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Started By
Message
re: Fixed Index Annuities for income in retirement
Posted on 4/23/23 at 6:44 am to La Place Mike
Posted on 4/23/23 at 6:44 am to La Place Mike
quote:
I am curious to hear Enadious' own words what the thought process is.
I'm shopping FAs and this was the first meeting sales pitch. He didn't have any details of my funds, so i'm imagining they present everyone the same plan.
quote:
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?
Those are my concerns too. I'm doing what I can to research this now. Believe it or not, the process is not easy. Nearly everything I've found to read/youtube is a veiled sales pitch. I know the devil is in the details. It's hard to find the devil.
quote:
Enadious did the FA do an assessment to determine your risk tolerance and if he did would share the results with us?
Just before I left the meeting, he said we'd do a risk tolerance at the next meeting. He does know that I'm mostly conservative.
1
Posted on 4/23/23 at 7:01 am to Enadious
So, what happens after year 10? This annuity has a living benefit rider which is designed to provide income over your lifetime. Curious as to why that is not being used instead of taking max withdrawals.
Did you say he made these recommendations without knowing how money you had?
Did you say he made these recommendations without knowing how money you had?
Posted on 4/23/23 at 7:22 am to TDTOM
quote:And if they 'show everyone the same plan', again, run for the hills.
Did you say he made these recommendations without knowing how money you had?
Posted on 4/23/23 at 7:34 am to Enadious
Look that is a bunch of mumbo jumbo.
The only way you can evaluate an annunity is to enter the details into a present value of an annuity calculator. Here is a simple one that I found—just enter everything you know and leave the growth rate blank and it will calciulate that rate. LINK. You can do it in excel too.
i suspect you will find that simply putting the money in treasuries or even a savings account and withdrawing the same dollars each month the annunity would have paid will be a much better deal.
The only way you can evaluate an annunity is to enter the details into a present value of an annuity calculator. Here is a simple one that I found—just enter everything you know and leave the growth rate blank and it will calciulate that rate. LINK. You can do it in excel too.
i suspect you will find that simply putting the money in treasuries or even a savings account and withdrawing the same dollars each month the annunity would have paid will be a much better deal.
Posted on 4/23/23 at 9:45 am to TDTOM
quote:
So, what happens after year 10? This annuity has a living benefit rider which is designed to provide income over your lifetime. Curious as to why that is not being used instead of taking max withdrawals.
After year ten, he would write a new annuity using money left in the first account, AND, then pull money from the 2nd side of the board (stocks, treasuries, etc), The idea is to only pull funds from the annuity.
quote:
Did you say he made these recommendations without knowing how money you had?
He learned how much I had after presenting his plan. It's up to me how much to put in it.
Posted on 4/23/23 at 9:48 am to I B Freeman
quote:
i suspect you will find that simply putting the money in treasuries or even a savings account and withdrawing the same dollars each month the annunity would have paid will be a much better deal.
Since it's a fixed variable annuity tied to the S&P 500, the lure is to have more upside years over ten and pay more than the other funds you suggested. I'd 'never lose funds' in down years.
Posted on 4/23/23 at 9:51 am to Enadious
quote:
I'm shopping FAs and this was the first meeting sales pitch. He didn't have any details of my funds, so i'm imagining they present everyone the same plan.
Nope. Everyone is different. This is bad sign.
quote:
Just before I left the meeting, he said we'd do a risk tolerance at the next meeting. He does know that I'm mostly conservative.
That should have been one of the first things he should have done, IMO
Posted on 4/23/23 at 9:56 am to Enadious
quote:
Since it's a fixed variable annuity
It's a Fixed Index Annuity.
Have you sat down and broken up your retirement income in to 2 categories, essential and discretionary? You need to do that. Once that is done the there is a simple formula to determine how much of your assets to put in to an annuity.
Posted on 4/23/23 at 9:59 am to I B Freeman
quote:
i suspect you will find that simply putting the money in treasuries or even a savings account and withdrawing the same dollars each month the annunity would have paid will be a much better deal.
That's a great plan! If you want to run out of money in retirement.
Posted on 4/23/23 at 11:03 am to La Place Mike
let me get this straight—you believe this annuity with fees and expenses—will certainly return more that t-bills over the next 10 years??? Why do you think that?
Posted on 4/23/23 at 11:15 am to La Place Mike
quote:
Once that is done the there is a simple formula to determine how much of your assets to put in to an annuity.
Can you give me the formula and does it factor in inflation?
Posted on 4/23/23 at 12:21 pm to I B Freeman
quote:
let me get this straight—you believe this annuity with fees and expenses—will certainly return more that t-bills over the next 10 years??? Why do you think that?
I don't have a crystal ball so I cant answer that question, but i do know that retirement usually lasts longer than 10 years. Not all Annuities are expensive. When people think of high Annuity Fees they're thinking about Variable Annuities. When it comes to retirement you have to consider Longevity and Annuities can solve that issue.
This post was edited on 4/23/23 at 1:27 pm
Posted on 4/23/23 at 1:21 pm to Enadious
quote:
Can you give me the formula and does it factor in inflation?
No the formula does not but you certainly can factor in inflation as well as taxes if you want a more specific number. Once you factor in taxes and inflation the formula is then pretty simple.
Essential Income - Social Security Income = Gap
Gap/Annuity Lifetime Payout Percentage.
For an example. An Individual has a portfolio valued at 2 million. He determines that his annual essential income totals 75,0000 and his Social Security Income is equal to 30,000. In this example I will use 5.5% for the lifetime payout.
75,000 - 30,000 = 45,000
45,000/.055 = 818,181
818,181 should be used to purchase an Annuity which is roughly 41% of the portfolio.
Annuities, IMO, should provide a lifetime realiable income and not be broken up like this FA wants to do.
FYI, in a situation like this Academics love SPIAs due to the Mortalty Credits.
Posted on 4/23/23 at 3:04 pm to La Place Mike
He is buying a 10 year annuity.
Posted on 4/23/23 at 3:07 pm to La Place Mike
What a crock.
In your example T-bills would provide almost $90000 a year today—-three times your so called gap—-with no fees and no risk.
In your example T-bills would provide almost $90000 a year today—-three times your so called gap—-with no fees and no risk.
Posted on 4/23/23 at 3:11 pm to I B Freeman
quote:
He is buying a 10 year annuity.
He hasn't bought anything yet and probaly shouldn't buy a 10 year.
This post was edited on 4/23/23 at 3:19 pm
Posted on 4/23/23 at 3:16 pm to I B Freeman
quote:
today
That is the Key word. Retiremnet could last for 30 years or longer. The OP is trying to determine a long term retiremnt strategy.
Posted on 4/23/23 at 3:34 pm to La Place Mike
And you want him to buy an annuity.
He should read your recommendation in the example you posted before taking your advice.
He should read your recommendation in the example you posted before taking your advice.
Posted on 4/23/23 at 4:00 pm to I B Freeman
quote:
And you want him to buy an annuity.
I want him to do what is best for him.
quote:
He should read your recommendation in the example you posted before taking your advice.
Where did I recommend anything?
Can you guarantee 90K a year investing in T Bill's for the rest of his life?
Posted on 4/23/23 at 4:33 pm to La Place Mike
I think I am going to bow out of this discussion. It has just gotten too weird for me. From charging 1.75% to buying a 10 year annuity to take withdrawals. Then planning on replacing it as soon as it is out of surrender. None of this sounds like it is in the best interest of the OP while the FA will make out like a bandit. Good luck OP.
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