- 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
Opinions on fixed-index annuities...
Posted on 1/16/13 at 5:49 pm
Posted on 1/16/13 at 5:49 pm
I understand that your principle is not subject to losses in the market in down years and when the index is up say, 13% you may only get a 6% return on your money. But, if it's included as one facet of a portfolio that has a 401k and other IRA's, what's the downside? Is it not a good choice to provide a foundation for retirement income?
What about including a "guaranteed income for life" rider that costs about 0.5%-0.7% per year based on the value of the account?
What about including a "guaranteed income for life" rider that costs about 0.5%-0.7% per year based on the value of the account?
5
Posted on 1/16/13 at 7:27 pm to Jake88
They are a decent way to invest your safe money that is not needed for liquidity. Not sure you will be able to find an annualized cap as high as you stated, but nonetheless, they provide you with a guaranteed return and some upside. As long as it is not viewed as a growth position, it can serve a purpose in the investment portfolio.
Posted on 1/17/13 at 12:51 am to BARNEYSTINSON
I was looking at one that guaranteed about 5% and could go higher if the market took off (as the OP described). Then I saw the 2.65% annual fee. I went to mutual funds.
Posted on 1/17/13 at 9:47 am to matthew25
That was probably a variable annuity. An indexed annuity will only have fees if a lifetime income living benefit is added. Sounds like you are describing the m&e costs of a VA. An indexed annuity does not actually invest in mutual funds. Also, the 5% you describe is not a guaranty on actual account value; but rather a guarantee of growth on the income benefit regarding the living benefit.
Posted on 1/17/13 at 9:52 am to Jake88
They have tax advantages, but not I'm a fan unless you're within less than 10 years of retirement. I'm not investing in them until after maxing out my ROTH and SEPP IRA's, it's just not worth tying up my money for mediocre returns.
This post was edited on 1/17/13 at 1:50 pm
Posted on 1/17/13 at 1:39 pm to Vols&Shaft83
Barney - I pulled out the packet I was given for MetLife $250K variable annuity application with guaranteed income of 5%. Fees were .25 for admin, 1.05 for mortality and expense, and 2.65 for the guarantee.
For me, 5 minus 3.95 was a mere 1.05% gain (plus the gain if the index goes up >5%).
I passed, and put the money in mutual funds.
For me, 5 minus 3.95 was a mere 1.05% gain (plus the gain if the index goes up >5%).
I passed, and put the money in mutual funds.
Posted on 1/17/13 at 1:49 pm to matthew25
Don't disagree with your decision. But, there is a huge difference between the VA you describe and an Index annuity. Also, that living benefit you describe has nothing to do with the principal whereas the gains you "lock in" on an index annuity are on your account value. All that is important is that you found what investment was best suited for you.
Posted on 1/17/13 at 1:54 pm to BARNEYSTINSON
The agent stated that I would select an index of my choice, i.e., most people choose S&P, or Dow aor Nasdaq. The term "index" was used throughout the discussion.
Posted on 1/17/13 at 2:14 pm to Jake88
quote:
Opinions on fixed-index annuities...
They have their place. A lot of people are quick to criticize them for being expensive, but with a small piece and in the right situation they make sense. You have to be cautious of those FA's, agents, reps, or whatever selling them to everyone. They draw a lot of interest because of their healthy commission.
Posted on 1/17/13 at 2:15 pm to Jake88
quote:
But, if it's included as one facet of a portfolio that has a 401k and other IRA's, what's the downside?
that's the best way to think of it. everyone has a different risk tolerance, some people would like to have a percent of their portfolio guaranteed. im going to wait around a few years until interest rates rise and see if i can lock in at a guaranteed 4%. when i get older it'd be nice to stash some money at 4% no matter where rates are.
ETA: im talking a fixed annuity
This post was edited on 1/17/13 at 2:16 pm
Posted on 1/17/13 at 7:49 pm to Vols&Shaft83
quote:
They have tax advantages, but not I'm a fan unless you're within less than 10 years of retirement. I'm not investing in them until after maxing out my ROTH and SEPP IRA's, it's just not worth tying up my money for mediocre returns.
I'm an anxious guy and the guaranteed income for life rider costs 0.65% of the principle per year. Even with the fixed annuities mediocre returns in good years, it seems attractive as I have no pension. Like I mentioned I've got a 401k going and some other IRA's as well as mutual funds and individual stocks that are not part of an IRA, but when the market takes a dump like 2008/9 and 2000, I take it in the shorts.
I'm 41 and I guess I just want some of my retirement income guaranteed. I've been investing since 1998 and have gone through two crappy periods and don't feel as though I've gotten as far as i'd like.
Are there loopholes and/or tricks the insurance company includes in these contracts that can screw me in the long run? What happens if the insurance company goes out of business ten years into my annuity?
Thanks.
Posted on 1/17/13 at 8:31 pm to Jake88
Be careful with the surrender period (try not to go out too far) and if you are not close to retirement there is no need for an income rider. If your annuity becomes due then you can simply roll it to another one in a few years Probably with better options... so keep the expenses down unless needed
Posted on 1/17/13 at 8:48 pm to Jake88
At 41 the income rider is probably not necessary. Especially since the annualised caps are so low right now. Considering your age and risk tolerance an indexed annuity could definitely be utilized as part of your retirement buckets. If income is your primary goal for these funds, you may want to look further in to a variable annuity. It will give you a better potential for growth and still guarantee to a lifetime income. Especially considering your time horizon. I would also look at low cost conservative allocation funds that are tactical. You may also want to look in to alternative investments that are not correlated to the equity/bond markets.
Posted on 1/18/13 at 7:25 am to BARNEYSTINSON
Thanks to everyone for the input.
Ever? Can I just add it later to the fixed index annuity, say, when I'm 51 or so?
What are these?
Such as?
Thanks again.
quote:
At 41 the income rider is probably not necessary.
Ever? Can I just add it later to the fixed index annuity, say, when I'm 51 or so?
quote:
low cost conservative allocation funds that are tactical
What are these?
quote:
You may also want to look in to alternative investments that are not correlated to the equity/bond markets.
Such as?
Thanks again.
This post was edited on 1/18/13 at 7:26 am
Posted on 1/18/13 at 10:18 pm to Jake88
I wouldn't add an income rider till you are 15-10 years out of retirement.
Some alternatives to look at would be REITs, BDCs, and managed futures.
Hope this helps.
Some alternatives to look at would be REITs, BDCs, and managed futures.
Hope this helps.
Page 1 of 1
Popular
Back to top
Follow TigerDroppings for LSU Football News