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wife and I are 83 no kids-no need for any money to be left. How would you invest in annuities,TIPS,RSP,QQQE,BRKB,Other?
Pension and soc sec cover our expenses.

Then why are you even investing? You could put it all in money market accounts and be fine. You could lose it all tomorrow and also be fine, right?
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Pension and soc sec cover our expenses now---- Did you ever hear of inflation?

You ask the same question like every three months. Why don't you read over the previous answers?

"Pension and soc sec cover our expenses now" Did you ever hear of inflation?

Yes, of course. Social Security goes up by CPI.
You didn't give any sort of hint or ballpark for your investments compared to expenses & income, and what percentage of the income is fixed(?) pension and what percentage is SS.

Also, at 83 your long-term is approximately next Tuesday. Don't buy green bananas. ;-)
Seriously, life expectancy at 83 is about 7 years.


If you have $1,000,000 you can put it in something like T-bills and withdraw $50,000 a year for 20+ years.

Personally, I am in the "run up the score" camp, so I'd invest in VUG and VTI.
Maybe put a couple years worth of pension income into T-Bills, in case of short-term bear market. That would only have to cover the shortfall of pension/SS from inflation.

where in various past 3 months did I state market is way up at new highs and I felt it difficulty in going in now?
List the message numbers where market was at high, and I asked the same.

Thanks Ray great suggestions.

Well you did ask this on 9/19/2023 on the retirement board for example and Jim provided a reply:

Jim,
MY wife and I are both 83 fairly good health,no kids.
Pension and soc sec covers yearly expenses now.
No stocks, all money invested in 3 moth treasury bills, a subatancial amount of money.
I would appreciate your advice on how to invest to protect for lengevity- stocks, annuities, etc.

Thanks in advance.

BRK was not near all time high, which was asked "6" months ago. Being hard for me to go in now, implying wait or dollar cost average or other.

Since 9/19/2023 there has a big run up.

Ignore the people teasing you, we're mostly nice around here.

I would love to do a well thought out post, but I have a horrible case of Covid and I'm running on about 60 IQ points.
(it only takes 40 to bark, I've heard).

You and your spouse are older than most people discussing this situation here, which changes the standard advice.
The key thing is not long run annualized real return, the usual prime concern. The risks you need to stop on are longevity risk (outliving your money) and inflation.

For longevity risk, there aren't any good products other than annuities, which are financially terrible but they do really serve a purpose. The problem with annuities is that there basically aren't any that are fully inflation protected. (last I heard in the US there was precisely one, and it was about to be discontinued...with no competition you can rest assured the pricing was not aggressive).


So, two general approaches, which I am not smart enough today to say things about their relative merits.

If you go with equities because they offer a positive long run real total return, then yes, some of the alternatives mentioned are relatively richly priced at the moment, especially RSP. I believe QQQE and Berkshire are only modestly more richly valued than usual. If you wanted to go with equities, then I'd suggest buying in three chunks over the next year. One will be at a bad price, one at a good price, one in the middle. You will feel like a genius for at least getting a good price on 1/3 of it! If you are living from equities and handling longevity risk yourself, you have to have a low withdrawal rate. e.g., each year cash out and spend 4% of the current portfolio value. The income will be variable, but should keep up with inflation indefinitely.


But, going with the first note above, your concern is primarily inflation protection and longevity risk. You don't really need the extra return that equities would offer over the very long run, and they do come with the downside of variability.

So I might suggest something like this:

For a random back of the envelope, and immediate joint annuity for a couple aged 83 will pay around 10.6%/year of the purchase amount. (remember it's a purchase, not an investment: the premium is gone once you hand it over)
That would probably work fine, except for the fact that the real income will slide with inflation. Your joint life expectancy is around 12.5 years (i.e., at least one of you is likely to live at least that long). It is not inconceivable that you could lose 1/3 or 1/2 of your purchasing power in that amount of time, which is too much, especially when you consider that expenses tend to rise as you get older.

That leads to some ideas of a two part solution.
Put some of your money into 5-year TIPS. They are paying inflation + 1.77%/year, which is is a lot better than full exposure to inflation losses, then on maturity buy an immediate joint annuity with the money from the redemption. At the moment a joint annuity for two people age 88 would give about 13.4%/year cash income for life, again with no inflation protection.
Spend the rest of your money in a straight line over the next five years. Just as that pot of cash runs out, you buy the annuity and live on that from then on.

Pick the ratio so you are getting a big bump in spending power at the five year mark, since you will get no inflation protection after that date. For example, if you put 35% of your money in cash (all T-bills or a five year ladder) to spend cash in a straight line over five years, that will give you 7%/year spending money measured as a fraction of your total nest egg. Putting the other 65% into five-year TIPS and buying an immediate joint annuity at age 88 will probably get you around 9.5%/year as a fraction of your total starting nest egg today (because the TIPS have a positive real yield). It would take around 10 years of 3% inflation for that to erode back down to the income level you had for the first five years.

For bonus points:
It is possible that bond yields will be very low on the precise fifth anniversary, so the annuity you buy won't have the same income as today's quote suggests. However, you can keep an eye on quotes and buy the annuity sooner (with more money) to mitigate that. Or, do two annuities: buy 4-year TIPS to go into annuity at age 87, and also 8-year TIPS to go into annuity at age 91. It's less likely that the bond rates (and therefore annuity rate) will be unusually low at both of those future dates. You're a bit better protected from an inflation point of view, too.

I'm not sure any of that is GOOD advice, but it gives you things to consider that you might not otherwise have done.


Jim

Thanks Jim.

Gracious post. Feel better

" but I have a horrible case of Covid and I'm running on about 60 IQ points.
(it only takes 40 to bark, I've heard)." Hi Jim, sorry to hear this best wishes. In our country PFE is aggressively running ads, promoting Paxlovid, " got covid, take Paxlovid", kind of ads. For those of us who own PFE directly and or indirectly, what's the thinking in your area of the world, did they advise you take Paxlovid ? If you don't mind, are you current on your covid vaccine, PFE is promoting the boosters as well. Dozens of American colleges are still mandating the boosters to healthy college kids. Best of luck, get well soon, either with Chicken soup or Paxlovid!!

BRK was not near all time high, which was asked "6" months ago. Being hard for me to go in now, implying wait or dollar cost average or other.

"The best time to plant a tree was 20 years ago. The second best time to plant a tree is today."

If, as it seems, you have been asking basically the same question every few months, then I have to wonder if you are loking for advice or just trolling.


As far being afraid to invest near all time highs, you should be aware that all-time highs tend to come in clusters. When one happens, it is likely that another one will occur pretty soon.

You said that you live on pension and SS now, and don't need to withdraw from investments, but are concerned that inflation will cause your expenses to become higher that the pension+SS income.

Well, SS is indexed to inflation, so the only concern is the non-indexed pension. So all you need to cover is the shortfall of the pension income.

Since you did not indicate what percentage is pension and what percentage is SS, then you have basically asked "how high is up?". You did not provide enough information for anybody to make meaningful suggestions.

You don't need to provide numbers, but to get any useful suggestions you would need to provide some percentages, like:
* pension is XX% of income
* SS in YY% of income
* annual pension+SS income is ZZ% of investment/retirement account.

Absent that, you are just trolling.

For those of us who own PFE directly and or indirectly, what's the thinking in your area of the world, did they advise you take Paxlovid ?


In Quebec, the government does not promote it heavily but makes it available for free, basically to people over 60 that want it and to anyone who has chronic diseases that make them at high risk of complications from COVID. You need to have a confirmed SARS-CoV-2 infection and have had symptomes for less than 5 days, and there are a number of contra-indications (mostly because the ritonavir component of the drug makes the active nirmatrelvir part last longer (ritonavir slows the hepatic metabolism of nirmatrelvir) but it also slows the metabolism of a bunch of other meds like blood thinners and a variety of cardiac meds.

Anecdotally, it doesn't seem to be used very much, although I personally would take it if I were very sick.

I briefly owned shares of Pfizer because I thought Paxlovid was going to be a big deal, but I quickly exited the investment as it became clear to me that sales were never going to amount to as much as I thought initially.

dtb

If there is no plan to leave money to anyone or institution, it seems to me at this age, one should assume an optimistic life-expectancy of 100, and the best approach would be a split of bonds and stocks, with majority (e.g., 60-80%) of money spreading out in a few months up to 10 years bonds, and the other portion in super-safe stocks like BRKB or index funds.

If there is no plan to leave money to anyone or institution, it seems to me at this age, one should assume an optimistic life-expectancy of 100, and the best approach would be a split of bonds and stocks, with majority (e.g., 60-80%) of money spreading out in a few months up to 10 years bonds, and the other portion in super-safe stocks like BRKB or index funds.
----------------------------------------------------------------------------------------------------------------------Thanks BIGSHAN

Lately, the last year, I have been doing something very similar to what you described.
I have been using the barbell strategy, 80% in 3 months treasury bills, and about 20% in various trades, which I enjoy.

I have been trading and investing for about 60 years, stocks, all types of options trades, futures, and even currencies at times. I have mainly used technical analysis over the years, along with some fundamentals. I had been a member of the
Market Tecnicians Asscociation years ago.

I became interested in mechanical investing many many years ago and used it. I also worked on a couple
brokerage computer software systems, as a programmer and computer analyst.
in the 1960's.

Lately, I became very risk adverse because of my age, and that is when in planning for future. I have asked the questions.

Also, thanks to all for constructive help.

Looking simply at 30 year charts of BRK and S&P I am not sure how "super-safe" BRK is. After the Dotcom bubble both fell roughly 40%, in the great financial crisis both 50%. In the latter both needed 5 years to recover. Only after the Dotcom bubble BRK recovered much faster while the S&P needed full 7 years - - - which at that age is not exactly pleasant to watch. So personally as bigshan I also would put only the minority into the index or whatever presumed super-safe stock.

Actually to be on the safe side and to be completely risk-averse (why not, if one doesn't need good returns anymore) I'd think about putting a part in completely different "hard" asset classes (real estate, timber ....) and/or other parts of the world.

" but I have a horrible case of Covid and I'm running on about 60 IQ points.
(it only takes 40 to bark, I've heard)." Hi Jim, sorry to hear this best wishes. In our country PFE is aggressively running ads, promoting Paxlovid, " got covid, take Paxlovid", kind of ads. For those of us who own PFE directly and or indirectly, what's the thinking in your area of the world, did they advise you take Paxlovid ? If you don't mind, are you current on your covid vaccine, PFE is promoting the boosters as well. Dozens of American colleges are still mandating the boosters to healthy college kids. Best of luck, get well soon, either with Chicken soup or Paxlovid!!

Paxlovid is great. It reduces the chance of long covid by 1/3. It also prevents bad symptoms if you take it right away. It does make you nauseous however.

I would love to do a well thought out post, but I have a horrible case of Covid and I'm running on about 60 IQ points.
(it only takes 40 to bark, I've heard).

Get well soon.

I am also 83. In my Continuing Care Retirement Community, in Maryland near Washington, DC. I know a couple of people whose spouses have Alzheimer's Disease, or some other kind of disease, and require 24/7 caregivers. At $25 or $30 an hour, this means $200K to $250K a year extra expenses, for an unknown number of years. How many years of this does the original poster want to budget for?

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