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Fixed Index Annuities - Considering augmenting my Retirement Portfolio
Posted on 12/18/14 at 4:47 pm
Posted on 12/18/14 at 4:47 pm
Is there a place in my portfolio for FIA?
Most of my retirement money is in an IRA - 70% Equity and 30% Fixed Income. I am considering augmenting this portfolio with an annuity product (maybe 25%) to add some long term stability (dependability). I would begin tapping into these funds in about ten years. I am looking into Fixed Index Annuities and they come with all kinds of bells and whistles. I think I prefer one with fewer of the B&W's. They look like they can get complicated.
Any sage advice or warnings from the money crowd here?
Most of my retirement money is in an IRA - 70% Equity and 30% Fixed Income. I am considering augmenting this portfolio with an annuity product (maybe 25%) to add some long term stability (dependability). I would begin tapping into these funds in about ten years. I am looking into Fixed Index Annuities and they come with all kinds of bells and whistles. I think I prefer one with fewer of the B&W's. They look like they can get complicated.
Any sage advice or warnings from the money crowd here?
This post was edited on 12/18/14 at 5:12 pm
3
Posted on 12/18/14 at 5:09 pm to ynlvr
Don't.
I say go variable with bells and whistles or don't go at all.
I say go variable with bells and whistles or don't go at all.
Posted on 12/18/14 at 5:13 pm to ynlvr
Are you maxing out all other retirement savings?
Posted on 12/18/14 at 5:15 pm to LSUFanHouston
Well, I have a pretty big pile in tax advantaged already and I don't predict tax rates on old rich white guys to go down anytime in the foreseeable future.
Posted on 12/18/14 at 5:21 pm to ynlvr
Are you considering this for after tax money?
Posted on 12/18/14 at 5:23 pm to Janky
Thanks a ton Janky. I'm looking to limit downside risk. Don't think variables with fees will get me there.
Posted on 12/18/14 at 5:23 pm to Janky
looking to rollover existing IRA.
Posted on 12/18/14 at 5:24 pm to ynlvr
Why not? What is the objective for this money?
Posted on 12/18/14 at 5:25 pm to Janky
Safety at reasonable return ten plus years out for life.
Posted on 12/18/14 at 5:27 pm to Janky
One word...
Iraqi Dinar
Go all in
Iraqi Dinar
Go all in
Posted on 12/18/14 at 5:29 pm to white perch
quote:
white perch
Finally, sage advice. Gets me diversification too.
Posted on 12/18/14 at 5:32 pm to ynlvr
So, you want to safely grow a balance for 10 years then turn on income for the rest of your life? Easy enough.
Now, what are the fees associated with this FIA you are considering?
Now, what are the fees associated with this FIA you are considering?
Posted on 12/18/14 at 5:33 pm to Janky
Don't know yet. Haven't priced a product.
Posted on 12/18/14 at 5:37 pm to ynlvr
Ok, I am not trying to sell you on the idea but if you are considering an annuity then consider a variable. It will probably cost a little more but the guarantees will more than make up for it. After all, the primary purpose of this money is to generate income and not capital appreciation although you can get both.
Posted on 12/18/14 at 5:41 pm to Janky
Well, I'm looking to diversify from the traditional risk assets of a standard portfolio. How does a variable limit downside risk? That is the attraction of the FIA. I also always hear variables are more expensive - fee laden. Not true?
Posted on 12/18/14 at 5:42 pm to ynlvr
I already have some real estate and small business interest for some diversification.
Posted on 12/18/14 at 5:53 pm to ynlvr
You are not really diversifying your assets because the FIA is typically invested and one more more of the most popular indexes which is probably what the majority of your assets are in or benchmarked to. All you are doing is putting a floor on what your account can fall to and a ceiling on what it can grow to in one year. I am not sure how the distribution phase would be on the FIA because you have not picked one yet.
With that said, there are multiple VAs out there trying to one up the other. The bells and whistles version would look something like this. It will give you a guaranteed growth rate on your income value. If the market value on any one day that year is greater than the guaranteed value then that number is locked and can never go down. The market value (i.e walk away value) can go up or down depending on market performance. Then there are the death benefits, but that is another story.
With that said, there are multiple VAs out there trying to one up the other. The bells and whistles version would look something like this. It will give you a guaranteed growth rate on your income value. If the market value on any one day that year is greater than the guaranteed value then that number is locked and can never go down. The market value (i.e walk away value) can go up or down depending on market performance. Then there are the death benefits, but that is another story.
Posted on 12/18/14 at 6:02 pm to Janky
Yes, I realize these funds are indexed to the markets. The risk limitations (floor & ceiling) is what I am looking to add. I want to sleep at night and not follow the ticker during the day (except for fun).
I have long term care insurance in place and life insurance. If there is money left over at the end, so be it. But heirs are not a driving factor. They can fend for themselves after I've educated them.
So, you really think VAs are worth looking into. Better? Or just different option to FIAs?
I have long term care insurance in place and life insurance. If there is money left over at the end, so be it. But heirs are not a driving factor. They can fend for themselves after I've educated them.
So, you really think VAs are worth looking into. Better? Or just different option to FIAs?
Posted on 12/18/14 at 6:08 pm to Janky
quote:
then consider a variable. It will probably cost a little more but the guarantees will more than make up for it.
What guarantees on principal are in a variable annuity? Is there a rider that offers this with an increased annual expense?
Posted on 12/18/14 at 6:09 pm to ynlvr
Worth looking into, yes. Better, maybe. Greater potential for more income, yes. The only way the FIA is better is that the walk away value may be higher. However, if the main goal for this is to generate income I think the VA would win every time.
I am just not a big fan of FIAs nor VAs for that matter, but I prefer VAs. I have never seen a FIA perform like the illustration shows.
I am just not a big fan of FIAs nor VAs for that matter, but I prefer VAs. I have never seen a FIA perform like the illustration shows.
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