Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Annuities
Old 11-16-2016, 01:09 PM   #1
Recycles dryer sheets
 
Join Date: Mar 2013
Posts: 379
Annuities

Yeah, I know, search first. I did.

Reading a book on generating Retirement income from your portfolio that someone here recommended (sorry, don't have it in front of me, still at w*rk for 21 more days...). It is pretty good and basically offers strategies of a mix of income-skimming, drawdowns, and annuities... based on your priorities, legacy, life expectancy, risk tolerance, etc.

I can see a fairly strong argument for an annuity being a "leg" of your income platform, especially if risk averse, but never really considered it. I am eligible for one from my pension but it is only 5.1% of the lump sum and they stripped survivorship from it a couple years ago, so a non option for me. I will take the lump sum (Feb 2017).

My DW both have a long megacorp career and SS for us (me 67 her 71) is substantial and we could easily live off of it if we had too. So there is a pretty solid fixed income element... but we have about a 12 year span to get to it.

Anyway, enough of my situation, curious as how many here have or will:

Buy an annuity post retire
If so, with how much of your portfolio value?
Represents what % of your (expected) monthly expenses?
Bought anything other than a standard/immediate annuity.... what kind?

I'll have decisions to make in 2017 about how to invest some fairly good sized chunks of money coming my way.... looking for options...
__________________

doneat54 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-16-2016, 01:21 PM   #2
Full time employment: Posting here.
FIREmenow's Avatar
 
Join Date: May 2013
Posts: 755
SS is basically an annuity, so you are buying an annuity for those 12 years?
__________________

__________________
Believe me, my young friend, there is nothing - absolutely nothing - half so much worth doing as simply messing about in boats. ― Kenneth Grahame, The Wind in the Willows
FIREmenow is offline   Reply With Quote
Old 11-16-2016, 01:41 PM   #3
Full time employment: Posting here.
 
Join Date: Apr 2013
Location: Beach and Mountain
Posts: 532
DW and I had maxed out on 401ks and IRAs and putting money in kids accounts. Inherited $15k 20 plus years ago - before any of the current Vanguard Index Funds were started. At the time, it made sense to put it in a FIDO annuity. It has grown well. Now it represents 4% of my portfolio and IF I were to annuitize, it would be about 4% of my retirement income. I do not see any situation where I would annuitize. I just did it for tax deferrals.

If you were OK with annuities, I could not see more than 20%. Of course, those with a Cola'd pension and SS or massive rental income would go for less.
Z3Dreamer is offline   Reply With Quote
Old 11-16-2016, 01:45 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
travelover's Avatar
 
Join Date: Mar 2007
Posts: 11,972
This has been discussed extensively. If you use the Version 2 skin of the browser based forum (green as opposed to blue), the search function is a much more comprehensive Google based search.

I found I could not buy an equivalent annuity to the one my MegaCorp offered by using the proceeds from a lump sum offer. So, in my case I took the Megacorp annuity.
__________________
You probably mean principal not principle. Judgment only has one "e".
travelover is online now   Reply With Quote
Old 11-16-2016, 02:34 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 24,183
A 5.1% payout rate for a 55 yo male in MA is not bad... a SPIA would pay 5.0% at most.

As you may well know, the problem with most SPIAs is that they are fixed payouts, so that $x/month in incoem that seems great now has much less spending power in 10, 20 or 30 years because of inflation.

If you want to buy an annuity, the best deal out there is to delay SS... the purchase price is the cash flow you use to live on while you are delaying and the benefit is the increase in COLAed payments for the rest of your joint life.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA
pb4uski is offline   Reply With Quote
Old 11-16-2016, 02:43 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 24,183
One other downside to annuities... if you put a bunch of money in one, even a joint life payout, and you and your DW pass on early then it is a negative proposition for your heirs... for most annuities you have to survive 20 years or more to receive benefits equal to your premium.

For example, a joint life SPIA for a 55 yo male and 59 yo female pays out ~4.6% so it is almost 22 years before you even get your original premium back in benefit payments.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...target 65/35/0 AA
pb4uski is offline   Reply With Quote
Old 11-16-2016, 02:49 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
 
Join Date: May 2013
Location: In the fairway
Posts: 5,319
Quote:
Originally Posted by doneat58 View Post
Yeah, I know, search first. I did.

Reading a book on generating Retirement income from your portfolio that someone here recommended (sorry, don't have it in front of me, still at w*rk for 21 more days...). It is pretty good and basically offers strategies of a mix of income-skimming, drawdowns, and annuities... based on your priorities, legacy, life expectancy, risk tolerance, etc.

..
probably Money for Life that I recommended. Glad you find it helpful.
__________________
Swing hard, look up
Big_Hitter is offline   Reply With Quote
Old 11-16-2016, 03:02 PM   #8
Recycles dryer sheets
 
Join Date: Mar 2013
Posts: 379
Quote:
Originally Posted by Big_Hitter View Post
probably Money for Life that I recommended. Glad you find it helpful.
That's it! Thanks!
doneat54 is offline   Reply With Quote
Old 11-16-2016, 03:02 PM   #9
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 2,868
I also think that the pension payout is better than if you buy an annuity with the lump sum.
__________________

__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Life only annuities GTM FIRE and Money 4 10-11-2004 02:44 PM
Immediate fixed income annuities Bill J. FIRE and Money 9 07-19-2004 03:50 AM
Annuities ? renferme FIRE and Money 21 12-23-2003 02:13 PM
Annuities-Variable? Fixed? Immediate jackalope FIRE and Money 6 10-01-2003 05:36 AM

» Quick Links

 
All times are GMT -6. The time now is 12:25 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2020, vBulletin Solutions, Inc.
×