Retirement Plan Options

Comments on “Retirement Readiness Is Being Assessed in the Wrong Manner,” an interview with Moshe A. Milevsky, in the April 2016 AAII Journal.

I disagree with the use of annuities. I see them as a response to fear and as a vehicle of the companies issuing them, and that they have more confidence in our economy than buyers. If you live hand to mouth on what you have, you need them. If you feel you could weather a drop in your investments for three to four years, I would think you are fine without them.
—Frank Thibault from Arkansas

I have been a member of AAII for over 30 years. We have worked hard to have a portfolio of investments that pay dividends and interest that will provide us with the income we desire during retirement. My model assumes that my investments will only return 1% more than the rate of inflation, which I believe is conservative. Our sole annuity will be Social Security, which we will defer until I reach 70 to maximize it.

My view of these other annuity products discussed in the article is that they are like life insurance and gambling—i.e., the odds are with the house, so why not play like you are the house? You hedge your bets with term life insurance!
—Charles Clark from Washington

Many good points are raised in the article and the comments to it. We all travel down the continuum of time with different beginning points and uncertain end points, not knowing whether we will still have our mental faculties at the end. There is a range of variables that can be employed to achieve an acceptable outcome, though the rules and economic conditions will change along the way. But the most important thing is to get people to think about what will work for them early enough to allow implementation of a sound plan. And the hardest thing is to get them to take steps toward implementing their plan.

Following the RMD (required minimum distribution) schedule for IRAs would provide an income stream until age 115, assuming one is responsible and doesn’t take it all out and spend it right away.
—William Warren from Illinois

The Value of Bonds

Comment on “What Bond Calls Mean for Your Cash Flow,” by Hildy Richelson and Stan Richelson, in the April 2016 AAII Journal.

Found this to be a very informative article in understanding the value of bonds.
—Gary Owens from Ohio

Sell Rules

Comments on “Strategies for Selling Stocks, Including Guidelines From Experts,” by Charles Rotblut, CFA, in the April 2016 AAII Journal.

Very interesting article. After many years of trading, I have realized that selling is the most emotional and difficult decision. The article explores this point very well.
— Fabio De Castro from Illinois

Although I prefer to own individual stocks, I do own a few ETFs (exchange-traded funds) from time to time to help reduce risk in investment areas where I am less familiar. I have not seen specific articles discussing how buy/sell decisions differ between equities and ETFs or mutual funds. Do these buy/sell decisions have different determinants or decision points?
— J. Yockers from Oregon

Charles Rotblut, CFA, responds:
The major question you have to ask yourself about mutual funds and ETFs is whether or not the reasons you bought the fund still apply. Is it still being managed in the same manner? Has the expense ratio changed? Is the performance relative to its peers still similar? Whether you answer yes or no to these questions will help guide your decision.