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Old 08-15-2011, 09:17 PM   #41
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So the cost of the bank paying multiple branch vice presidents to surf the net and cashiers to chew bubblegum and gossip while waiting for someone to walk up doesn't affect CD rates? That's just free?
Those so-called "special" CD rates are just a line entry in the marketing budget, nothing more. If a bank could pay you zero and loan it out on car loans and credit cards they would.........

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Fixed Annuities don't charge any loads or expenses, were you under the impression they do?
Is a 1-year fixed annuity paying a guaranteed 2% with full liquidity at the end a worthwhile product?
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Old 08-16-2011, 02:10 PM   #42
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Senior Annuity Alert

Heck, if they are running ads on this site, they must be worth something!

The main page states "8% for life"; what's not to like?

Everybody who has used this "valuable resource", please raise your hand...
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Old 08-16-2011, 02:25 PM   #43
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Originally Posted by rescueme View Post
You can learn it all here:

Senior Annuity Alert

Heck, if they are running ads on this site, they must be worth something!

The main page states "8% for life"; what's not to like?

Everybody who has used this "valuable resource", please raise your hand...
"Looking to buy an annuity"..............right away it sound suspicious.......
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Old 08-16-2011, 02:48 PM   #44
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Originally Posted by rescueme View Post

The main page states "8% for life"; what's not to like?
Do they take into account that you don't get your capital back at maturity like you do with a CD or bond? I bet that 8% included return of capital as well as earnings. Is it inflation indexed? And how secure is the company that backs the annuity.

In the end, an annuity means you are giving a company your money and they are promising to make certain payments for the rest of your life (or other predetermined time period.) If the company is not well run and goes down the tubes, you probably won't get your money back. At the very least I would diversify annuities over several companies and over time since current interest rates are very low.
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Old 08-17-2011, 11:45 AM   #45
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There are many income annuities that are fixed instead of variable. I've explained them here before but don't really feel like searching my post history to find it. You can think of a fixed deferred income annuity as guaranteeing a future SPIA based on the rates available today. Note that taxation of income annuity withdrawals may be different than a SPIA.

A 5-6% guaranteed income growth "bucket" is on the low side as there are some companies in the 7-7.5% compounded range, haven't looked at the rates in a little while. The actual withdrawal amount is factored as a combination of the income "bucket" value and the withdrawal percentage allowed.

I did one a couple years ago for someone that had an 8% compounded growth on the income side. He was 54 years old and wanted guaranteed income starting at age 65-66, so the 12-year surrender was fine with him and he had plenty of other assets, so he didn't need to touch the money. They offered a higher payout percentage at the age 65-69 band, so he was in the sweet spot for payouts and their lifetime guaranteed payout amount was about 10% more than any other company. He was well aware of the contract provisions and read everything in full. The policy was about 35 pages long and terms spelled out very clearly. Everything comes down to specifics.
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Old 08-17-2011, 12:42 PM   #46
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Do they take into account that you don't get your capital back at maturity like you do with a CD or bond?
That's where most people go wrong in their thinking.

An annuity (specifically an SPIA) is not an investment, but rather than an income vehicle.

You can't touch the money you invested in a CD, to be used for current income needs. Not to say that it should not be considered, but look at an annuity in a manner that says that you can draw down both originial investment (e.g. preimum) along with earnings to provided current income.

It's not the same product nor is it used in the same manner, over a long term...
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Old 08-17-2011, 03:08 PM   #47
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You can't touch the money you invested in a CD, to be used for current income needs.
I don't agree......

First of all, a CD is NOT an investment........
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Old 08-17-2011, 03:40 PM   #48
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I don't agree......

First of all, a CD is NOT an investment........
Ok...

Define an investment! Go ahead.

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Old 08-17-2011, 04:47 PM   #49
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Ok...

Define an investment! Go ahead.

Oh, I just love definitions: "putting money into something with the expectation of gain, but which is not a speculation and not a deposit (such as a CD)."
See Investment - Wikipedia, the free encyclopedia which, however, does not say this.
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Old 08-18-2011, 12:18 PM   #50
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EIA have only been sold in large numbers in the last 6 or 7 years and because there is typically at least a 10 year holding period, there is virtually no real data about how much income they provide in retirement. I asked DGoldenz to give me an example of how much income they provide to his past clients and he said that none of the EIA he sold had matured (wrong word)
The EIA's I've sold are "walk-away" annuities where you can just walk away after the surrender period. Annuitizing is an option, not a requirement. The income annuities guarantee a future income that is stated at the beginning of the contract instead of being variable based on future interest rates. I would not sell an EIA that requires annuitization or that has a surrender period longer than the accumulation period.

The income annuities give the owner the option of annuitizing, using the guaranteed income rider, or walking away with their accumulated value. There is a difference between annuitizing and using the income rider.
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Old 08-19-2011, 04:47 AM   #51
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many many banks are making a thrust into selling you an annuity with rates so low. i thought i would give you the heads up on it as it just happened to us saturday.
they all pretty much play out the same so being forewarned is to be forearmed as to just how these work. they all pretty much follow the same layout..

the fine print and pages and pages of stuff was very complex. i did my best to interpret it as best i could and i believe this is what it boiled down to so dont quote me. it is still making my hair hurt as to what that plan is. it takes an mba in finance to figure out that prospectus.

SOOOOOOOOOO yesterday we went to the bank to renew a cd and got pitched an annuity. they said rates are so low and since we had no time frame on the money would we like to see some better options.
i said sure and so the next guy went to work on us with their offering.

i have to say it sounded so good i almost bought it myself lol.

it started out with them promising me a minimum of 10% a year return for 10 years if the annuitywas on myself or 5% a year min if it extended to marilyn too.. if my variable investments were worth less they would increase me to either 5% or 10% min depending which i took. . if i died my wife gets to continue the plan and she gets the 5% minimum option.

thats where it got interesting.

i asked if i could take that money out and of course no you cant.

that 10% a year guarantee are only bonus bucks good towards an annuity conversion into a lifetime income stream..

however heres the catch. you pay expenses on your average yearly account value. those bonus bucks after 10 years have your expenses running double because they are based on that phantom value.

if you started with 100k had 3600.00 a year in expenses before the fund expenses those bonus bucks after 10 years have you paying 7200.00 a year plus fund expenses .

there were options everywhere to add to the plan each one increasing costs as well.

as best as i could tell here are the expenses,and keep in mind historically the return on a 50/50 mix is about 7% when not in an annuity

the expenses below are based on the total account value with the phantom bucks being included they give you.

mortality and expense risk charge 1.10%...

administrative fee .20%

combination enhanced death benefit .45%

beneficiary protector .35%

10% lifetime income option charge 1.2%

10% spousal continuation charge .30%

total 3.60% but we havent included the fund expense fees so tack on another .45 to 1.94% depending what funds you picked..


is that an amazing fee structure for the un-aware?.
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Old 08-19-2011, 04:55 AM   #52
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You're talking about a variable annuity with a GMIB (Guaranteed Minimum Income Benefits) Rider. You don't have enough information to make a deciision. You shouldn't buy it, you need more information. Focus on the actual benefit to you more than the nuts and bolts. They will turn, the features of the contract will not. Also be sure to ask yourself, do you want single or joint life? Single may be 1%, Joint will be 1.5% expense, does your spouse need the income to continue, or will the death benefit be sufficient for her?

You could buy Vanguard Total Bond Market Index Fund and get 3.17% and just draw down on principal for the additional needed and cross your fingers and go for it. It's only lost money twice in 23 years. However it's never seen a rapidly rising rate environment so we don't know what happens then. Do you have a palate for cat food?

That said, there is no simple answer.

If I were retired I'd split my money into 3 buckets and fill each before I earmarked for the next:

Must Have: This is the money that must absolutely be there no matter what. Expenses for food, shelter, healthcare etc.
- Asset classes for this include social security, pension, and annuities

Want to Have: Extras in retirement.
- If I didn't understand individual stocks & fixed income, I would use a mutual fund asset allocation program. If I did do individual stocks & fixed income, I'd manage half, and farm out the other half

Legacy: Doesn't sound like you're concerned. Nothing further needed.
the problem using bonds is bonds had a 30 year bull run. they are at the bottom of the cycle and there is no way they will duplicate what they have done.

variable annuities suck but immeadiate annuities can be helpful to a portfolio.

with bonds you are still betting on the whims of interest rates and markets. there isnt much dependability there.
immeadiate annuities give you diversification you can never duplicate. they are betting on dead bodies not so much markets.

the idea is to get a pensionized income to support your portfolio in times its down .

in the old days if you fell 15% in a 50/50 mix with interest rates in the 6-7% range you were whole again in 2 years. today your are down a long long time.

we are actually living that failure rate firecalc and all the others speak of.

markets are peaks and valleys and pensionizing income to raise those valleys up can add a huge success rate to portfolio survival. death to retirement plans are selling when markets are down.

im looking into incorperating a 20-25% mix of immreadiate annuities and my bucket system. the idea is to shift some of the risk of that income stream to a 3rd party who will take the risk for some of that stream not in the same investments im taking that risk in namely equities and bonds.

those dead bodies add another level of diversification. heck maybe its the new asset class.
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Old 08-19-2011, 08:46 AM   #53
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many many banks are making a thrust into selling you an annuity with rates so low. i thought i would give you the heads up on it as it just happened to us saturday.
they all pretty much play out the same so being forewarned is to be forearmed as to just how these work. they all pretty much follow the same layout..

the fine print and pages and pages of stuff was very complex. i did my best to interpret it as best i could and i believe this is what it boiled down to so dont quote me. it is still making my hair hurt as to what that plan is. it takes an mba in finance to figure out that prospectus.

SOOOOOOOOOO yesterday we went to the bank to renew a cd and got pitched an annuity. they said rates are so low and since we had no time frame on the money would we like to see some better options.
i said sure and so the next guy went to work on us with their offering.

i have to say it sounded so good i almost bought it myself lol.

it started out with them promising me a minimum of 10% a year return for 10 years if the annuitywas on myself or 5% a year min if it extended to marilyn too.. if my variable investments were worth less they would increase me to either 5% or 10% min depending which i took. . if i died my wife gets to continue the plan and she gets the 5% minimum option.

thats where it got interesting.

i asked if i could take that money out and of course no you cant.

that 10% a year guarantee are only bonus bucks good towards an annuity conversion into a lifetime income stream..

however heres the catch. you pay expenses on your average yearly account value. those bonus bucks after 10 years have your expenses running double because they are based on that phantom value.

if you started with 100k had 3600.00 a year in expenses before the fund expenses those bonus bucks after 10 years have you paying 7200.00 a year plus fund expenses .

there were options everywhere to add to the plan each one increasing costs as well.

as best as i could tell here are the expenses,and keep in mind historically the return on a 50/50 mix is about 7% when not in an annuity

the expenses below are based on the total account value with the phantom bucks being included they give you.

mortality and expense risk charge 1.10%...

administrative fee .20%

combination enhanced death benefit .45%

beneficiary protector .35%

10% lifetime income option charge 1.2%

10% spousal continuation charge .30%

total 3.60% but we havent included the fund expense fees so tack on another .45 to 1.94% depending what funds you picked..


is that an amazing fee structure for the un-aware?.
I've seen these too. Seems lots of investment companies have similar programs with their annuities. From the standpoint of a pure investment, they are expensive. From the standpoint of generating retirement income, they can have value (the main value issue I see is that they can limit panic and can guarantee future income).
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Old 08-19-2011, 09:47 AM   #54
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Originally Posted by mathjak107 View Post
many many banks are making a thrust into selling you an annuity with rates so low. i thought i would give you the heads up on it as it just happened to us saturday.
they all pretty much play out the same so being forewarned is to be forearmed as to just how these work. they all pretty much follow the same layout..

the fine print and pages and pages of stuff was very complex. i did my best to interpret it as best i could and i believe this is what it boiled down to so dont quote me. it is still making my hair hurt as to what that plan is. it takes an mba in finance to figure out that prospectus.

SOOOOOOOOOO yesterday we went to the bank to renew a cd and got pitched an annuity. they said rates are so low and since we had no time frame on the money would we like to see some better options.
i said sure and so the next guy went to work on us with their offering.

i have to say it sounded so good i almost bought it myself lol.

it started out with them promising me a minimum of 10% a year return for 10 years if the annuitywas on myself or 5% a year min if it extended to marilyn too.. if my variable investments were worth less they would increase me to either 5% or 10% min depending which i took. . if i died my wife gets to continue the plan and she gets the 5% minimum option.

thats where it got interesting.

i asked if i could take that money out and of course no you cant.

that 10% a year guarantee are only bonus bucks good towards an annuity conversion into a lifetime income stream..

however heres the catch. you pay expenses on your average yearly account value. those bonus bucks after 10 years have your expenses running double because they are based on that phantom value.

if you started with 100k had 3600.00 a year in expenses before the fund expenses those bonus bucks after 10 years have you paying 7200.00 a year plus fund expenses .

there were options everywhere to add to the plan each one increasing costs as well.

as best as i could tell here are the expenses,and keep in mind historically the return on a 50/50 mix is about 7% when not in an annuity

the expenses below are based on the total account value with the phantom bucks being included they give you.

mortality and expense risk charge 1.10%...

administrative fee .20%

combination enhanced death benefit .45%

beneficiary protector .35%

10% lifetime income option charge 1.2%

10% spousal continuation charge .30%

total 3.60% but we havent included the fund expense fees so tack on another .45 to 1.94% depending what funds you picked..


is that an amazing fee structure for the un-aware?.
Sounds like a Nationwide VA..........
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Old 08-19-2011, 04:16 PM   #55
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well ill protect the names of the guilty but just curious how you arrived at nation wide?
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Old 08-19-2011, 04:39 PM   #56
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it started out with them promising me a minimum of 10% a year return for 10 years if the annuitywas on myself or ...
What a deal!
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Old 08-21-2011, 02:00 PM   #57
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well ill protect the names of the guilty but just curious how you arrived at nation wide?
10% growth on the income base for 10 years, not many others have that.......
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Old 08-21-2011, 02:10 PM   #58
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nor fees on that phantom base ha ha ha.... according to what i could figure out in that complex prospectus it looks like the charges are based on the fact they are crediting you with those step up bonus's.


i all sounded like an amazing deal. 10 % guaranteed for 10 years.... thankfully i already had a clue where it was going.
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Old 08-21-2011, 02:20 PM   #59
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10% growth on the income base for 10 years, not many others have that.......
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nor fees on that phantom base ha ha ha.... according to what i could figure out in that complex prospectus it looks like the charges are based on the fact they are crediting you with those step up bonus's.


i all sounded like an amazing deal. 10 % guaranteed for 10 years.... thankfully i already had a clue where it was going.
given the 3.6% fees you stated earlier doesnt that just mean that the actual guaranteed rate is 10%-3.6%=6.4%/yr? or am i missing something?
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Old 08-21-2011, 02:28 PM   #60
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the 3.60 doesnt include the fund fees yet either.... depending what you pick the fund fees can run almost 2%.

again the 10% return isnt money you get now. its a credit you get decades later if and when you convert to an annuitized income. in the mean time put in 100k and those fees your paying now will double as they credit you with those phantom bucks. imagine paying 7200 bucks by year 10.
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