And I have made that point more than once. (By the way, the Prudential 手数料 charged for payment in US$ is hardly exclusive to annuities is it?)

Sure there have been scams in annuities but there have been many investment, real estate, art and other scams too. Should we therefore not invest in these other areas either?

I know some advise against annuities. But many of her peers also publicly put down Suzy Orman, big time. The original NYTimes article heading up this thread, however, promotes annuities. As do others in the sample below. I don’t think these pros would make recommendations if these products were half as evil as you make them out to be. And given your vehemence on the subject, I assume you don’t have any actual experience you can share either.

https://www.washingtonpost.com/business ... story.html

https://www.investopedia.com/best-annuity-rates-5179335

https://www.forbes.com/advisor/retireme ... g-annuity/

I was mainly pointing to the 1% annual management fee (Did I read that wrong? Topline of the image. My Japanese is quite poor, apologies).

Your points about Susan definitely stand, I agree with her on annuties, but not much else. Just like I agree with Dave Ramsey`s budgeting advice, but not much else. (He suggests expensive mutual funds).

I have heard other people's horror stories, which probably give me a pretty negative bias. But I do stay away from anything that is not transparent or that comes with huge fees, (art, wine, whiskey etc). I am even too chicken for real estate syndications and prefer REITs.

Considering how they function, I suppose I simply do not understand why someone would pay for someone else to invest in a product for you, charge a fee, then pay you a small portion back, if you already have the knowledge and knowhow to invest passively in a low-risk manner.

I feel like I am truly missing something, and I am not trying to be obtuse or agrevating.

[Tokyo]

I feel like I am truly missing something, and I am not trying to be obtuse or agrevating.

Okay, I think am starting to understand the basis of your protests. You think you can do better on your own by passively investing. I totally agree. But what are you, 40, 50? Obsessed with growing your nest egg. Have you interacted with many seniors, especially those over 80? Any with the beginnings of dementia, let alone those more advanced? Do you really believe growth is their priority anymore?

Many if not most older retirees know they are not as physically and mentally fit as they once were. That’s not the time you want to be managing your whole portfolio, even just minor profit-taking and occasional rebalancing. I have made one or two mistakes selling ETFs on my Nomura account, mostly due to my inadequate Japanese. I am confident, unfortunately, that’s not going to improve in future.

So you will find that having regular income is simply an unbeatable feeling. I do nothing and every month, money comes in from various income sources, including the small annuity. Separately, we have made a lot of money in the past 15 months with ETFs but we already have sufficient income and assets to live the life we want. I am thrilled to fly business class - I don’t aspire to 1st class. The law of diminishing returns and all. I was not/am not a sophisticated investor so I am happy to pay a 1% management fee for peace of mind. Anytime. I am happy.

If you don’t see the point, there’s no need for you to jump in.

[zeroshiki]

I think they're saying that the company giving you the annuity already invests the money you give them (minus fees) into a mutual fund. In that case, why not cut out the middleman and invest in the mutual fund yourself. After a number of years, you can then setup your fund to sell itself off by pieces (like an annuity!) and put money into your bank account at regular intervals.

[RetireJapan]

I think it is worth repeating that there are different types of annuities.

Variable annuities have a bad reputation and seem to be where a lot of the miss-selling came from (and the high fees).

Fixed annuities, on the other hand, can be a useful way to diversify and manage risk. They are more an insurance product than an investment. You can buy immediate or deferred, index-linked, and ones that also pay to a surviving spouse.

Unfortunately current low bond yields, etc. have made fixed annuities expensive.

[RetireJapan]

I think they're saying that the company giving you the annuity already invests the money you give them (minus fees) into a mutual fund. In that case, why not cut out the middleman and invest in the mutual fund yourself. After a number of years, you can then setup your fund to sell itself off by pieces (like an annuity!) and put money into your bank account at regular intervals.

The advantage the insurance company has is that they have a pool of money with different payout timelines, and therefore can guarantee your payout while still making money.

If you just invest it yourself you run the risk of a crash/bear market and also the risk of losing the ability to take care of your finances.

I don't think annuities should replace investing, but they can complement it*


*I don't currently plan to use annuities, but have talked to a number of people who do, for diversification/peace of mind/to keep their spouse happy.

[beanhead]

This product from Manulife comes up when you search for 米国ドル建年金支払型特殊養老保険

http://manulife-gaika.jp/kodawari-kojin ... A8EALw_wcB

This is variable with a guaranteed 1.5% return. As RJ said, basically a form of insurance. The Japanese govt still encourages these kinds of policies by giving a tax break for this as it is packaged as life insurance.

[Established]

I feel like I am truly missing something, and I am not trying to be obtuse or agrevating.

Okay, I think am starting to understand the basis of your protests. You think you can do better on your own by passively investing. I totally agree. But what are you, 40, 50? Obsessed with growing your nest egg. Have you interacted with many seniors, especially those over 80? Any with the beginnings of dementia, let alone those more advanced? Do you really believe growth is their priority anymore?

You nailed me down, I am actually in my early 30`s, first kid, focused on accumulation.

Simplicity is a important factor, I agree.

1. I structured my account to only have 2-3 funds, and to use iDeco as a pension to make things easy in retirement and supplement nenkin.

2. Monthly distributing funds (毎月分配型) are always an option, or quarterly or biyearly etc.

3. For that 1% plus other fees, you could afford to pay someone to oversee your accounts.

4. I worry about the complexity of some accounts (Such as Retire Japans personally holdings) and dealing with them in old age.

beanhead -> I linked the plan OP mentioned above, check my previous posting

Here->https://www.pgf-life.co.jp/st/products/ ... /pdf/1.pdf

Lots of warnings about fees included

RetireJapan -> No payout is "guarenteed" , the investing company is taking risk, that will be passed on to you. Yes, high degrees of fixed income investment can cut the risk, but the fees would eat away any return. This is not a free lunch.