What Shall We Do With Our Savings?

Long ago, when I retired, I met with the advisor the retirement company assigned to me, to decide what to do with my retirement savings.  (My employer and I had been giving them a little bit each month, which they had been investing in corporations on my behalf, and hopefully by the time I retired, there would be so much money that I could take a bit each month, and as long as my wife and I lived, we would not run out of money.)

Now, the retirement company--any of them, really--offer a deal.  They offer to take all your savings in a lump sum (scary, huh?) in exchange for which, they give you an income for life.  No matter how long you live!

They'll tell me in advance how much I'd get each month; it would depend on how much I gave them.  This is called an annuity.  The agreement is called buying an annuity.  It is the responsible thing to do, if you don't want to gamble with your retirement.

Alternatively, you could leave your savings invested in the stocks and bonds the company invested it in, and hope that the stock market would not take a nose dive.

Well, guess which road I took? 😭😂

Ñobody knows (excuse my Spanish) what's going to happen; the economy could rebound (probably not very soon), and anyway, the retirement company will hedge their investments by buying bonds, which are loans that companies take from my savings, at a negotiated interest rate, which will not dive like the stock market.  All sorts of crazy things could happen, many of which are bad for my savings.

If I had to do it all over again, here's what I think I should do.  I should divide my savings in half.  With half, buy an annuity, which will give me an annual income of half what I would have gotten if I had bought an annuity with all my money.  The rest of my savings I would keep where they have been, going to the moon with the crazy stock market.  This way, if the stock market goes sick and is on life-support, I won't be completely helpless.

I know lots of friends who know all about stocks, and who are in the insurance business (which depends heavily on the stock market), but I hesitate to get their advice.  Nobody has lived through a recession as crazy as the one on the horizon, and they cannot advise; they just don't have the background to do so.  So this 50-50 strategy is the best we can do, I think, in the total absence of reliable information.

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