Subject: Re: is there a lot of risk in Treasury bills now?
Instead of buying a deferred annuity which starts payments five (or however many) years from now, buy 5 year TIPS and then buy an immediate annuity with the final amount.
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just 2030 Tips or ladder 25-2030?

I was thinking of a single TIPS bond of the duration between now and when you think you want to switch to annuity income.
You need a lump sum to buy the annuity, so on maturity that single bond gives you the lump you need.

This is purely related to the "income after age X" problem, which deals with longevity risk. Only a pooled strategy like an annuity or tontine makes sense for that.
The rest of your money is of course used differently...spend it between now and then.

In many ways the TIPs-then-annuity idea makes great sense for the longevity risk portion. The only modest disadvantage is that it makes it just a pinch harder to estimate how much money to put into that deferred bucket. The prices for annuities for today are known, but they might be a little different a few years from now. I don't think that removes the merits of the idea, just something to bear in mind. Allow a little "slop" in the estimate : )
(translation: maybe buy a pinch more TIPS than you think you need, and a pinch less spend-in-a-straight-line-till-then. The advantages outweigh that)

If this is a little scary, don't sweat it. It's not an all-or-nothing idea. Say you wanted to set it up so that you spend capital for 8 years then live on an annuity. You could buy an 8-year-deferred annuity now, or you could buy an 8-year TIPS bond and buy an immediate annuity 8 years from now. But you could also split the difference and buy 4-year TIPS and then buy a 4-year-deferred annuity when it matures.

Also, having multiples smaller annuities (with different firms) has some advantages. You could do more than one of those alternatives. You don't have to lose sleep worrying that you made a choice which was good, but not optimal. No strategy is perfect, so pick any two!

Stepping back for a moment, the bigger observation about retirement planning, rarely discussed, is this:
- if your nest egg is not big enough, no amount of fancy strategy is going to fix that. A bummer, but it happens.
- if you have more than enough socked away, there are lots of strategies that are entirely feasible, you can't go too far wrong. A billionaire's widow could put it all in a wildly overpriced S&P 500 and still live nicely on the dividends.
- picking an optimal strategy is time well spent only for those on the borderline between those two categories

I have a friend with whom I traded a bunch of emails of how he should arrange his affairs for his wife on his demise. He is not young. His first thoughts were extremely fancy, the sort of optimization that is a joy for me, and a joy for him, but perhaps not for his future widow. I pointed out "um, hey, you're pretty rich. Just keep it simple, have her buy a fund". (particularly startlingly because I am NOT a fan of standard cap-weight index funds)

Jim