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56 and planning to retire by 65
Old 11-03-2012, 10:00 AM   #1
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56 and planning to retire by 65

Hi all
Just found this forum. I am 56 years old and live in Southern California. I have been 100% invested in the stock market (index funds) in my pension plan and personally for the past 25 years. After the roller coaster ride the last 10 years have been, I don't think it is prudent to keep doing that. I have recently been talking to a new financial planner who recommends putting half of my assets in an Allianz 360 annuity. At first I dismissed it, but it may not be so crazy. Anyone here have experience with that product?
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Old 11-03-2012, 12:12 PM   #2
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Hi all
Just found this forum. I am 56 years old and live in Southern California. I have been 100% invested in the stock market (index funds) in my pension plan and personally for the past 25 years. After the roller coaster ride the last 10 years have been, I don't think it is prudent to keep doing that. I have recently been talking to a new financial planner who recommends putting half of my assets in an Allianz 360 annuity. At first I dismissed it, but it may not be so crazy. Anyone here have experience with that product?
sker,

Sorry, I've never heard of that product.

Welcome to the forum.

omni
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Old 11-03-2012, 12:21 PM   #3
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There can be good reasons to buy an annuity, but ignorance of alternatives, fear and a fast talking salesman are not among them. If you can tell us more about your situation, then people can make more informed recommendations.

Also, you could consider asking at bogleheads,org as they are very good with investing questions.
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Old 11-03-2012, 12:46 PM   #4
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Welcome to the forum. Most guidance suggests no one should hold more than 80% equity allocation at any age. Having said that, some of us were 100% equity when we were younger (though I doubt any of us would recommend it to anyone else), so we know the feeling. When you're still working you can delay retirement if your portfolio takes an untimely hit.

There are lots of threads here on annuities and there is a place for them under the right circumstances, but any FA that arbitrarily suggests you put half your assets in an annuity is a quack with only his/her best interests in mind. What makes the advice worse, with interest rates so low, this is an historically bad time to buy any annuity if you can avoid it (not everyone can)...
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Old 11-03-2012, 01:35 PM   #5
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Welcome to the forum. Most guidance suggests no one should hold more than 80% equity allocation at any age. Having said that, some of us were 100% equity when we were younger (though I doubt any of us would recommend it to anyone else), so we know the feeling. When you're still working you can delay retirement if your portfolio takes an untimely hit.

There are lots of threads here on annuities, but any FA that arbitrarily suggests you put half your assets in an annuity is a quack with only his/her best interests in mind. What makes the advice worse, with interest rates so low, this is an historically bad time to buy any annuity if you can avoid it (not everyone can)...
+1

Welcome to the forum.
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Old 11-03-2012, 02:24 PM   #6
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+1

Welcome to the forum.
+2 (And I/DW have an annuity; an SPIA, only recommended if your situation calls for it, and the only annuity product I would consider - after years of investigation, and actual use - over five years, of the product).

BTW, we only "invested" 10% of our combined retirement portfolio in the SPIA when we purchased it in 2007. The rest (90%) remained in equity/bonds/cash.

50%? That seems high, especially at the begining of retirement, without looking at future income streams (and their timing) such as pensions, SS, and the like and looking at an annuity as part of your overall plan...
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Old 11-03-2012, 07:08 PM   #7
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+3. And I have deferred annuities.

Welcome to the forum.

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+2 (And I/DW have an annuity; an SPIA, only recommended if your situation calls for it, and the only annuity product I would consider - after years of investigation, and actual use - over five years, of the product).
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Crazy?
Old 11-03-2012, 09:06 PM   #8
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Crazy?

Quote:
Originally Posted by sker View Post
Hi all
Just found this forum. I am 56 years old and live in Southern California. I have been 100% invested in the stock market (index funds) in my pension plan and personally for the past 25 years. After the roller coaster ride the last 10 years have been, I don't think it is prudent to keep doing that. I have recently been talking to a new financial planner who recommends putting half of my assets in an Allianz 360 annuity. At first I dismissed it, but it may not be so crazy. Anyone here have experience with that product?
I think you are hearing what most "in the know" think about annuities -- there may be a "small" place for them, especially if you are not expecting any fixed pension income - but I would never recommend you buy one in this low interest rate environment at an age where you don't even know if you will need it. The time to buy an immediate annuity is much later in life, usually after you have already retired. I don't like deferred annuities at all as there are much better things to do with your money.

I am also concerned why I hear in your "voice" that you are not liking your index funds. I don't know what your allocation is and the funds you are using, but I am a huge index fund investor and there are very very few actively managed funds (or any investments for that matter) that have beaten the majority of my index accounts over the last 3-5 years.

Stay with your index approach and keep the huge commission you would have paid to the annuity salesperson working for you to age 67, then re-evaluate. Don't be pressured into something that is a bad idea.

fd
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Old 11-03-2012, 09:22 PM   #9
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Find a new financial planner. This one isn't working in your best interests given the recommendation to put 50% of your money in an annuity.

You say that you are 100% invested in the stock market. But in what kinds of index funds? All equity funds? or a mix of equity and bond funds?

If you are 100% in equity funds, you could let those lie and change your new money to bond funds. I like intermediate term investment grade and high yield corporate bond funds at this point in time.
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Old 11-04-2012, 04:33 PM   #10
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Cannot comment of specific products, but PLEASE seriously consider the sage advice here about annuities. Annuities traditionally have a high sales commission (up to 5-7+%) which is why so many "advisers" push them. Annuity returns are currently low by historical standards (due to low interest rates) so you have plenty of time to learn, research, and shop around.

Good luck, & welcome to the Forum!
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