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Old 06-05-2014, 07:39 PM   #141
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I've always thought of variable annuities as being "neither fish nor foul". They are complex and are usually expensive


Sigh.......only if you buy from a sales person......no more complex than owing a mutual fund...
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Old 06-05-2014, 07:51 PM   #142
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I've always thought of variable annuities as being "neither fish nor foul". They are complex and are usually expensive


Sigh.......only if you buy from a sales person......no more complex than owing a mutual fund...
Oh, no, they are foul all right - no matter who you buy from.

Go back and read carefully through your paperwork. I would be extremely surprised (to put it mildly) if you were not paying M&E fees.
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Old 06-05-2014, 07:53 PM   #143
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.....no more complex than owing a mutual fund...
We must be reading different prospectuses. The variable annuities I've looked at had at least 75 pages of 'fine print", usually 100 or more - regardless of who sold them.
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Old 06-05-2014, 07:58 PM   #144
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I have owned 3 of these for 2 years, I know exactly what I pay, scroll up and you will see....the application as I remember it was about 6 pages of which 3 or 4 didn't apply to me...They work for me and they don't for you....kind of like mutual funds, if we all liked the same funds maybe there would be 3 instead of about 7000 of them....
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Old 06-05-2014, 08:01 PM   #145
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I have owned 3 of these for 2 years, I know exactly what I pay, scroll up and you will see....the application as I remember it was about 6 pages of which 3 or 4 didn't apply to me...They work for me and they don't for you....kind of like mutual funds, if we all liked the same funds maybe there would be 3 instead of about 7000 of them....
Whatever works for you. Personally, I am looking forward to the start of small game season. Just ordered a new 20 gauge semi-auto...
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Old 06-05-2014, 08:03 PM   #146
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Cool.......I am looking forward to the Hot August Nights collector car event in Reno!!!!! My latest restoration will be done!!!!
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Old 06-05-2014, 08:25 PM   #147
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FYI...you want complex!!! Try registering a collector car that is in Nevada when you live in Hawaii. All I want to do is give them money so I can have a license plate on the car that is there. This is far more complicated than the annuities I bought and it is taking 10 times as long, or longer....Jeezzz!!!! And here I thought States were looking for ways to tax individuals so they could get more money...
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Old 06-06-2014, 07:46 AM   #148
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Sigh.......only if you buy from a sales person......no more complex than owing a mutual fund...
Variable annuities are certainly more complex and expensive than owning a mutual fund. The Vanguard annuity may well work well for you, but my approach would be to keep expenses to a minimum and if I wanted guaranteed income I would use CDs, SS, DB plans and SPIAs before looking at a variable annuity.
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Old 06-06-2014, 08:00 AM   #149
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I'm a bit nervous...got a phone call from my uncle the other day, telling me he wants me to look at some annuity papers for my grandmother that are supposed to arrive today. Grandmom is 90, legally blind, and not in a position to manage this kind of stuff anymore, so normally my Mom handles her finances, but she's in Florida for a couple weeks. My uncle knows nothing about finance...in fact, I manage his retirements for him! He looks at me as some sort of financial guru, which kinda scares me a bit.

I really don't know much about my Grandmother's finances, other than a rough idea of what it's all worth, and that it's mostly in bank CDs and other low-interest, conservative accounts. So I didn't even know Grandmom had an annuity.

So, I have no idea what to expect. Hopefully this isn't some decision that needs to be made right away, so I can pawn it off on Mom when she comes back!
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Old 06-06-2014, 09:24 AM   #150
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Hey Kimo, I have an identical investment through Great West life. I hate the .9% fee, but love the "floor" it puts under my mutual fund investment. Mine is in a pre tax account

My fund guarantees a 3.75% withdrawal will be available from the fund for the longer of my or my wifes life span. The investment is in a balanced fund, and the 3.75% is based on the balance at the time I start taking withdrawals (base) . Every year on the anniversary date the base that the 3.75% is calculated against is reset to the current balance in the fund, if the balance has grown. If the balance has not grown, the base stays at the original level, so the withdrawal amount will never go down.

Best case the fund performs well enough to overcome the 3.75% withdrawal and .9 % fee. (plus mutual fund fees also). In this case the balance grows and the amount that I can withdraw grows also. Of course in this case, the 1% fee is wasted because I did not need the guarantee.

Worse case, the fund does not perform well and gets eaten up by the withdrawals and fees. Then you still are guaranteed a withdrawal amount at least as large as the original one. (unless the company goes belly up)

The fund balance is mine to do with as I please, I can get out of the program at any time and move the money to a different investment, and take a chunk out for a special need (which decreases my base) Also the balance passes on to heirs if my wife and I get run over by a beer truck tomorrow.

Not for everybody, but I like it
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Old 06-06-2014, 09:41 AM   #151
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Hey Kimo, I have an identical investment through Great West life. I hate the .9% fee, but love the "floor" it puts under my mutual fund investment. Mine is in a pre tax account

My fund guarantees a 3.75% withdrawal will be available from the fund for the longer of my or my wifes life span. The investment is in a balanced fund, and the 3.75% is based on the balance at the time I start taking withdrawals (base) . Every year on the anniversary date the base that the 3.75% is calculated against is reset to the current balance in the fund, if the balance has grown. If the balance has not grown, the base stays at the original level, so the withdrawal amount will never go down.

Best case the fund performs well enough to overcome the 3.75% withdrawal and .9 % fee. (plus mutual fund fees also). In this case the balance grows and the amount that I can withdraw grows also. Of course in this case, the 1% fee is wasted because I did not need the guarantee.

Worse case, the fund does not perform well and gets eaten up by the withdrawals and fees. Then you still are guaranteed a withdrawal amount at least as large as the original one. (unless the company goes belly up)

The fund balance is mine to do with as I please, I can get out of the program at any time and move the money to a different investment, and take a chunk out for a special need (which decreases my base) Also the balance passes on to heirs if my wife and I get run over by a beer truck tomorrow.

Not for everybody, but I like it
Pinejake, I agree, there are people who hate them but I would never give mine up. I hold a lot of different investments in my portfolio and this is the one I worry about the least......good for you!!!
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Old 06-06-2014, 10:12 AM   #152
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Hey Kimo, I have an identical investment through Great West life. I hate the .9% fee, but love the "floor" it puts under my mutual fund investment. Mine is in a pre tax account

My fund guarantees a 3.75% withdrawal will be available from the fund for the longer of my or my wifes life span. The investment is in a balanced fund, and the 3.75% is based on the balance at the time I start taking withdrawals (base) . Every year on the anniversary date the base that the 3.75% is calculated against is reset to the current balance in the fund, if the balance has grown. If the balance has not grown, the base stays at the original level, so the withdrawal amount will never go down.

Best case the fund performs well enough to overcome the 3.75% withdrawal and .9 % fee. (plus mutual fund fees also). In this case the balance grows and the amount that I can withdraw grows also. Of course in this case, the 1% fee is wasted because I did not need the guarantee.

Worse case, the fund does not perform well and gets eaten up by the withdrawals and fees. Then you still are guaranteed a withdrawal amount at least as large as the original one. (unless the company goes belly up)

The fund balance is mine to do with as I please, I can get out of the program at any time and move the money to a different investment, and take a chunk out for a special need (which decreases my base) Also the balance passes on to heirs if my wife and I get run over by a beer truck tomorrow.

Not for everybody, but I like it
TIAA-Traditional is an interesting product. It guarantees a minimum return of 3%, there are no fees that the investor sees, they are baked into the annual interest rate. Each year an additional rate is declared and this year it's 1.74% so I'm getting 4.74%. I can also get at principal by making a series of equal withdrawals over 10 years. Alternatively I could buy a fixed annuity through TIAA-CREF and get a 7% payout rate. It's an interesting choice between an SPIA with it's lower costs and higher payout rate and a variable annuity with an income rider that will initially pay out less and have higher fees. Your gambling on a rising market......which sort of negates the reason I'd have for buying an annuity. Of course you have to account for inflation which is the simple SPIA's big drawback.

For people who ER a fixed term SPIA might be a good choice to bridge the gap to SS or 59.5. I considered one to fund the years between 52.5 and 59.5, but I ended up just putting money into a Stable Value fund in my Great Life 457 that returns 2.6%. I increased the equity percentage in my AA. I get some interest and lots of flexibility.
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Old 06-06-2014, 11:24 AM   #153
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I have always thought of this forum as a way to possibly explain personal experiences so that others can entertain the though as to whether it may or may not be something they are interested in.

There appears to be some very misguided information regarding annuities that are actively searched for as I did as opposed to a salesperson calling you at dinner to sell something he is going to make a lot of money on.

I would like to offer a comparison between the actual annuity I bought vs. an actual mutual fund I bought. Because this is my true experience I can't vouch for other products but because both are Vanguard products I believe a lot of people will be able to follow this because of their familiarity with Vanguard.

I decide on June 1, 2012 to buy Wellington Fund and a variable annuity that's only holding is the same Wellington Fund. I enter the order for 100,000.00 dollars each. The next morning I awake to find x number of shares in both holdings each valued at 100,000.00. I hold both of these in my Vanguard account, side by side.

I decide I want to take out 4.5% of my MF so that it coincides with the 4.5% I am having taken out of my annuity.

There are three ways the market can preform, up down or stay the same, lets look at each scenario.

Over the next 10 years the market, on average, continues to rise. I continue to sell shares from the MF to keep my return the same as my annuity payout and in addition to selling shares in my annuity to keep the same return I am also selling shares to cover the .95% fee in the annuity. So, after 10 years I have less in my annuity that in my MF. I also have a lot more money in my other mutual funds because of the rise in the market. At this point, if I wish, I can close my annuity at no cost and collect the entire balance because I have determined I now have more money than life left. While I did lose the .95% I don't mind as I will be gone prior to running out of money. (Remember I kept raising the withdrawal in dollar amount to keep it a steady 4.5% withdrawal rate for the 10 years in both accounts.

Now lets consider the other 2 scenarios. If the market stays flat or declines for the next 10 years as I continue to take my 4.5% out of both accounts there is a real possibility I run both accounts to zero, with the annuity getting there first because of the additional money taken out for the fee. So eventually, I have 2 accounts with no money in them. This is not an end of the world scenario, it is a fund that can't keep up with the 4.5% withdrawal rate.The MF account is closed because obviously I can't continue to take my 4.5% from it. On the other hand, I continue to receive my 4.5 percent from my annuity and, as an added benefit, they stop charging me the fee (That is in the contract). So, for the rest of my life I get this 4.5% vs. nothing from the MF.

This is why I personally can relate buying this particular annuity as the same as buying a mutual fund.

FYI, I receive all dividends, capital gains, etc. in both accounts. Both are held in taxable accounts so I pay the same taxes on both.

Where is the problem?
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Old 06-06-2014, 11:29 AM   #154
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Who gets all the money at your death?
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Old 06-06-2014, 11:31 AM   #155
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My wife gets everything, exactly what ever is the balance, it transfers to her Vanguard account with no fee.
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Old 06-06-2014, 11:36 AM   #156
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Ok so that is not the problem. Maybe it is you are not out surfing right now!
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Old 06-06-2014, 11:38 AM   #157
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On my way to the North Shore to meet friends in 2 hours!!!! It is only 6:31 AM as I write this! And so, you are right!!!!!!!!!!!!
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Old 06-06-2014, 11:47 AM   #158
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Where is the problem?
It is your money, so apparently it is not a problem for you.

For me, the problem is that it is effectively a mutual fund with a 1+% expense ratio, a guarantee that is useless, and worse tax treatment than simply holding a mutual fund in a taxable account. But since it is not my money, I don't much care if you think this is a great proposition.
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Old 06-06-2014, 11:54 AM   #159
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This is a small portion of my total portfolio. If the worst happens I add my return from the annuity with my SS and I will always have enough to eat something beside Alpo. If the best happens I don't care what extra I paid, I will have so much money in my other accounts I won't be able to spend it all....
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Old 06-06-2014, 11:56 AM   #160
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This is a small portion of my total portfolio. If the worst happens I add my return from the annuity with my SS and I will always have enough to eat something beside Alpo. If the best happens I don't care what extra I paid, I will have so much money in my other accounts I won't be able to spend it all....
So you drink enough Kool Aid that your blood type is "punch?"
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