Annuities? Have you been talking to someone who want to sell you something?

[Kimo]

aja,

Here is a cut and paste from the Vanguard site:

If you're considering an annuity, we'll make it easy for you whether you purchase one directly from us or choose one from our partner insurance companies

I went directly through Vanguard.

 

[alaska55]

This what he's talking about.

Finally, a Variable Annuity Worth Considering-Kiplinger

 

[aja8888]

This what he's talking about.

Finally, a Variable Annuity Worth Considering-Kiplinger

Thanks.

 

[Kimo]

Thanks Alaska!!!

 

[REWahoo]

This what he's talking about.

Finally, a Variable Annuity Worth Considering-Kiplinger

Looks like the fees for the GLWB have gone up.

From the Kiplinger November 2011 article:

The wrinkle that Vanguard has just added offers a guaranteed lifetime withdrawal benefit for an additional cost of 0.95% a year.

From the Vanguard link Kimo posted:

You can add the GLWB rider to a Vanguard Variable Annuity anytime until age 90. You'll pay an annual fee equal to 1.20%...

Even with the additional 0.25% it is, as variable annuities go, a bargain - but not enough of a bargain to make me a buyer.

 

[Kimo]

They must have gone up, my total cost for the rider, the Wellington management expenses and the death benefit are 0.95% total.

Too bad it they did raise it, the ones I have with them treated me good....

 

[Kimo]

Maybe it is 1.20% for everything I said I was getting for 0.95%?

 

[haha]

Looks like the fees for the GLWB have gone up.

From the Kiplinger November 2011 article:
From the Vanguard link Kimo posted:
Even with the additional 0.25% it is, as variable annuities go, a bargain - but not enough of a bargain to make me a buyer.

There is an additional annual cost, as I remember .59 %.

Theses things give me a headache, I always feel that someone is trying to put one over on me. So I just say no.

Ha

 

[Kimo]

haha,
These are really pretty simple if you talk with them over the phone and then decide at a later date if it is for you or not. They never ask you if you are ready to purchase or give any sign of trying to get you to buy. If I remember correctly, he asked me if I really wanted to do this instead of just keeping my money in my current funds....my memory isn't as good as it used to be so I won't swear to this...LOL

 

[REWahoo]

They must have gone up, my total cost for the rider, the Wellington management expenses and the death benefit are 0.95% total.

I think you must be missing something. Did you include the ~0.60% expense ratio for the annuity itself? That would bring your total up to 1.55%, within the 1.45% - 1.55% cost range quoted in the 2011 Kiplinger article.

 

[Kimo]

For every 100K in my account my quarterly payment to them is 237.50. So 1% would be 1000.00, right? My 237.50 x 4 is 950.00.

 

[Kimo]

As much as I appreciate owning these, I did say earlier I would never put all my money into these. I consider these annuities as a small portion of my total portfolio. I believe in this regard they fill a need for my wife and I. I, like all others here, I believe, have certain amounts allocated to different products of their total assets.

 

[Walt34]

My response to annuity salesguys:

Get off my lawn - YouTube

 

[Kimo]

Me to....I would never buy an annuity from a sales person!

 

[REWahoo]

For every 100K in my account my quarterly payment to them is 237.50. So 1% would be 1000.00, right? My 237.50 x 4 is 950.00.

Right, but that appears to be only the fee for the GLWB rider. You are also paying an expense ratio for the investments in your annuity.

If you read both the Kiplinger article and the fine print at the bottom of the Vanguard page you linked, you'll see the expense ratio for the Wellington-like fund is currently 0.6%. That expense is in addition to the charges you quote above and are quietly and invisibly taken from your funds during the year - as is the case for all mutual funds.

 

[Kimo]

You are absolutely correct!

 

[aja8888]

0.6 fee + 1.2 fee (new one) = 1.8% which when subtracted from the payout of that annuity of 4.5% is 2.7%. Am I correct here? if so, not bad, but not as good as the PenFed 3% CD's sold earlier this year.

 

[Kimo]

Okay aja, now I have to go find my paperwork!!!!!!!!!!!

But I believe it is better than that and the other thing is the value of the investment went up 14% last year and yes, it could go down any year also, but just using these two as an example in this particular year you and I would rather have the annuity I believe.....back later!

 

[Kimo]

And the 14% is after taking my monthly payments, not including them....

 

[aja8888]

I'm only comparing the guaranteed payout amount to a 3% CD. Not any increase or decrease in principal in the annuity.

 

[Kimo]

aja: Found it! Okay, to manage the fund the expense is 0.26%. (Like you said, the part we never actually see) The death benefit is 0.19% (also never seen) and, like you said, 0.95% for the GWLB. I didn't think it was quite as bad as the earlier numbers. Having said all that I also own Jumbo CD's as I like a very diversified portfolio.

Having the opportunity to have the annuity value go up which increases the monthly payment (and the expense) is why I decided to purchase them as well as the fact you can get out any time, just like selling a mutual fund at the end of the closing day any time I want. I also feel like I am in the market with less risk than with my regular mutual funds because I won't lose the monthly income. I know, thinking there is less risk is kind of strange but it is how I feel. I guess it is because regardless of the market I am set.

I like to have the money scattered around....

 

[athena53]

I just heard a new one from the enterprising young man DH let in the door once (he's from Edward Jones and that's how they seek clients). We've been buying the occasional local bond from him and I think he's hell-bent on getting all our money $5K at a time.

I told him I'd retired and, after asking if I'd rolled over my 401(k) yet (yes, to Fidelity), he said he could sell me an annuity that would provide income between now (age 61) and my FRA for SS (66) or till age 70, so I could let my SS benefit grow.

Umm, no, but thanks for playing.

 

[Kimo]

I just heard a new one from the enterprising young man DH let in the door once (he's from Edward Jones and that's how they seek clients). We've been buying the occasional local bond from him and I think he's hell-bent on getting all our money $5K at a time.

I told him I'd retired and, after asking if I'd rolled over my 401(k) yet (yes, to Fidelity), he said he could sell me an annuity that would provide income between now (age 61) and my FRA for SS (66) or till age 70, so I could let my SS benefit grow.

Umm, no, but thanks for playing.

Yep, the LAST place I would buy an annuity from is a sales person....

 

[rayvt]

The payout is 4% and the GLWB costs 0.95% (now 1.20% BTW) --- That's almost one-fourth of your payment. Sounds pretty expensive to me.

At the bottom of Vanguard's annuity page:
"Vanguard Annuity Access is offered in collaboration with Hueler Investment Services, Inc."
and
"Fixed annuities purchased through Vanguard Annuity Access are subject to a one-time transaction fee. The fee is equal to 2% of the purchase amount."
and
"The Vanguard Variable Annuity with the optional GLWB rider is issued by Monumental Life Insurance Company"

 

[Kimo]

The payout is 4% and the GLWB costs 0.95% (now 1.20% BTW) --- That's almost one-fourth of your payment. Sounds pretty expensive to me.

At the bottom of Vanguard's annuity page:
"Vanguard Annuity Access is offered in collaboration with Hueler Investment Services, Inc."
and
"Fixed annuities purchased through Vanguard Annuity Access are subject to a one-time transaction fee. The fee is equal to 2% of the purchase amount."
and
"The Vanguard Variable Annuity with the optional GLWB rider is issued by Monumental Life Insurance Company"

My payout is 4.5%, not 4%. There was no fee at all regarding my purchase and no mention of Hueler anywhere in my paperwork. Maybe what this refers to is annuities purchased though their outside link which I didn't do. What you are describing though isn't what I bought...