Slate Money’s Felix Salmon had an interesting conversation with economist and author Teresa Ghilarducci. It is well worth the half hour listen or the time to read the transcript.
Both the audio and the transcript are available here: Megaphone
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The success of your retirement is inversely proportional to what you lose to fees, commissions and trading costs.
You could solve a lot of this by simply giving every American access to the low-fee Federal Gov’t Employees’ Thrift Savings Plan. Wall Street will spend liberally to make sure that doesn’t happen.
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Yes, and failing that they will plot to get control of its investments by hook or crook.
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Did you agree with her other points too?
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As you probably guessed, I don’t like her idea of the annuity, unless it comes with the same cost structure I get from the Social Security Administration by waiting from age 62 to 70. Any inflation-adjusted annuity you buy from a commercial insurer will cost about 50% more.
I think a better idea would that tontine-like product I posted about 2 months ago, except I’d invest the money in an S&P 500 index fund instead of US Treasury securities and ditch the 1% fee. I’d keep the same mechanics of the “pool” (i.e., you can withdraw your money prior to age 80, minus what you’ve gotten in monthly benefits, than the pot gets annuitied for 20 years and everyone still gets a monthly check, at age 100 they split what’s left among the surviving members of the cohort. (You need that age 100 thing so that it technically isn’t a tontine (i.e., last man standing gets the whole pot) which is illegal in the US.
I liked the fact that she talked about how most of the gerontological research shows that people really enjoy being retired. The exact opposite of what the Calvinists have been telling us for 40 years – maybe longer.
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