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Old 01-30-2011, 08:27 AM   #21
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Some people use a ladder to try to capture the increased payout (if rates move up).
Great point, and what we will probably do as we age (and don't want to manage our investments, as we do today).

Again, it comes back to the question of an SPIA and if it fits your specific needs. Not everybody should get (or need) one; it all depends on your specific situation...
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Old 01-30-2011, 08:33 AM   #22
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Not everyone has a guaranteed COLA pension.......
Heh, spoken like a true.......
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Old 01-30-2011, 08:37 AM   #23
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Heh, spoken like a true.......
Findude... Hope that's not an indication of the quality of the..... I would hate to risk my future on an incomplete....
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Old 01-30-2011, 08:39 AM   #24
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Interesting thread.
Years ago when I first signed on to this forum, the mention of an annuity would have created an internet riot and probable stoning. These days there seems to be quite a lot of support and interest.
If the daily headlines regarding the plight of many baby boomers retirement challenges are to be believed, I suspect annuities are going to play an important role as will products like reverse mortgages.
Trouble is, none of these products are cut from a single bolt of cloth and the most needy of such a plan are no doubt the most vulnerable.
Here's a snipet from a recent incident here in MO.

A Springfield investment adviser who has hosted seminars in Branson has requested a hearing with Missouri Secretary of State Robin Carnahanís office to contest a cease and desist order that was issued against him last week.
Tracy Wayne Mitchell was named in a Jan. 11 order released by Carnahanís office that alleged he had used free lunch seminars to encourage seniors to purchase restrictive insurance annuities without disclosing the downside of such products or the large commissions he stood to gain on their sale. In doing so, Carnahan said Mitchell, a registered investment advisor with Guidepost Financial LLC, put his own interests before those of his clients, breaking a requirement of his license.

While this case is still to be decided, the allegation is that 31 of 32 (at one such event) attendees were sold inappropriate products. Some apparently even had to sell their existing annuities to buy his. A feeappalooza.

Regardless of how you feel about the product, your best buy is probably not going to be found at a free steak supper..IMO
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Old 01-30-2011, 08:47 AM   #25
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I'm shocked that this would happen! The nerve of this guy. I get 3 or 4 of those invites each week, do you guys think they might try and do something like that down here in Florida?
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Old 01-30-2011, 08:52 AM   #26
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Surely, the people on this site are not that gullable? It's amazing how older, unsophisticated people fall for these pitches. The advisor would have "perfected" his pitch over a long time. There is no free lunch.
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Old 01-30-2011, 08:54 AM   #27
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I'm shocked that this would happen! The nerve of this guy. I get 3 or 4 of those invites each week, do you guys think they might try and do something like that down here in Florida?
Wow, I only average one per week. You could cut your grocery bill big time.
I'm hoping some of the preplanned funeral guys will come up with a free tank of gas deal..
And no, I don't think they would try anything shady in Florida..
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Old 01-30-2011, 09:04 AM   #28
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There are new insurance regulations beginning this year for annuity products.

NAIC Suitability in Annuity Transactions.

It puts more burden on Insurance companies and producers in an effort to stop inappropriate sales of annuities.

We will see if it works. Banks are hawking deferred annuities like there is no tomorrow.
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Old 01-30-2011, 09:04 AM   #29
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The advisor would have "perfected" his pitch over a long time. There is no free lunch.
Yes, the comedienne rarely changes the jokes; they just change the audience ...
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Old 01-30-2011, 09:06 AM   #30
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I think the vast majority of the folks that buy these products aren't paying attention anyway. The person selling annuities will develop a new strategy to get around any disclosures.
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Old 01-30-2011, 09:17 AM   #31
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Should rates soar in the coming years ( and why wouldn't they) it will likely coincide with the period when I will want to swap my investment management time for beach time. At that point I think I'll be shopping Vanguard, FIDO, USAA for an appropriate annuity.
Perhaps an opportunity like the universal life policy I bought from USAA in the late 80's. It was yielding 12% then and is guaranteed to never fall below 4.75% which is where it sits today.
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Old 01-30-2011, 09:20 AM   #32
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Not everyone has a guaranteed COLA pension.......
Right, and I think that was the point. For some people, "buying a pension" by using an SPIA can make some sense, but the circumstances need to be right. I haven't ruled it out at some point well into the future with (say) 1/3 to 1/2 of my retirement savings depending on my age, health and current interest rates (i.e. I wouldn't buy one at today's pathetic interest rates because the cost of a guaranteed income stream is much higher now).
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Old 01-30-2011, 09:27 AM   #33
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NAIC Suitability in Annuity Transactions.

It puts more burden on Insurance companies and producers in an effort to stop inappropriate sales of annuities.

We will see if it works. Banks are hawking deferred annuities like there is no tomorrow.
Yeah, most of the problems in the annuity sales areas are in the deferred annuities with the high fees and surrender charges. You don't hear annuity sales people pushing SPIAs nearly as much as they push deferred annuities, especially the EIAs. And the harder someone tries to sell you something, the worse a deal it probably is for you because good products don't need a hard sell.
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"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

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Old 01-30-2011, 09:38 AM   #34
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Right, and I think that was the point. For some people, "buying a pension" by using an SPIA can make some sense, but the circumstances need to be right.
Exactly (that's what we did). While an annuity (more specifically an SPIA) is not the solution for everybody, it is the solution for some - such as us...

BTW, an SPIA is rarely sold by "a salesman". Costs (if any) are recovered by the issuing company when they get your premium. I've been questioned before on this (on other forums). My contract does not show any sales, or maintenance charges. If the company gets their expenses/profits from my initial premium, I don't care. As long as I have a monthly payment that I can include in my retirement income planning (for the rest of my/DW's life) and assured that our estate/beneficiaries will get something of value if we both pass before the guarantee period ends, that's what counts.

And if we live longer (probably not)? Our return will be considerably higher, since payments continue at 100% if either/both are still alive beyond the guaranteed term.
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Old 01-30-2011, 09:44 AM   #35
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Right, and I think that was the point. For some people, "buying a pension" by using an SPIA can make some sense, but the circumstances need to be right. I haven't ruled it out at some point well into the future with (say) 1/3 to 1/2 of my retirement savings depending on my age, health and current interest rates (i.e. I wouldn't buy one at today's pathetic interest rates because the cost of a guaranteed income stream is much higher now).
+1 - exactly my thoughts. If all goes well I will never buy one, but if I do it will be when/if I get close to my annuitization hurdle.

And at today's interest rates I'd avoid an annuity. Conversely it's a good time to take a lump sum if you have a pension option coming up in 4 months like someone I know...
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Old 01-30-2011, 10:53 AM   #36
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The rates for SPIA's right now are horrible...
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Old 01-30-2011, 11:02 AM   #37
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Perhaps an opportunity like the universal life policy I bought from USAA in the late 80's. It was yielding 12% then and is guaranteed to never fall below 4.75% which is where it sits today.
My guaranteed minimum for a USAA Universal Life policy is 3%.... timing is everything.

I can afford to wait until the interest rates recover before I move any monies into a USAA SPIA. I know how much I want to get monthly so when the online quote hits that number I'm getting it. I'm hoping to get the SPIA at the end of this year. Or maybe the end of next year.
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Old 01-30-2011, 11:07 AM   #38
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My guaranteed minimum for a USAA Universal Life policy is 3%.... timing is everything.

I can afford to wait until the interest rates recover before I move any monies into a USAA SPIA. I know how much I want to get monthly so when the online quote hits that number I'm getting it. I'm hoping to get the SPIA at the end of this year. Or maybe the end of next year.
Universal life insurance guaranteed interest rates are meaningless because of the cost of insurance charges. You could give people 10% guaranteed interest, but if your cost of insurance was extremely high, it wouldn't make a difference. Even a policy with a guaranteed minimum of 4.75% from the 1980's will probably crash and leave you with $0 cash vale and $0 insurance at some point in the future. The COI charges on those older policies have mostly been raised and interest rates fell, causing them to crash. Read your policy statement and ask the company for the following information:

1. How long your policy is guaranteed if you keep paying premiums
2. How long it's currently projected to last if you keep paying premiums
3. How long it's guaranteed to last if you stop paying premiums
4. How long it's currently projected to last if you stop paying premiums
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Old 01-30-2011, 01:53 PM   #39
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Universal life insurance guaranteed interest rates are meaningless because of the cost of insurance charges. You could give people 10% guaranteed interest, but if your cost of insurance was extremely high, it wouldn't make a difference. Even a policy with a guaranteed minimum of 4.75% from the 1980's will probably crash and leave you with $0 cash vale and $0 insurance at some point in the future. The COI charges on those older policies have mostly been raised and interest rates fell, causing them to crash. Read your policy statement and ask the company for the following information:

1. How long your policy is guaranteed if you keep paying premiums
2. How long it's currently projected to last if you keep paying premiums
3. How long it's guaranteed to last if you stop paying premiums
4. How long it's currently projected to last if you stop paying premiums
Funny you should mention this dgoldenz. Just got a call last week from an agent(?) for my Universal Life policy. He said my policy would eventually crash (not his words) if I didn't change something. He wants to talk (code word for sell?) I'll probably hear him out, but I'm looking for a possible cash out instead of keeping the policy in force. Current cash is invested in very low pay-out "safe" fund. I may have to convert to another fund if I keep the policy.

Thanks for the questions to ask. Could be useful.
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Old 01-30-2011, 02:05 PM   #40
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Funny you should mention this dgoldenz. Just got a call last week from an agent(?) for my Universal Life policy. He said my policy would eventually crash (not his words) if I didn't change something. He wants to talk (code word for sell?) I'll probably hear him out, but I'm looking for a possible cash out instead of keeping the policy in force. Current cash is invested in very low pay-out "safe" fund. I may have to convert to another fund if I keep the policy.

Thanks for the questions to ask. Could be useful.
Sounds like the agent is doing a good job in being pro-active. He is at least warning you about what may happen in the future instead of waiting until you find out for yourself, when it might be too late to do anything about it. You can cash out, keep the policy until it crashes, or if you want to keep the coverage forever and are still in reasonably good health, do a 1035 exchange into a new guaranteed universal life policy that will guarantee benefits for life even if the cash value reduces to $0. We do a lot of these for people who had the old 1980's UL policies. Very few people understand how they work, some even seem to think they can stop paying premiums and the policy will magically stay in force forever.
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