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5 year CD ladder of TIAA annuity
11-16-2008, 02:42 PM
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#1
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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5 year CD ladder of TIAA annuity
This is a philosophical as well as financial question. Would you put money into a 5 year CD ladder and live of the 4% it would throw off or take half the money and buy a TIAA fixed annuity that would produce similar income, but reduce your capital.
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11-16-2008, 03:30 PM
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#2
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Thinks s/he gets paid by the post
Join Date: Mar 2006
Location: Houston
Posts: 4,337
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I wouldn't because we're at historically low interest rates. With a CD ladder, you'll be able to roll over to the higher rates and you're only at the lower rates for the CD period. With the annuity you get (at best) the rate at the time of purchase.
__________________
The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane -- Marcus Aurelius
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11-16-2008, 04:20 PM
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#3
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2005
Posts: 10,252
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The OP says "half the money" and "produce similar income" which means the annuity must pay about double CD rates. But I guess if you die, the money in the annuity is all gone and not part of your estate.
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11-16-2008, 06:47 PM
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#4
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Full time employment: Posting here.
Join Date: Oct 2003
Posts: 961
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Quote:
Originally Posted by 2B
I wouldn't because we're at historically low interest rates. With a CD ladder, you'll be able to roll over to the higher rates and you're only at the lower rates for the CD period. With the annuity you get (at best) the rate at the time of purchase.
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Ah, but TIAA is a participating annuity, so your payment is not set in stone. If interest rates rise a lot, the payout from the TIAA immediate annuity may also rise. See TIAA the CPI.
- Alec
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11-16-2008, 07:08 PM
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#5
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Thinks s/he gets paid by the post
Join Date: Apr 2006
Posts: 1,490
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OP mentions the fixed annuity, not the "graded" option
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11-17-2008, 05:13 AM
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#6
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Thinks s/he gets paid by the post
Join Date: Jun 2006
Location: Central, Ohio, USA
Posts: 2,635
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Quote:
Originally Posted by nun
This is a philosophical as well as financial question. Would you put money into a 5 year CD ladder and live of the 4% it would throw off or take half the money and buy a TIAA fixed annuity that would produce similar income, but reduce your capital.
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You ask a lot of Annuity questions. However, to answer this one I say go with the CD Ladder (FDIC=Government backed). I currently have a 7 year CD Ladder (and have stretched it, in the past, as long as 10 years) that is paying a consolidated 5.69% interest rate. Just added a bit ($15K) to the 7th year rung at 5.5% APY (5.35% APR). To me it is totally a financial question, and I can not see where philosophy enters into the equation. After all, it is my money not TIAA's. Here we go again on the annuity/CD questions.
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Vietnam Veteran, CW4 USA, Retired 1979
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11-17-2008, 11:31 AM
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#7
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Full time employment: Posting here.
Join Date: Oct 2003
Posts: 961
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Quote:
Originally Posted by d
OP mentions the fixed annuity, not the "graded" option
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And? The standard payment option from TIAA is not exactly "fixed." It can increase and decrease, although not all that much.
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