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Started By
Message
re: Fixed Index Annuities for income in retirement
Posted on 4/21/23 at 9:57 pm to TDTOM
Posted on 4/21/23 at 9:57 pm to TDTOM
quote:I kinda feel like we’re all vested in this guy not screwing this up.
Which tells me that he needs someone to make sure he understands what he is getting into before he signs his name.
My big thing is I would limit the FIA to a max 20% of his assets and that honestly would have to be a very compelling product with rates at 5.3% on just a fixed. It looks like a 10% cap but only 50% participation in the pic. 5.3% seems pretty hard to beat if the argument is really for protection of principal. Rephrased, if you really end up needing that protection, it seems unlikely this FIA would achieve a 5.3 average.
1
Posted on 4/22/23 at 7:07 am to UpstairsComputer
quote:
It looks like a 10% cap but only 50% participation in the pic.
That is garbage.
Posted on 4/22/23 at 7:28 am to TDTOM
quote:
You are probably right. Which tells me that he needs someone to make sure he understands what he is getting into before he signs his name.
yeah, annuity indexed to S+P with no downside loss and a cap on up years. And yes, I'm bombarding the FA with emails (like I'm a five year old), and coming here to fact check him.
Posted on 4/22/23 at 7:31 am to TDTOM
quote:
As long as you buy a qualified (IRA) annuity, then no taxes owed until distribution.
Would a qualified (IRA) annuity purchased with before tax funds be subject to RMD at 72?
Posted on 4/22/23 at 7:51 am to Enadious
quote:
Would a qualified (IRA) annuity purchased with before tax funds be subject to RMD at 72?
If you use after tax dollars you would be limited to annual contribution limits. Also, if you are retired there is no income to allow for IRA contributions. However, if you do this into a traditional IRA RMDs at 73 will be in order.
Posted on 4/22/23 at 7:56 am to Enadious
quote:
I'm bombarding the FA with emails
I would’ve expected that guy to be out of consideration…
Posted on 4/22/23 at 9:34 am to TDTOM
Getting to an actual product to look at:
GILICO annuity no annual charge. No fee for the client. The insurance companies pays FA one time direct commission of 6.75%. The surrender schedule is 12%, 12%, 11%, 11%, 10%, 9%, 8%, 7%, 6%, 4%. After year 10, there is no longer a surrender charge. Has an included income rider which does not cost anything additional for the client. There is also a confinement benefit, a terminal illness waiver, and total disability waiver. The free withdrawal amount each year after the 1st contract year is 5% of the account value. The current cap rate for the S&P 500 annual point to point is 10.25%.
So, I just got this information from the FA. Again, he wants to put 50% of my total retirement investment into a product like this. This is a 'protected' stream of income. Any thoughts, warnings, or whatever are appreciated.
Guaranty Growth Plus
GILICO annuity no annual charge. No fee for the client. The insurance companies pays FA one time direct commission of 6.75%. The surrender schedule is 12%, 12%, 11%, 11%, 10%, 9%, 8%, 7%, 6%, 4%. After year 10, there is no longer a surrender charge. Has an included income rider which does not cost anything additional for the client. There is also a confinement benefit, a terminal illness waiver, and total disability waiver. The free withdrawal amount each year after the 1st contract year is 5% of the account value. The current cap rate for the S&P 500 annual point to point is 10.25%.
So, I just got this information from the FA. Again, he wants to put 50% of my total retirement investment into a product like this. This is a 'protected' stream of income. Any thoughts, warnings, or whatever are appreciated.
Guaranty Growth Plus
Posted on 4/22/23 at 9:38 am to Enadious
That is a great product......
For the advisor.
If the goal is to generate income later there are better ones out there. The benefit base only grows at 4% annually. I would love to see an illustration. Also, the 5% free withdrawal is half of the industry standard. No chance in hell I would 50% of my money into that 10 year product.
When are you planning on starting the income? How much is the income amount going to be?
For the advisor.
If the goal is to generate income later there are better ones out there. The benefit base only grows at 4% annually. I would love to see an illustration. Also, the 5% free withdrawal is half of the industry standard. No chance in hell I would 50% of my money into that 10 year product.
When are you planning on starting the income? How much is the income amount going to be?
This post was edited on 4/22/23 at 9:57 am
Posted on 4/22/23 at 11:09 am to TDTOM
As soon as an 'advisor' starts peddling things like this run for the hills.
Posted on 4/22/23 at 11:49 am to TDTOM
quote:
Also, the 5% free withdrawal is half of the industry standard. No chance in hell I would 50% of my money into that 10 year product.
When are you planning on starting the income? How much is the income amount going to be?
Thanks! I would be starting the income a year after retirement. Any 'safe' income generating ideas in retirement suggestions?
Posted on 4/22/23 at 11:59 am to Enadious
quote:
I would be starting the income a year after retirement.
When is this? When would you be funding the annuity, now or at retirement?
The FIA idea is not terrible, but I bet there are other contracts that can achieve the same income for less premium.
Posted on 4/22/23 at 12:23 pm to TDTOM
quote:
When is this? When would you be funding the annuity, now or at retirement?
The FIA idea is not terrible, but I bet there are other contracts that can achieve the same income for less premium.
I'll retire in 18months, fund the annuity, and then draw 5% a year later for 10 years.
Thank you for your input.
Posted on 4/22/23 at 2:41 pm to Enadious
quote:
I'll retire in 18months, fund the annuity, and then draw 5% a year later for 10 years.
Thank you for your input.
Are you taking Social Security in 18 months? If so will the income from the annuity and Social Security cover your essential expenses?
Posted on 4/22/23 at 3:03 pm to Enadious
I have an alternative suggestion.
Build up your 401k and Roth IRA as much as possible.
When you're near/at retirement, invest in JEPI with a 10-11% yearly dividend.
Live off the combination of the dividend and social security. Leave the base capital in JEPI to your family.
Build up your 401k and Roth IRA as much as possible.
When you're near/at retirement, invest in JEPI with a 10-11% yearly dividend.
Live off the combination of the dividend and social security. Leave the base capital in JEPI to your family.
This post was edited on 4/22/23 at 3:04 pm
Posted on 4/22/23 at 5:46 pm to MikeyFL
quote:
I have an alternative suggestion. Build up your 401k and Roth IRA as much as possible. When you're near/at retirement, invest in JEPI with a 10-11% yearly dividend. Live off the combination of the dividend and social security. Leave the base capital in JEPI to your family.
OP, don’t do this.
Posted on 4/22/23 at 5:59 pm to La Place Mike
quote:
Are you taking Social Security in 18 months? If so will the income from the annuity and Social Security cover your essential expenses?
The answer is yes.
Posted on 4/22/23 at 6:03 pm to TDTOM
quote:
OP, don’t do this.
Posted on 4/22/23 at 7:15 pm to Enadious
quote:
fund the annuity, and then draw 5% a year later for 10 years.
Just curious, what is the thought process behind this?
Posted on 4/22/23 at 9:40 pm to TDTOM
quote:
Just curious, what is the thought process behind this?
I am curious to hear Enadious' own words what the thought process is.
I am pretty sure I understand what the FA may be trying to achieve base on the answer Enadious gave to my earlier question.
A couple of my concerns are is the purchase of the annuity using 50% of the portfolio too much, and is it the right annuity product?
Enadious did the FA do an assessment to determine your risk tolerance and if he did would share the results with us?
Posted on 4/23/23 at 6:34 am to TDTOM
quote:
Just curious, what is the thought process behind this?
That's how the annuity is structured. If all the upsides of the annuity are true, I imagine that they are making up 'profits' by allowing only a 5% withdrawal (this is the first FVA I've looked into, if 10% is a norm). 5% instead of 10% would allow them to have more money in the account to 'invest for a return' over the ten years.
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