Annuity Question for Money Board?

This is actually the perfect scenario for an annuity.

Plenty of better options than to annuitize at such a young age...depending upon health. If the party is unhealthy, an impaired SPIA could provide a healthy income.

I would not recommend it. She is locking in at a time of record low interest payments. When she takes a settlement option, the money is the issuing company's, no longer hers. Even with a period certain I have never recommended it to a client unless they have no heirs. I think she would be better off in a dividend focused etf or an assortment of blue chip dividend paying stocks, with no more than 10% in any one company.

Yeah. The advantage here is the tax deferral, which will reduce effective rates. She can put it on a 3, 5, or 10 year payout if she wants, but annuities are mainly for the deferral of taxes on a lump sum.

There was not a single good suggestion against an annuity. There are just some insane haters that read 13% of a finance book that bashed it.

I shoot down 99% of all annuities "investment" comments made here, as it is a niche product that snake oil slinging financial advisors often push because they get big kickbacks. This is not the case here.

To the guy that said it's the issuing company's money: do you not believe bonds because it's the issuing company's money. What about cash? It's the issuing entity's money. That's an absurd Argument.

Putin her in a 10 year annuity might not be right (this was never my suggestion), but a 3 or a 5 year would save her a lot of money in taxes and give her a safe return, however small, that would not be out of line with any of the other appropriate investment vehicles available.

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a 3 or a 5 year would save her a lot of money in taxes and give her a safe return, however small, that would not be out of line with any of the other appropriate investment vehicles available.

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so she should pay the annuity fees to perhaps save a bit in taxes (without knowing what her tax situation looks like)?

I agree that annuities are somewhat useful in limited situations, with a person of this age, I would tread very, very carefully.

Immediate and Fixed Annuities rarely have fees.

Index Annuities will have fees if a Lifetime Income Benefit Rider is attached...typically around 1% per year.

Variable Annuities can have annual fees upwards of 4% with all the bullshite those guys throw on there.

Enlighten me. I've been doing this for 20 years.

OP go see an advisor who will look at this situation more deeply than some folks on the inter web...

IKnowMore... Good for you, I do this as well. VA's are gonna provide more flexibility, better potential return, more liquidity. (Not saying I even recommend an annuity in this case).

A loaded down variable annuity with bells n whistles will charge about 2.5%/yr. however you're paying for something with that, usually it's a Guaranteed income stream regardless of performance and without annuitizing the product.

An indexed annuity typically has a surrender period 15yrs + with a surrender charge of 15% + and a capped performance rate of 75%. They're the reason the dept of labor is coming down on the industry, not to mention they're not even regulated by finra.

Some of Yall are so dadgum hung up on fee's here it's ridiculous.. I mean do Yall find the cheapest vehicle, cheapest clothes, cheapest food, etc.... You absolutely need to know what you're paying for and weigh the pros/cons but.. you get what you pay for.

Surrender Charge is only relevant if she exceeds 10% withdrawal...which we all agree exceeds recommended rates.

The SPIA will get her the payouts she wants if she's 73 and qualifies as an 80 year old.

I'm not preaching annuity. He came in asking for it. Might as well let him know what his options are.

You know the tools selling Jackson National are going all in at 3.8%. We all know THAT GUY.