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Frequently asked questions
When you join a tontine, you invest enough of your savings to ensure that you receive a suitable level of steady income for the rest of your life.
BUT, the golden rule of a tontine is that when a member dies, they no longer need their monthly income and this income is put towards supporting those surviving members of your tontine community that still need the income. Therefore, members that are unfortunate to die at younger ages may not have received back their investment in full however they will have benefited in different ways:
- They will have enjoyed spending their retirement income without the ongoing stress of worrying about running out of money in later years.
- They can look down from the pearly gates and know that they have helped sustain their fellow members that were blessed with a longer life.
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The projected income from a tontine adjusts based upon changes in interest rates, investment returns and the mortality of the members. This flexibility is the hallmark of the safest pension funds in the world.
This means is that our systems are constantly monitoring investment returns and death rates and then adjusting each members expected future payments usually by a few cents up or down.
If many members are dying sooner than expected, the payouts will start to rise faster. If many members are living longer than expected then the payouts will rise more slowly and may even stop rising for a while.
Through over 7 years of research we have found that that these tiny ongoing micro-adjustments ensure that the tontine always has enough money on hand to sustain the surviving members even if they live exceptionally long lives.
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With existing retirement accounts, your children could have to wait 30+ years until you pass away to see if they stand to inherit any leftover savings.
A TontineIRA™ makes it safer to take care of your children financially now without them having to wait.
In a TontineIRA™, you tontinize enough of your savings to secure your ideal level of lifetime income and then use the leftover balance to help your children now when they need it most to pay university fees, buy a house or start a business.
At the same time, your TontineIRA™ also reduces the risk that you will become a financial burden to your children in later years.
As Nobel Laureate Richard Thaler put it: "the best bequest you can give your kids is a guarantee that you will never need to move in with them".
Members with children that have savings left over after they have secured their lifetime income should consider creating a Tontine Trustfund for their children.
This eliminates the risk that the children will "blow their inheritance" by converting that inheritance into a lifetime income that can start paying out at the date selected by the member, for example, at 18 years old.
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Your savings are deposited in a Trustee-directed IRA rather than a self-directed IRA at a US custodian selected by our chartered trust partners (the 'Trustees').
The Trustees ensure that all of the monies are held in individual trust IRA accounts for each member and that the monies are invested in FDIC insured deposits/CDs.
The Trustees expect to offer a broader range of investment options via model retirement investment portfolios and target date funds in the near future.
You may elect to switch your underlying investment portfolio partially or fully from the FDIC insured assets into these retirement portfolios however they will require you to complete a questionnaire before making these available to you to ensure that they are broadly suitable for someone of your risk profile.
The Trustees will not be offering individual financial advice.
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We typically form communities of members by selecting individuals of the same sex that were born within a few years of each other.
As new members get onboarded to our platform, we will continously add new members to the already established communities until they reach a maximum of 10,000 members at which point we start a new community for that demographic.
Your "job" in retirement is then to take the best care of yourself with the goal of outliving as many of those other 10,000 members as possible.
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You can increase the balance in your Tontine Trust at any time subject to any contribution limits imposed by tax authorities such as the IRS.
In the case of the TontineIRA™, you can roll over unlimited amounts from a 401(k), 403(b) or an existing IRA and you can also contribute an addition $7,000 per year if you are under the age of 50 or $8,000 if you are over 50.
If you have non-qualified (already taxed) monies, you will be able to contribute these to other types of tontine product such as our upcoming Tontine ROTH IRA.
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Life expectancies are a single number of years that people your age and sex might expect to live on average.
Although a few people will live to their exact life expectancy, most people will live either a shorter or longer period of time, and it could be much shorter or longer. There is a significant financial risk involved in living longer, especially if your primary source of retirement income is your savings. Therefore, it is very risky to rely on the life expectancy number when planning your retirement.
The Actuaries Longevity Illustrator estimates the chances that you will live for various lengths of time. And for couples, it also shows the likelihood that one of you will outlive the other. All of this information is important when planning a secure retirement.
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