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re: Fixed Index Annuities for income in retirement
Posted on 4/23/23 at 5:54 pm to La Place Mike
Posted on 4/23/23 at 5:54 pm to La Place Mike
you recommended in your example a person with a $2 million portfolio put 41% in an annuity to get $30000 a year
This post was edited on 4/23/23 at 5:56 pm
1
Posted on 4/23/23 at 7:54 pm to I B Freeman
quote:
you recommended in your example a person with a $2 million portfolio put 41% in an annuity to get $30000 a year
If I recommended anything it's a formula based on hypothetical data that the OP can use or not use besides your reading comprehension sucks. If you have a better formula by all means share it with us. As a reminder the thread is titled.
quote:
Fixed Index Annuities for income in retirement
Posted on 4/23/23 at 8:24 pm to TDTOM
quote:
I think I am going to bow out of this discussion.
For your contributions, I salute you.
Posted on 4/23/23 at 8:26 pm to La Place Mike
quote:
If I recommended anything it's a formula based on hypothetical data that the OP can use or not use besides your reading comprehension sucks. If you have a better formula by all means share it with us. As a reminder the thread is titled.
Posted on 4/23/23 at 8:55 pm to La Place Mike
Formula???? Any formula that results in a person investing $820000 in an annuity to get a $30000 payment as your formula did is clearly a formula from annuity sales people. That is 3.6%—30% less than risk free t-bills. But hey it is formula based.
This is not rocket science.
This is not rocket science.
This post was edited on 4/23/23 at 9:02 pm
Posted on 4/23/23 at 9:07 pm to I B Freeman
Can anyone just end this damn thread and give this dude a recommendation to someone who isn’t going to put him in a shitty annuity??? This has gone 4 pages too far.
Posted on 4/23/23 at 9:44 pm to I B Freeman
quote:
Formula???? Any formula that results in a person investing $820000 in an annuity to get a $30000 payment as your formula did is clearly a formula from annuity sales people. That is 3.6%—30% less than risk free t-bills. But hey it is formula based.
You suck at reading and comprehending simple mathematical formulas.
People laugh at you and don't take you seriously on the Political Board now I know why.
This post was edited on 4/23/23 at 9:47 pm
Posted on 4/23/23 at 10:14 pm to La Place Mike
You are correct you want to put the person in the example in an annuity with fees to gross $45000
Still a crap move relative to risk free returns.
Still a crap move relative to risk free returns.
Posted on 4/23/23 at 10:46 pm to I B Freeman
quote:
You are correct you want to put the person in the example in an annuity with fees to gross $45000
You still don't get it. I am not wanting to put anyone in anything. It's a formula that will help determine how much to allocate to an annuity. No one is saying you have to do it. It's more of a guideline if anything.
You also don't get retirement can last for 30 years are longer. An annuity guarantees a reliable income for life. You don't know what a T-Bill's yields will be 5, 10, 15, or 20 years from now but you would know how much income you will get from an annuity even if the base drops below zero.
This post was edited on 4/23/23 at 10:48 pm
Posted on 4/23/23 at 10:50 pm to UpstairsComputer
quote:
Can anyone just end this damn thread and give this dude a recommendation
It's not about recommending anything it's about giving him information so that he can make an informed educated decision.
Posted on 4/24/23 at 12:05 am to La Place Mike
quote:
You also don't get retirement can last for 30 years are longer. An annuity guarantees a reliable income for life. You don't know what a T-Bill's yields will be 5, 10, 15, or 20 years from now but you would know how much income you will get from an annuity even if the base drops below zero.
While I don’t disagree, this comes at an incredible cost.
No one can recommend a great annuity because there aren’t many. Most of them are crap products that are very expensive for a niche market or for insurance salesman to bank money on.
I still have a hard time seeing how a 10 year annuity makes sense right now? I don’t know how long of an annuity you can do? If you wanted to argue for a 20 or 30 year I could see that? But a 10 year makes no sense when you can lock in bonds for that?
ETA: fwiw I agree you are trying to help the OP with his annuity search which is what was asked.
This post was edited on 4/24/23 at 12:12 am
Posted on 4/24/23 at 6:09 am to baldona
There are FIAs that yield much more than what is being discussed paid out over the annuitant’s lifetime. I am not where these numbers are coming from. Do we know how old the OP is?
Posted on 4/24/23 at 6:56 am to TDTOM
quote:
Do we know how old the OP is?
64.
Posted on 4/24/23 at 7:49 am to Enadious
Off the top of my head I can think of one FIA that will yield 6.5% for life with access to the balance starting at age 65. If you can wait a few years before starting income it gets better.
Posted on 4/24/23 at 7:55 am to TDTOM
quote:
Off the top of my head I can think of one FIA that will yield 6.5% for life with access to the balance starting at age 65
Yield isn’t a great word for it if it’s an income rider.
Posted on 4/24/23 at 8:07 am to La Place Mike
quote:
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.
Ehh, there is no right amount that everyone needs in an annuity.
ETA- plenty of situations where it’s not necessary at all.
This post was edited on 4/24/23 at 8:08 am
Posted on 4/24/23 at 8:13 am to baldona
quote:
Most of them are crap products that are very expensive for a niche market or for insurance salesman to bank money on.
Variable Annuities are expensive FIA and SPIAs can be very reasonably priced.
quote:
I don’t know how long of an annuity you can do? If you wanted to argue for a 20 or 30 year I could see that?
You can structure an annuity to payout for the annuitant's lifetime. That is why Academics love SPIAs due to the mortality credits and risk pooling. The insurance company will continue the payout even if the there is zero dollars in the account.
quote:
But a 10 year makes no sense when you can lock in bonds for that?
This where some people are confused and I was to at first. It's not a "10 year certain" meaning after 10 years there are no more payouts. The surrender charges are for 10 years. The OP can (if he goes with this FA and he should not) keep the annuity and receive payouts for the rest of his life however long that maybe.
When it comes to retirement planning you have to think long term. People in the retirement income planning space have likened retirement to a 30 year vacation. The last thing most people want to do is run out of money. You have to consider lifestyle, longevity, liquidity, and legacy. An annuity paired with social security income can help solve some of the lifestyle and longevity issues. In my simplified hypothetical example, that I used earlier, an individual, let's call him Bob, has 2 million in his portfolio. His FA (not me) recommends purchasing an annuity with a 5.5% payout for his lifetime. That amount to purchase the annuity combined with social security will cover his essential needs for the rest of his life. No matter what happens Bob can live comfortably. In the example Bob would purchase the annuity for 819,000 bucks leaving him 1,181,000 bucks. His essential income totals to 75K. Bob has determined he wants to spend 20k on discretionary income for travel, dining out, hookers, blow, and whatever. Bob can now be as aggressive or as conservative as his risk tolerance allows because all he needs to do is pull out less than 2% from the investment side to cover his discretionary spending. In this example Bob will, more than likely, never run out of money and leave a legacy.
Disclaimer: The above example is hypothetical and should not be considered investment advice. Past performance does not guarantee future results.
Posted on 4/24/23 at 8:43 am to Enadious
quote:
Enadious
Find another FA that is offering better Annuities with higher payouts. There is no reason to roll you into another annuity( The FA is just looking to make another score IMO)when you have the option to keep the annuity he wants to put you in and because of that you need to find one with a higher lifetime payout. If you are going to use an annuity for retirement income stick with Fixed Indexed Annuities or Single premium Annuities. As I mentioned earlier, Academics love Single Premium annuities because of the mortality credits and risk pooling. The drawback is you may pass away before the base amount is spent but if you are really healthy you could out live the contract base amount and get in to the insurance company's pockets. With FIAs there is usually a death benefit unless you live longer than expected. The pro here is if you live longer than expected you could spend the account down to zero and be in the insurance company's pockets. The con is there would not be a death benefit.
IMO, Annuities should be used as a tool for reliable lifetime retirement income and not grow your portfolio. I hope you have found the information provided in this post and others helpful. Good luck!
Disclaimer: Information provided in this post should not be considered investment advice. Current market results do not guarantee future success.
Posted on 4/24/23 at 8:48 am to La Place Mike
quote:
It's not about recommending anything it's about giving him information so that he can make an informed educated decision.
The mere fact that OP is still debating the merits of this guy's FIA and considering using him is a bit frustrating. Regardless of everyone - including obviously people who sell FIA's regularly - telling him he shouldn't. The advisor is not to be trusted. If he goes with him, in 3-4 years he'll be back on MT talking about how he got screwed by an "advisor" and all the anti-advisor people can be all kumbayah about how he should've done it on his own. Which he clearly doesn't feel comfortable with.
Truth is, none of us know enough about this guy's situation to be telling him what to do. He needs to go talk to a CFP as someone suggested days ago. Preferably a registered investment advisor who isn't beholden to an insurance company or broker dealer that determines their pay structure.
eta. by going with this guy, he's keeping him in business, now the guy can go repeat this shitty happy meal plan on other unsuspecting retirees.
This post was edited on 4/24/23 at 8:54 am
Posted on 4/24/23 at 9:13 am to UpstairsComputer
quote:
The mere fact that OP is still debating the merits of this guy's FIA and considering using him is a bit frustrating
Really what I'm trying to do is to understand fixed index annuities and determine if it's something I should use in retirement. Since the only one I've been exposed to was presented by the FA, it's the only example I can refer to.
quote:
He needs to go talk to a CFP as someone suggested days ago. Preferably a registered investment advisor who isn't beholden to an insurance company or broker dealer that determines their pay structure.
The issue I'm having is being 18 months from retirement, FAs aren't willing to get to the details I'm looking for unless I sign the dotted line and turn over my funds.
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