Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Aug 27, 2022 0:09:59 GMT
Some one mentioned Annuities to me. Looks like I will have to give a company a big sum of money for guaranteed income in future. That way I do not have worry about the market ups and down in retirement. He mentioned it is like buying a pension.
My reaction was not that it is not a good idea. Money should be in ones control. and what if company goes bankrupt etc.
But are there any good reasons to consider them?
|
|
|
Post by chang on Aug 27, 2022 0:51:53 GMT
I had the option of taking an annuity or a lump sum pension payout when I retired two years ago. I considered the annuity for about 0.00001 seconds. Took the lump sum.
|
|
|
Post by saratoga on Aug 27, 2022 0:57:46 GMT
some good reasons: psychological benefit of a steady income; You benefit from `the mortality credit' if you live long; You protect your income from frauds and from your children;
some additional bad reasons: possible high cost; typically not protected from inflation; lose chance to bequest.
Consider maximizing SS before you buy an annuity. Social Security is an excellent annuity. TIAA annuity could be good. Deferred annuities or SPIA may be useful in some cases. I would be more careful with the rest. In my case, I weighed investing in PRWCX against annuitizing my TIAA investments. I chose PRWCX but it was a close decision. A partial annuitization of the TIAA investment in the future is possible as mortality credit and interest rate increase.
|
|
|
Post by Mustang on Aug 27, 2022 1:04:02 GMT
An annuity is an insurance contract. They can be a great investment for people who need a stable, reliable income source and don't intend to leave anything for the kids. The payment is based upon life expectancy. If you expect your lifespan to be longer than average then a SPIA (Single Premium Immediate Annuity) might be a good investment because you will draw longer than most. If you die early the insurance company keeps the difference.
|
|
|
Post by mozart522 on Aug 27, 2022 3:23:38 GMT
A SPIA for part of one's portfolio might be a good investment if along with SS that would tend to cover living expenses, leaving the rest of the portfolio to invest. This eliminates the worry over withdrawals and makes your investments more flexible. However, they were far more attractive before 2008 when bonds yielded around 5-6%. They can be expensive and once a decision is made there is no going back.
|
|
|
Post by fishingrod on Aug 27, 2022 5:47:34 GMT
|
|
|
Post by yogibearbull on Aug 27, 2022 12:20:51 GMT
Basic SPIA for lifetime guaranteed income may work for some for covering essential expenses. July 25 Barron's had a feature and listed some 100 commercial examples. Clearly they are not for the DIY crowd.
|
|
|
Post by steadyeddy on Aug 27, 2022 13:37:24 GMT
In general, avoid annuities like COVID (plague).
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Aug 27, 2022 14:53:18 GMT
Thanks everyone. I will not consider annuities.
I used Fidelity's free retirement planner software. bad news - I will have to work till 65.
It has a concept of guaranteed income during retirement which is not affected by market's volatility.
guaranteed income - Our Social Security + 1 rental income will cover 50% of our monthly needs during retirement. I do not have pension.
|
|
|
Post by ECE Prof on Aug 27, 2022 15:10:16 GMT
My PDI investment pays an income, equivalent to SS + Tenn. Retirement income. Even during the pandemic, PIMCO paid cash every month. Had I known back in 2005, I would not have given the cash to the state of Tenn. to get the retirement (two-life annuity), but would have invested in some PIMCO CEF, like steelpony10 , has done. There are many such vehicles to get "almost" guaranteed income every month. Dividend income stream is more tax efficient. My dividend income had only been growing every year, and never less, since my retirement in 2008.
|
|
|
Post by alvinthechipmunk on Aug 29, 2022 1:50:53 GMT
annuities: nope, no way. The money becomes THEIR money! I might consider a chunk of money to create an annuity before The End arrives in order to set up an annuity to benefit a charity. Lots of them around. I've seen them offered by a bunch of denominations.
|
|
|
Post by yogibearbull on Aug 29, 2022 2:26:14 GMT
alvinthechipmunk , charitable annuities may require some advance work (well before the End arrives). Become familiar with the alphabet soup of CGA, CRT, CRAT, CRUT or just use a simple DAF (non-annuity option).
|
|
|
Post by alvinthechipmunk on Aug 29, 2022 6:37:57 GMT
holy jeepers snots. More alphabet soup than in the FDR Administration. Thanks, yogibearbull. I would say that picture is too complicated now, for me to want to play THAT game.
|
|
vl
Ensign
Posts: 18
|
Post by vl on Aug 29, 2022 16:46:42 GMT
if the a spouse has annuity, and if the spouse dies, would the husband or wife continue to live on that annuity.
|
|
Deleted
Deleted Member
Posts: 0
|
Post by Deleted on Aug 29, 2022 17:10:35 GMT
if the a spouse has annuity, and if the spouse dies, would the husband or wife continue to live on that annuity. "A joint and survivor annuity is an insurance product designed primarily for retired couples who want a guaranteed monthly income that will continue for as long as either spouse lives. Annuities, in general, are investment choices that can be used to provide a regular stream of income during retirement. An alternative to the joint and survivor annuity is the single life annuity, which stops payment at the death of the annuitant." www.investopedia.com/terms/j/jointandsurvivorannuity.asp#:~:text=Key%20Takeaways-,A%20joint%20and%20survivor%20annuity%20is%20an%20insurance%20product%20designed,people%20live%20longer%20than%20expected.
|
|
|
Post by Chahta on Aug 31, 2022 14:49:52 GMT
Are there not Index Annuities that cap the amount taken out each year, but the investor always owns the principal?
|
|
|
Post by fishingrod on Aug 31, 2022 15:44:50 GMT
Are there not Index Annuities that cap the amount taken out each year, but the investor always owns the principal?
Very high fees.
Sold not bought.
|
|
|
Post by Chahta on Sept 1, 2022 0:48:03 GMT
I would not own one but those that have no acumen for investing may need them.
|
|
|
Post by fishingrod on Sept 1, 2022 7:19:53 GMT
Chahta , www.annuity.org/annuities/rates/These are fixed annuity rates that are determined by today's prevailing interest rates. Other annuities may be paying a bit more but have enormous fees and very hard to understand. One would be better hiring a professional money manager charging 1-2% IMO. Just make sure they are a fiduciary! and don't sell you an annuity.
|
|
|
Post by yogibearbull on Sept 3, 2022 12:18:24 GMT
Are there not Index Annuities that cap the amount taken out each year, but the investor always owns the principal? There are also expensive GMWB/GLWB riders that allow one to draw income without giving up the principal.
|
|
|
Post by fishingrod on Sept 3, 2022 12:49:29 GMT
|
|
|
Post by FD1000 on Sept 6, 2022 12:56:43 GMT
Easy rule, if you have hard time understanding something about investing, don't do it.
|
|
hondo
Commander
Posts: 148
|
Post by hondo on Sept 6, 2022 15:32:13 GMT
Easy rule, if you have hard time understanding something about investing, don't do it. +1. So very, very true.
|
|
|
Post by ECE Prof on Sept 6, 2022 15:52:39 GMT
Easy rule, if you have hard time understanding something about investing, don't do it. +1. I agree 150%.
|
|
|
Post by FD1000 on Sept 6, 2022 18:23:01 GMT
Easy rule, if you have hard time understanding something about investing, don't do it. BTW, a typical (FA) financial adviser doesn't understand many of theses complicated annuities. Remember, a FA is "Jack of all trades, master of none", any time you need a real advice, FA send you to a CPA(taxes) or an attorney(trusts). A FA is a salesman, not an expert. Other rules: - Any investment that takes 3+% of the top isn't a good idea. - Any adviser that takes 1% of your total size portfolio, regardless of the hours, isn't a good idea. There isn't a lot more work analyzing 2 million portfolio vs one million. And why do they charge you in your second-third year and beyond, the same %, when they spend fewer hours on that? - Catch 22: when you don't know enough, you will not be able to know if your FA is good. When you know enough, you don't need a FA.
|
|
|
Post by ECE Prof on Sept 6, 2022 18:30:59 GMT
"a FA is "Jack of all trades, master of none""
LOL. True, though. He tells you what you want to hear.
What kind of FA do you need to invest in TIAA and pay him 2%? I have known a few of my former colleagues. I was shocked, but I cannot my colleagues "stupids." That would not be "collegial," and could harm me. So, I keep quiet.
|
|
|
Post by mnfish on Nov 25, 2022 12:26:57 GMT
Easy rule, if you have hard time understanding something about investing, don't do it. BTW, a typical (FA) financial adviser doesn't understand many of theses complicated annuities. Remember, a FA is "Jack of all trades, master of none", any time you need a real advice, FA send you to a CPA(taxes) or an attorney(trusts). A FA is a salesman, not an expert. Other rules: - Any investment that takes 3+% of the top isn't a good idea. - Any adviser that takes 1% of your total size portfolio, regardless of the hours, isn't a good idea. There isn't a lot more work analyzing 2 million portfolio vs one million. And why do they charge you in your second-third year and beyond, the same %, when they spend fewer hours on that? - Catch 22: when you don't know enough, you will not be able to know if your FA is good. When you know enough, you don't need a FA. My Significant Other recently sold her house and moved in with me and we opened some new accts (Roth and Taxable) at Fidelity with the proceeds as she had an HSA there already. Just CD ladders for now (3, 6, 9, 12mo). She had an IRA with Ameriprise as well which her FA had invested in an annuity with River Source Life in what appears to be some sort of "stock dividend" proprietary funds which charge 1.7%. Obviously, I told her that the only reason he would do that was because he got more in fees from the annuity company. That will be moved to Fidelity as well as the surrender fee is only $30. This IRA was opened in 1998 and it appears that compared to a simple 50/50 fund like VBIAX she missed out on about an addt'l 130% in gains. Seems almost criminal.
|
|
|
Post by Chahta on Nov 25, 2022 15:05:29 GMT
mnfish, can she manage and invest based on her own decisions? Or will she need Fidelity to suggest what to invest in if you are not around?
|
|
|
Post by mnfish on Nov 25, 2022 17:29:10 GMT
mnfish , can she manage and invest based on her own decisions? Or will she need Fidelity to suggest what to invest in if you are not around? We'll start out very basic and keep it that way as she has no clue what to do. She knows that Fidelity offers additional services if I'm out of the picture. I must say I was very impressed with how easy it was to open accounts with Fidelity set up transfers and beneficiaries and to create CD ladders, buy bonds, etc. I think I might give Wells Fargo a call and make some suggestions.
|
|
|
Post by ECE Prof on Nov 25, 2022 18:41:39 GMT
mnfish , can she manage and invest based on her own decisions? Or will she need Fidelity to suggest what to invest in if you are not around? We'll start out very basic and keep it that way as she has no clue what to do. She knows that Fidelity offers additional services if I'm out of the picture. I must say I was very impressed with how easy it was to open accounts with Fidelity set up transfers and beneficiaries and to create CD ladders, buy bonds, etc. I think I might give Wells Fargo a call and make some suggestions. +1. I moved all of my Vanguard accounts—probably after 3 decades—could be just 29 years—to Fido. In fact, I was a FIDO customer too until 1997. Two of our accounts have closed as of last Friday. There is a left cash $3.50 balance in one account, which may be transferred on Monday. Once it is closed, I am done with Vanguard.
There are many advantages in FIDO. The most important ones:
1. You are not forced to buy Vanguard ETFs/Funds to maintain the investment status. There is no investor status in FIDO. All are equal.
2. You are allowed to buy dollar-based securities. 3. Furthermore, you can buy leveraged equities, such as TQQQ, SQQQ, etc.
4. Research, DIV. Info are widely available for tax estimate purposes.
5. You can also compare with other similar funds/ETFs. 6. Tax reporting is available within easy reach and match exactly with the IRS forms and styles.
7. Fund transfer is faster in FIDO to and from your bank accounts.
I understand that there is a blog space. I do not particiapte there.
I am sure that there are many more advantages with FIDO over Vanguard.
|
|