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Pensionize Your Nest Egg: How to Use Product Allocation to Create a Guaranteed Income for Life, 2nd Edition by Moshe A. Milevsky, Alexandra C. Macqueen

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Introduction Why Retirement Income Is Better than Retirement Savings

It is early September in the year 2045, and Gertrude has just turned 85 years old. She is in relatively good health and is enjoying this quiet, uncomplicated stage of her life. She has time for her hobbies, which include membership in her local gardening society and a regular poker night with friends, and time for her family, who visit most holidays and indulge her on birthdays. Her everyday companions include her small dog, Perky, and the young dog walker she has hired to provide the daily activity Perky needs to keep fit. (Running around the park is a little beyond Gertrude these days.)

Gertrude’s income (all in 2015 dollars) consists of about $10,000 per year in an old-age government pension, about $7,000 in dividends, and an additional $40,000 from an indexed life annuity she purchased from an insurance company many years ago. While she doesn’t have much in the way of investments, she does have a financial adviser to manage her small stock and bond portfolio. Mainly, they talk about how much Gertrude wants to donate to charity each year. In fact, the only money question Gertrude really has to deal with is how to spend the annual income of $50,000 that she receives from her pension and life annuities.

Given her family history, Gertrude worries about Alzheimer’s, and she does her best to keep herself mentally and physically active by assembling the puzzles she downloads and prints on her home 3-D printer, ...

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