Join Early Retirement Today
Closed Thread
 
Thread Tools Search this Thread Display Modes
Old 09-27-2011, 02:30 PM   #101
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,841
Quote:
Originally Posted by M Paquette View Post
Indeed. Just when it looks safe to set forth and sail the wide accountancy, those stalwart and reasonably trustworthy men of the Crimson Permanent Assurance show up!

Hilarious! This is worth watching.
__________________

__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is online now  
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 09-27-2011, 02:54 PM   #102
Dryer sheet wannabe
 
Join Date: Sep 2011
Location: Glastonbury
Posts: 22
Quote:
Originally Posted by ziggy29 View Post
I have no issue with someone using *part* of their retirement savings to "buy a pension" with an SPIA (but not now because rates are so terrible). But when you start selling complicated, "guaranteed" deferred annuity products, I run the other way.
Hi Ziggy,

Actually. with a SPIA, you are giving the insurance company all control of your money for the benefit of annuitization. Do it wrong, and the company could actually end up with the bulk of your hard earned savings and nothing for the beneficiaries. That was the annuity of your father's day. Today's annuity, with income riders, keeps the control to the side of the annuity owner, and offers guarantees that mutual funds, bonds, and stocks cannot offer. It's the one vehicle that can secure your retirement without regard to the volitility of the marketplace.

I've heard the word 'complicated' plenty of times when referring to annuities. Complicated is a word that has been used so much that people automatically use it without any real reference point. Have you ever read a mutual fund prospectus? The average prospectus is 120 pages in length vs an annuity disclosure at 12 pages. Are you familiar with 12b1 fees, management fees, admin fees, 'A' shares vs. 'B' shares? These are just some of the fees in most mutual funds.

People tend to buy mutual funds and stocks without any real knowledge of what they have done, yet, they have been lead to believe that annuities are too complicated to purchase. In 2008 not one of my clients lost one dollar in their retirement savings and in 2009 they averaged a 15% return for the year. Another 9% average return for 2010. Once credited, the interest cannot be lost in future down markets.

When I go to the doctor he explains in laymans terms what is going on inside of my body. Much too complicated in technical terms. Either I trust him or I find a new doc. Same thing with mutual funds and with annuities.

My afvice to most: Don't parrot what others say. Find an advisor you can trust and ask him his opinion. By the way. most equity brokers are at a total lost as to how annuities work. Their vested interest is in what they sell - mutual funds.
The fact is. the annuity is the bedrock of the retirement pension back when pensions were made available to the employee. Many a retired person wishes that he had a pension today rather than his deflated 401k.
__________________

__________________
Retirement Mechanic is offline  
Old 09-27-2011, 02:55 PM   #103
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Oh boy a genuine insurance representative, this should be fun. Time to makes some popcorn.
__________________
clifp is offline  
Old 09-27-2011, 02:58 PM   #104
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,076
Quote:
Originally Posted by Retirement Mechanic View Post
My afvice to most: Don't parrot what others say. Find an advisor you can trust and ask him his opinion.
But Bernie Madoff won't return my calls...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 09-27-2011, 02:59 PM   #105
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by Retirement Mechanic View Post
Have you ever read a mutual fund prospectus? The average prospectus is 120 pages in length vs an annuity disclosure at 12 pages. Are you familiar with 12b1 fees, management fees, admin fees, 'A' shares vs. 'B' shares? These are just some of the fees in most mutual funds.
Yes, and I'm also familiar with the concept of "back-end loaded mutual funds". Sounds a lot like "surrender charges" to me.

Not to mention that when annuities are invested in mutual funds -- as many do -- they are paying the fund fees *in addition* to costs of the annuity anyway.

Actually I shouldn't use the term "investing" in an annuity because they are an insurance product and not regulated by the SEC, right?
__________________
"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)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline  
Old 09-27-2011, 03:01 PM   #106
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,036
Quote:
Originally Posted by clifp View Post
Oh boy a genuine insurance representative, this should be fun. Time to makes some popcorn.
here, I put the kettle on...
__________________
FIREd is online now  
Old 09-27-2011, 03:02 PM   #107
Dryer sheet wannabe
 
Join Date: Sep 2011
Location: Glastonbury
Posts: 22
Not too much butter please. One stick should do it.
__________________
Retirement Mechanic is offline  
Old 09-27-2011, 03:02 PM   #108
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by FD View Post
here, I put the kettle on...
__________________
"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)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline  
Old 09-27-2011, 03:12 PM   #109
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by ziggy29 View Post
Actually I shouldn't use the term "investing" in an annuity because they are an insurance product and not regulated by the SEC, right?
True. They are overseen/regulated by the indivudial state insurance department.

Yes, we have an annuity (SPIA), and no, I won't get into the discussion other than to say that they are not for everybody and there is no standard policy that applies to everyone, with today's policy options.

It has, and is working for us as an ER income vehicle which is allowing us to delay our respective SS. However our plan is unique for our situation and would not apply to most folks.

However, the SPIA (for us) is the right "tool" for the job...
__________________
rescueme is offline  
Old 09-27-2011, 03:21 PM   #110
Dryer sheet wannabe
 
Join Date: Sep 2011
Location: Glastonbury
Posts: 22
Well, kindly allow me to fix a bit of misinformation. You are mixing up two types of annuities, as most people do. There is the fixed and fixed index annuity and there is the variable annuity. The variable annuity typically has all the different charges you speak of. They also have the potential for loss as their downside risk is not protected. Because the variable annuity is directly invested in mutual funds they are regulated by the SEC and FINRA. The variable annuity has charges from the insurance side of the business and sub account fees from the investment side of the business. I personally am hard pressed to ever recommend a variable annuity.

A fixed and fixed index annuity is a type of an annuity that guarantees your principle and all future gains. A fixed annuity offers an annual fixed rate of return whereas, a fixed index annuity offers an annual rate of return that is a percentage of the performance of an index such as the S&P500 or the DOW. The upside potential is typically greater than a fixed annuity but will not receive 100% of the index growth for any particular year. Although it does not receive 100% of the market upside, it is 100% protected from the market downside. If you are approaching retirement or already retired, what would you rather do: Have a sure bet or a roll of the dice? The average indexed annuity has earned an annual 5.5% for the last ten years. The average index has been, for the most part, flat as my Aunt Nelly.

There is a cost to everything. Surrender charges are neccessary to protect the insurance company. The annuity owner does not incur surrender when the rules are understood and followed. An annuity is a long term retirement strategy, not a short term strategy to buy that boat you have your eye on.

Uhhh, my fingers are getting tired. Too many typos.
__________________
Retirement Mechanic is offline  
Old 09-27-2011, 03:23 PM   #111
Thinks s/he gets paid by the post
73ss454's Avatar
 
Join Date: Oct 2004
Location: LaLa Land
Posts: 4,378
Quote:
Originally Posted by Retirement Mechanic View Post
Actually. with a SPIA, you are giving the insurance company all control of your money for the benefit of annuitization. Do it wrong, and the company could actually end up with the bulk of your hard earned savings and nothing for the beneficiaries. That was the annuity of your father's day. Today's annuity, with income riders, keeps the control to the side of the annuity owner, and offers guarantees that mutual funds, bonds, and stocks cannot offer. It's the one vehicle that can secure your retirement without regard to the volitility of the marketplace.
In other words the commissions aren't as good with the SPIA.

You are wasting your time here.
__________________
Work is something you do to get enough $ so you don't have to....Me.
73ss454 is offline  
Old 09-27-2011, 03:30 PM   #112
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by Retirement Mechanic View Post
A fixed and fixed index annuity is a type of an annuity that guarantees your principle and all future gains. A fixed annuity offers an annual fixed rate of return whereas, a fixed index annuity offers an annual rate of return that is a percentage of the performance of an index such as the S&P500 or the DOW. The upside potential is typically greater than a fixed annuity but will not receive 100% of the index growth for any particular year. Although it does not receive 100% of the market upside, it is 100% protected from the market downside.
If you roll your own "EIA" with index funds and put options on the index, you *can* eliminate almost all the downside while only losing the cost of expiring option premiums on the upside. There's a small chance of losing a little money if the market is flat (you lose the option premiums while getting no gain from the equities), but that's a small "fee" compared to the chance of getting "capped" at (say) an 8% gain in 2009 when the S&P rose 27%.
__________________
"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)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline  
Old 09-27-2011, 03:30 PM   #113
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,076
Quote:
Originally Posted by Retirement Mechanic View Post
Uhhh, my fingers are getting tired. Too many typos.
Just curious, what age do you plan to retire?
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 09-27-2011, 03:37 PM   #114
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by Retirement Mechanic View Post
By the way. most equity brokers are at a total lost as to how annuities work. Their vested interest is in what they sell - mutual funds.
Really, how long have you been an equity broker? Do you have a securities license? Are you an RIA? Typical insurance agent, thinking all brokers sell mutual funds........

If you last more than 150 posts on this forum, I have to buy REWahoo lunch..........
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline  
Old 09-27-2011, 03:40 PM   #115
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by Retirement Mechanic View Post
The upside potential is typically greater than a fixed annuity but will not receive 100% of the index growth for any particular year.
Well, you finally are right on something!

Quote:
The average indexed annuity has earned an annual 5.5% for the last ten years.
So have a fair number of other investment portfolios, and without locking up your money for 10 years!
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline  
Old 09-27-2011, 03:42 PM   #116
Dryer sheet wannabe
 
Join Date: Sep 2011
Location: Glastonbury
Posts: 22
Obviously. with you I am wasting my time.
__________________
Retirement Mechanic is offline  
Old 09-27-2011, 03:48 PM   #117
Dryer sheet wannabe
 
Join Date: Sep 2011
Location: Glastonbury
Posts: 22
Well Ziggy, it appears you are pretty astute when it comes to investing. The annuity option may not be your best option. I have sat down with a surviving spouse who was at a total loss as to what to do with her husband's portfolio. This at a time when the markets were sinking. Her advisor assured her the markets would recover. She was at the age of 79 at the time. Someone kindly told her annuities were a bad thing. The annuity is not the total answer. But it serves very well the retired population who does not have the time window or the savvy to invest in the markets.
__________________
Retirement Mechanic is offline  
Old 09-27-2011, 03:51 PM   #118
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,076
Quote:
Originally Posted by Retirement Mechanic View Post
Well Ziggy, it appears you are pretty astute when it comes to investing. The annuity option may not be your best option. I have sat down with a surviving spouse who was at a total loss as to what to do with her husband's portfolio. This at a time when the markets were sinking. Her advisor assured her the markets would recover. She was at the age of 79 at the time. Someone kindly told her annuities were a bad thing. The annuity is not the total answer. But it serves very well the retired population who does not have the time window or the savvy to invest in the markets.
Not too many 79 year-old widows on the Early-Retirement forum...
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline  
Old 09-27-2011, 03:52 PM   #119
Dryer sheet wannabe
 
Join Date: Sep 2011
Location: Glastonbury
Posts: 22
Finance Dude, the term 'locking up' is inaccurate and over used. When someone buys a bond is his money locked up. How about a cd? Even with a stock there is always a chance of selling at the wrong time. Remenber that the annuity is for long term planning, not short term liquidity. Do you have all your funds in one mutual fund or one stock? I should hope not. Lets open up to the proper use of an annuity.
__________________
Retirement Mechanic is offline  
Old 09-27-2011, 03:53 PM   #120
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,423
Quote:
Originally Posted by Retirement Mechanic View Post
Well Ziggy, it appears you are pretty astute when it comes to investing. The annuity option may not be your best option. I have sat down with a surviving spouse who was at a total loss as to what to do with her husband's portfolio. This at a time when the markets were sinking. Her advisor assured her the markets would recover. She was at the age of 79 at the time. Someone kindly told her annuities were a bad thing. The annuity is not the total answer. But it serves very well the retired population who does not have the time window or the savvy to invest in the markets.
Too bad for her she didn't stop by here first...
__________________

__________________
MichaelB is online now  
Closed Thread


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
New-style annuity offers guaranteed income, access Tiger FIRE and Money 27 01-12-2008 08:23 PM
34.75% Return since 11/04 VS 1.75% Annual Advisor Fees av8r FIRE and Money 42 04-30-2007 09:05 AM
estimated annual return piano88 FIRE and Money 3 01-26-2006 09:55 AM
How to handle church endowment (looking for best guaranteed return) dandan14 FIRE and Money 3 08-22-2005 12:41 PM
Annuity w/guaranteed floor PLUS upside potential Jer FIRE and Money 8 06-07-2004 11:49 AM

 

 
All times are GMT -6. The time now is 04:21 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.