- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
re: Annuity for Part of Retirement
Posted on 10/6/20 at 6:37 pm to Shepherd88
Posted on 10/6/20 at 6:37 pm to Shepherd88
Bro, I own a firm.
3
Posted on 10/6/20 at 8:05 pm to Kirby59
I work with a lot of FAs as an attorney. If your FA told you to put 1 million in an annuity, you need to walk out the door. Seriously. You have a joke for a FA.
This post was edited on 10/6/20 at 8:06 pm
Posted on 10/6/20 at 8:56 pm to BestBanker
You two. Get a room.
Posted on 10/7/20 at 4:21 am to Kirby59
Most annuities are horrible.
But some VA's can provide you a guaranteed accumulation benefit and/or a guaranteed income benefit. THey can grow at a guar. minimum rate and then provide a certain % of the guaranteed accumulation as an annual withdrawal. Normally this is a higher % w/d than you could safely take out without the guarantee. Never use one that only has "life and certain" income options because the ins company keeps your money if you die after the "certain period" expires. Shop and find the best fit annuity for you. Do not put $1M of your $2.5M accumulated assets in annuities. Ok to use these for about $500K if you want guarantees. Key is that with the guarantees, you can be more aggressive in the investment side of a variable annuity since a market downturn won't hurt you.
But some VA's can provide you a guaranteed accumulation benefit and/or a guaranteed income benefit. THey can grow at a guar. minimum rate and then provide a certain % of the guaranteed accumulation as an annual withdrawal. Normally this is a higher % w/d than you could safely take out without the guarantee. Never use one that only has "life and certain" income options because the ins company keeps your money if you die after the "certain period" expires. Shop and find the best fit annuity for you. Do not put $1M of your $2.5M accumulated assets in annuities. Ok to use these for about $500K if you want guarantees. Key is that with the guarantees, you can be more aggressive in the investment side of a variable annuity since a market downturn won't hurt you.
Posted on 10/7/20 at 6:10 am to Kirby59
Is he recommending an annuity for safe growth? Like a 6 year or 8 year that is tied to the S&P with caps? These have zero fees and may be good for a safe allocation. I don’t know your situation but having all of your money at risk going into retirement may not be a good decision. There are lots of fixed annuities that don’t have fees and you can earn 3.5-6% safely. I don’t get the commission argument because they get paid one time on the money and it’s around 4-5% and it doesn’t come off of your money. It’s factored in the rate, but someone selling mutual funds like American funds A shares make 5.75% off of your money and can sell and rebuy a lot over 6-8 years.
You may not need an annuity paying an income unless you or your souse will lose an income source at death. My wife will not get my SS so I paid $25,000 into an annuity at 30 years old that pays 8.2% per year for 30 years and my wife can draw $2500 a month for her life at age 60. It was a good decision for SOME of our money.
You may not need an annuity paying an income unless you or your souse will lose an income source at death. My wife will not get my SS so I paid $25,000 into an annuity at 30 years old that pays 8.2% per year for 30 years and my wife can draw $2500 a month for her life at age 60. It was a good decision for SOME of our money.
This post was edited on 10/7/20 at 6:12 am
Posted on 10/7/20 at 7:58 am to Jaspermac
Good post
Given the current interest rate environment this is a decent alternative to bond allocations. You can then be in equities with your other money.
quote:
There are lots of fixed annuities that don’t have fees and you can earn 3.5-6% safely.
Given the current interest rate environment this is a decent alternative to bond allocations. You can then be in equities with your other money.
Posted on 10/7/20 at 10:56 am to Kirby59
I think there are people more well versed on annuities than me on here. But this is my question and what I know.
I presume that the advisor is recommending the annuity for safe growth? (I.e. not annuitizing the annuity)
Those are 2 completely different things.
Annuitizing will lock you in on a fixed income for the rest of your (or you and your spouse) life. Similar to your social security payout.
The problem with annuitizing is that the payout is based upon the current interest rate at the time you lock it in. Is now a great time to lockin a mortgage? Because annuitizing is the worst thing you can do in this rate environment.
If your advisor is recommending safe growth for 8 years or so, there are so many better options that dont have the drawbacks associated with a change of need on that money.
For me personally, I'm not afraid of the stock market on an 8 year timeline. A catastrophic dip comes back in less than 3 years (as you get closer to those 8 years, your strategy should change). For me personally, there are so many better things that you can do in the bond market (and take advantage of a 10 year dip back into stocks) than the protections that you get from an annuity.
There is a reason and benefit for annuities. I've yet to hear of a solid one in this interest rate market.
I presume that the advisor is recommending the annuity for safe growth? (I.e. not annuitizing the annuity)
Those are 2 completely different things.
Annuitizing will lock you in on a fixed income for the rest of your (or you and your spouse) life. Similar to your social security payout.
The problem with annuitizing is that the payout is based upon the current interest rate at the time you lock it in. Is now a great time to lockin a mortgage? Because annuitizing is the worst thing you can do in this rate environment.
If your advisor is recommending safe growth for 8 years or so, there are so many better options that dont have the drawbacks associated with a change of need on that money.
For me personally, I'm not afraid of the stock market on an 8 year timeline. A catastrophic dip comes back in less than 3 years (as you get closer to those 8 years, your strategy should change). For me personally, there are so many better things that you can do in the bond market (and take advantage of a 10 year dip back into stocks) than the protections that you get from an annuity.
There is a reason and benefit for annuities. I've yet to hear of a solid one in this interest rate market.
Posted on 10/7/20 at 2:03 pm to kywildcatfanone
Get a second opinion from another place just not here. A reputable professional.
Posted on 10/7/20 at 2:10 pm to BestBanker
quote:
Bro, I own a firm.
My dad owns a dealership
Posted on 10/7/20 at 2:53 pm to Kirby59
Annuities at retirement are for people who need every dollar to survive. They do pay out higher amounts but only because they are paying interest plus your own money back. They are one of the highest commission products a “financial advisor” can sell. Generally a rip off ! And don’t be fooled by the payout rate that’s not the earnings rate. That includes your money being returned ( and the annuity value decreasing)
This post was edited on 10/7/20 at 3:00 pm
Posted on 10/7/20 at 4:36 pm to Kirby59
I'm going to assume you own a home worth at least 300k with such a solid net worth... So this person is saying you need roughly 50% of your liquid net worth in a product that will lock up your money from doing anything else for a period of (usually) 7-10 years? This seems like an awful lot of your money for an awfully long time.
And all of your basic expenses must be covered by the 6k if you have no debt, it doesn't sound like you need guaranteed income.
I could only make a case for a portion of your bond/fixed/conservative portion to be in this type of investment (non-liquid). Not knowing your risk tolerance, I'll assume a 60/40 stock/bond portfolio. Just for the sake of argument, I'll assume half of your 40% fixed/bond - or 20% overall - to go towards something like this that isn't liquid IF you can make a compelling case for it (it fits what YOU need). That puts a cap around 440k in my back of a napkin calculations, and that would be max max max of what I would think would be reasonable given the information provided and that would require some really compelling new information to suggest that much.
Post the name of the annuity when you get a chance. (Eta. and the riders the advisors wants to put on it)
And all of your basic expenses must be covered by the 6k if you have no debt, it doesn't sound like you need guaranteed income.
I could only make a case for a portion of your bond/fixed/conservative portion to be in this type of investment (non-liquid). Not knowing your risk tolerance, I'll assume a 60/40 stock/bond portfolio. Just for the sake of argument, I'll assume half of your 40% fixed/bond - or 20% overall - to go towards something like this that isn't liquid IF you can make a compelling case for it (it fits what YOU need). That puts a cap around 440k in my back of a napkin calculations, and that would be max max max of what I would think would be reasonable given the information provided and that would require some really compelling new information to suggest that much.
Post the name of the annuity when you get a chance. (Eta. and the riders the advisors wants to put on it)
This post was edited on 10/7/20 at 6:27 pm
Page 2 of 2
Popular
Back to top
Follow TigerDroppings for LSU Football News