Author Archives: peter benedek
Spending and risk tolerance in retirement: How much can I spend in retirement?
In a nutshell The risk of outliving retirement savings is a persistent worry of those approaching or in retirement. A tool was built to help answer the “How much you can spend each year without running out of money?” question based on givens (age, assets, income/pension, risk-free rate and tax rate), maximum stock allocation (based […]
Nortel pensioners’ annuity vs. commuted value decision: Current thinking in personal context
In a Nutshell Just passed the half way point in the Nortel annuity vs. lump sum decision, it’s time to review my current thinking on my personal decision. Prior to receiving the option letter I was heavily inclined to take the commuted value (lump sum) if it was reasonably close to the actuarial fair value, […]
Non-fiduciary advice is an oxymoron…Comments on CSA consultation 33-404: Enhancing obligations of advisers is insufficient-Advisers must become Fiduciaries
In a nutshell Non-fiduciary advice is an oxymoron. Statutory fiduciary advice is achievable by a principle, rather than rules, based approach. Advice is about process not product. Advisors placed in a context conducive to fiduciary behaviour must transition from a business to a professional model by: state-of-the-art best practices (e.g. IPS), institutional/employer oversight […]
Expanded CPP agreement reached- in principle
In a nutshell The expanded CPP is a key element addressing Canada’s pension crisis. Proposed level of expanded CPP is acceptable, but the 49 year phase-in period makes addressing other problems of Canada’s retirement income system urgent. Needed changes include: higher savings rates, low-cost accumulation/decumulation vehicles, longevity insurance, fiduciary level of care/advice for all retirement […]
Rebalancing in retirement
In a nutshell The primary application of rebalancing for most DIY investors should be risk management. Most other rebalancing reasons/approaches are essentially active calls on market direction with guaranteed costs without guaranteed benefits. Using appropriate (capitalization weighted) passive broad-market index fund(s), the risky part of the portfolio gets most/all rebalancing achieved automatically; the only required […]
2016 CFA Annual Conference (Montreal) – An overview
In a nutshell The bad news is that we are living through a VUCA world (volatility/uncertainty/complexity/ambiguity)… the good news is that forecasting is difficult especially about the future. Changes/challenges and therefore threats/opportunities are everywhere: oil prices between $25-$150 and up, passive investment continues to grow with active investors thankfully working to eliminate pricing inefficiencies, China’s […]
Don Ezra’s “Most people need longevity insurance rather than an immediate annuity” (A review)
In a nutshell Ezra argues that the vast majority of retirees will be better of purchasing a longevity annuity rather than an immediate annuity. He opines that “the so-called annuity puzzle is not a puzzle…(but) if longevity insurance were widely available but still shunned, then that would indeed be a puzzle for social scientists to investigate.” […]
Will that be annuity or lump-sum?
In a nutshell The annuity vs. lump-sum decision is explored as a function of lump sum offered. Qualitative and quantitative considerations are reviewed, as well a tool is provided to allow consideration of: the required break-even return rates and stock allocations under various conditions, the impact of age when 60% (survivor benefit) kicks in, and pensioners’ […]
Hot Off the Web-October 22, 2015: Pensions and Retirement Income (incl. Nortel’s Canadian pension update)
Contents: Nortel pension update, USSteel/Stelco reaffirms no private sector pension protection in Canada, ORPP or CPP- putting all the eggs in one basket? actuarial delusions? target-date funds glide-paths still not right- it depends, Vanguard: next 10 year 60/40 portfolio return expected in range of 3-5% real, income replacement ratio is not target retirement metric, fiduciary? […]
Hot Off the Web- September 1, 2015
Contents: ETFs disconnect from underlying, capturing long-term equity risk premium (ERP) comes with inevitable occasional “horrifying short-term losses”, Fidelity IRAs provide Qualified Longevity Annuity Contract (QLAC) option (why not in Canada?), indexing perspectives: providers/bond and stock indexes/indexes for benchmarks vs. portfolio construction/, pre-mortem before the next inevitable 50% market drop. Much ink spilled in the […]
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