Retirement: How to craft your own annuity

Sidestep insurers, build your own annuity and keep control of your money.

Do-It-Yourself Annuities: A Blueprint (SmartMoney)

Retirement: Optimal equity exposure to mitigate longevity risk

This Monday's link is a study on stock allocations in retirement and risk of running out of funds before you die (longevity risk). It is one of the main risks to manage.  According to Putnam, your equity exposure should be no more than 25% which is more conservative than most studies I've seen.

Marketwatch writeup of the report.  Key snippet, "In an interview, Harlow noted that once a retiree starts taking money from their retirement accounts, the withdrawals become “path dependent.” And if the success of a retirement income plan rests on whether the markets go up or down, one has to figure out how to protect oneself against that volatility, and especially against the risk of unfavorable “sequence of returns.” And the best way to do that is by reducing one’s overall exposure to equity to no more than 25%, he said."

Actual report is here (putnam website)

Inertia and your 401(k)

Inertia can be good and bad.  If inaction causes desired behavior, then inertia is positive. When your employer automatically signs you up to save for retirement via the 401(k) and places the savings in an age-appropriately allocated portfolio, that's a good thing.  However, if they set aside too little, you may not be saving sufficiently for your retirement, and that's probably not a good thing.  If you are at an employer, with an automatic feature for the 401(k), check your automatic savings defaults at your employer, don't rely on inertia.  See if you need to take some additional action.

401(k) Law Suppresses Saving for Retirement (wsj)

Retirement: 5-year checklist to "R" day

You're about five years from retirement and you're not sure what you need to do be prepared?   Here is a WSJ checklist in consultation with Deena Katz, a noted personal finance professor at Texas Tech.