No. of Recommendations: 15
Anyone here retire in 2000? What did you do?
As it happens, yes, I did!
First thing, I took out a broker loan and leveraged my portfolio up to buy an outrageously expensive house, in spring 2000. Hey, I didn't say I was smart.
I have to admit that I have occasionally thought of coming out of retirement (I once ran a hedge fund) to start a Bogle-style low-fee actuarially fair tontine. They're really wonderful.
The simplest is called a "mutual inheritance fund", and my preferred variant goes like this:
* Around 100 or more people, of the same sex, aged X or higher, get together, and irrevocably put up at least $100k to purchase shares in a trust. X might be 60 or 65 or 70. The amount to invest is on the order of your desired yearly income when you get really old.
* The money is invested in a few basic things that can't go broke or play in bubble, like a broad equally-weighted index fund.
* The trust is fully funded for all payment commitments from day 1, so unlike an insurance contract there is no need for extra capital.
* Dividends are used to pay the trustee's fee, which should be very low as the trustee has almost nothing to do.
* Any additional dividends, beyond the trustee's fee, get paid out quarterly to all participants, in proportion to their investment shares.
* Each time participant dies, their share is liquidated and paid out in four quarterly instalments over the next year, in proportion to their investment shares.
The nice thing about this is that the expected payments, though somewhat irregular at first, grow slowly then start to rise a lot just as you get past your initial life expectancy and health care costs explode.
As a pure bonus, you feel like a genius for every year you're a surviving member. If (when) you don't survive at some point, well, you won't be regretting the decision to have participated!
Jim
