Pension protection, or ponzi.

[Shannow]

As a person who has been paying insurances of whatever persuasion for a couple decades now, and never collected, was interested in the latest suggestion that I heard last night.

Worried that you don't have enough retirement savings, there's a proposal to hand over your savings, and be guaranteed an increased pension for the rest of your life.

$100k in savings, traded for $90 per week over the base pension, guaranteed, for the rest of your life...however short, or long that may be.

Is it insurance, or ponzi ?

 

[Silk]

$100k savings? Wow.

How about $100 savings and 9 cents a week.I could handle that.

 

[Shannow]

Silk, it's specifically $100k in superannuation savings...have to have at least retired before you can "make the deal"...for me, can't sign up until 67.

Your plan holds significant merit 'though, and if offered today, I'd sign up now.

 

[tomcat27]

and who gets your 100k when you die? do they keep it, or does it go to your estate? its only a 4.5% return.

 

[Shannow]

If you live longer, you reap the benefits.

If you live shorter, those who live longer reap the benefits.

Like I said...insurance or ponzi ?

 

[crinkles]

i don't know... what kind of annuity can you buy with 100,000 dollars? 90 a week sounds a bit low.

 

[oilyriser]

Inflation.

 

[JHZR2]

Originally Posted By: crinkles
i don't know... what kind of annuity can you buy with 100,000 dollars? 90 a week sounds a bit low.


+1, what kind of COL-adjusted annuity for life can you buy?

 

[bepperb]

Here that would be called an annuity, and they're very common.

The details are all over the place, and that's where you can get caught up in a bad deal.

And always consider what a waterfall of CD's or bonds can get you. It's a bit more work, but probably a better return. Basically 25% of your money in cd's which mature in 1 year, 25% in 2 year, 25% in 3 year, 25% in four years. Every year you get whatever the CD rate is on 1/4, times four years, of your investments and roll the rest over. So around here, on 100,000 dollars that would be about two grand a year income. Two grand a year doesn't seem like much (compared to five grand, or 90 a week), but if you die tomorrow the money isn't gone.

 

[dwendt44]

"Here that would be called an annuity, and they're very common."

And they are usually a el-stink-o deal unless you are very rich.

http://clarkhoward.com/liveweb/shownotes/2005/05/18/9310/

 

[crinkles]

Originally Posted By: bepperb
Here that would be called an annuity, and they're very common.

The details are all over the place, and that's where you can get caught up in a bad deal.

And always consider what a waterfall of CD's or bonds can get you. It's a bit more work, but probably a better return. Basically 25% of your money in cd's which mature in 1 year, 25% in 2 year, 25% in 3 year, 25% in four years. Every year you get whatever the CD rate is on 1/4, times four years, of your investments and roll the rest over. So around here, on 100,000 dollars that would be about two grand a year income. Two grand a year doesn't seem like much (compared to five grand, or 90 a week), but if you die tomorrow the money isn't gone.


but if you died tomorrow you wont need money.

j/k
i know what you mean, leave it for your estate/will.

 

[dwendt44]

With 100K to play with you'd do better with the CD option.
100K @ 4% nets $4000 a year without touching the principle.
Careful shopping could get you higher intrest rates that than I think.

 

[Shannow]

It's supposed to be the "no risk" option, for pensioners who lost 20-30% during the last period, and are demanding that "someone do something".

So the "something" is to take the money now, and promise it back (more or less depending on how long you live) in the future.

Talking to my Dad, his father paid into a "pension fund" decades ago. Some went bust, people got scared, Govt resumed the money promising pensions for all...when he was due to retire, they gave much less than promised.

 

[oilyriser]

Inflation, and.... suddenly you no longer retire at 65, or even 70. Government can break contracts at a whim.

 

[Shannow]

Last lot changed my retirement age retrospectively to 65. This lot 67.

Their argument was that "when the pension was established, people spent on average 12 years on it"...

Logan's Run, or Soylent Green ?

 

[cousincletus]

I watched Happy Days for years and never saw Fonzi cheat anyone. Or was that a Potsie scheme?

 

[Papa Bear]

I don't need any retirement plan.... Mama Bear and I will go live with the kids in our old age.