[NovemberWhiskey]

OK sure; same's true of bonds or CDs or any other asset type though no? The point is that "invest in equities with dividend reinvestment until retirement and then buy a life annuity" is a totally viable strategy. That's basically the way pension saving in the UK works historically, for example.

[ghaff]

Right. Life annuities may or may not be a good deal. But that's certainly the main way to not be essentially forced to pass on assets. (Modulo real estate you own and are living in.) And, as you say, defined benefit pensions basically work the same way--although, in the US, current ones are fairly uncommon outside public sector--although a lot of people still have them from years past.

Just to add. Bonds and CDs do have durations though so you can essentially do your own actuarial calculations to a certain degree.

[NovemberWhiskey]

In the UK this is actually the typical pattern for defined-contribution schemes; I haven't looked recently but it used to be the case that you were legally required to buy an annuity with 75% of your tax-deferred retirement savings.

[ghaff]

Interesting. I'm not sure how common annuities outside of defined benefit pensions are in the US. My impression is not very.

I've noticed them mostly in the form of charitable trusts (which can offer the benefit of basically shielding large asset gains from taxation). But it doesn't seem to be a widely-used investment strategy in general. Maybe it's more common if someone doesn't have an interest in passing down any money.

[rgmerk]

You’re not required to any more, but there are heaps of people on annuities there.

I haven’t read anything about it yet but a lot of them must be in pretty awkward straits because most aren’t fully indexed to inflation…

[gpderetta]

The rules were changed some time ago; also buying an annuity hasn't been worth it for a while.