Originally Posted by RetireAge50
Ok I can see what you are saying. The annuity is priced based on what the insurance company invests in (bonds).
I guess I thought insurance companies would want to make more money by investing in stocks but maybe not. Thanks for education!
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The advantage of my state defined benefit plan buy in is that the state pension fund doesn't limit itself to bonds and, of course, it has the back up of taxation. Last year the MA state pension plan had an investment return of 17%...so maybe an interest rate of 7% on their pension when I do the annuity calculation is a bit mean.
OCCUPY ER, <=>
"The needs of the many outweigh the needs of the few, or the one." - Spock
Retired Mar 2014 at age 52
Target AA: 70% equity funds / 28% TIAA-Traditional/ 2% cash
Target WR: 0.0%,
Income from pension, rent, and eventually SS