Annuities got a somewhat deserved reputation for being overly complicated and expensive, but there are new products that are standardized and cheaper. Still, there’s a lingering problem of “not wanting to commit and mistrusting the insurance companies,” Robert Shiller, a Yale University economist, wrote to me by email.
For a practitioner’s perspective I interviewed Ryan Pinney, the president of Pinney Insurance Center in Roseville, Calif., which is a broker to insurance agents. (Pinney also has a company, WholesaleInsurance.net, that sells direct to consumers.) He said there are relatively few people who are willing to give away a big chunk of their savings all at once, even if it’s for a rational reason, namely to buy an annuity that will pay them monthly checks for the rest of their lives. Warshawsky’s product would require them to do that.
Pinney referred me to OneAmerica Financial Partners, an insurance company in Indianapolis that sells a product combining an annuity with long-term care insurance. But Dennis Martin, OneAmerica’s president of individual life and financial services, told me that his company’s product isn’t quite what Warshawsky had in mind. One difference is that people aren’t required to turn the pool of money in their accounts into an immediate annuity; they can choose whether to use the money to pay for long-term care, but any unused funds are paid out at death. So the natural hedge that Warshawsky’s concept depends on doesn’t exist.
“Mark has done really good work on this, and I think his combination concept is promising,” Mark Iwry, a nonresident senior fellow at the Brookings Institution and former senior adviser to the Treasury secretary, told me. But, he said, “It’s been a multidecade challenge to get people to buy, and industry to offer, consumer-protective, transparent and competitively priced annuities.” And, he said, the long-term care insurance market “has not worked well for many years.” If you don’t like broccoli and you don’t like brussels sprouts, you probably aren’t going to like a broccoli and brussels sprouts salad. Then again, hope springs eternal.
The Readers Write
Regarding your skepticism about buy-American rules: Perhaps you should visit a few towns in New York State or Massachusetts, where factories and industries have been shut down and their products offshored to low-cost regions like China and India. The U.S.A. is destroying its manufacturing capability and capacity. It will become strategically dependent on adversaries, not allies.
Ian A. Crossley
Brixham, England
The Maritime Administration’s recent decision to deny ports the ability to procure cargo-handling equipment from overseas with grant funds will almost certainly limit the effectiveness of the Bipartisan Infrastructure Law’s historic funding.
Chris Connor
Washington, D.C.
The writer is the president of the American Association of Port Authorities.
I have a thought concerning your newsletter about lessons from the Super Bowl. To make teams play their hardest on every down, play to a target point total in the fourth quarter, rather than until time expires. The N.B.A. did this in the All Star game last year.
Michael McCarthy
Huntington Beach, Calif.
Image and article originally from www.nytimes.com. Read the original article here.