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Old 04-18-2014, 10:32 PM   #21
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Perhaps, I have misunderstood the rules/process. It is my understanding that you can fund your spia with a nontax transfer of IRA funds. Your subsequent SPIA payments are of course taxable but only represent a fraction of the rmd. Meanwhile, the lump sum you transferred to the spia is no longer in your year-end balances that determine rmd are lower.
Obvious tradeoff is what is the impact on your marginal tax rate. RMD comes in lump sum; spia is annuitized income. Balances drive the answer along with pension, SS, etc levels.
Let me know what I am missing.
Thanks
Nwsteve
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Old 04-18-2014, 11:11 PM   #22
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I can spend $250k at 52.5 to get a single life COLA pension of $21k/year starting at 55. Looks like a good deal in the current environment.
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Old 04-19-2014, 08:04 AM   #23
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I had a deferred comp plan with an annuitization option that I could have annuitized when I retired at the end of 2011. Since I had some taxable funds to live on I just kelt the account and invested it in a 90% domestic/10% international equity fund available within the plan. Now the balance (and the annuity payments should I chose to annuitize) are 150% of what they were when I retired.
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Old 04-19-2014, 08:40 AM   #24
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Originally Posted by pb4uski View Post
I had a deferred comp plan with an annuitization option that I could have annuitized when I retired at the end of 2011. Since I had some taxable funds to live on I just kelt the account and invested it in a 90% domestic/10% international equity fund available within the plan. Now the balance (and the annuity payments should I chose to annuitize) are 150% of what they were when I retired.
It's the age old gamble. I get a one time chance to buy into my state's pension plan and I'm leaning to doing it and just treating it as a 25% fixed income allocation producing a COLAed $21k/year; I'll be aggressive with the rest of my money knowing that I get a paycheck every month. Getting access to my tax deferred funds at 55 also means that I won't be spending down my after tax accounts; the $21k from the pensions and $15k from rent will cover my expenses.

If I assume 5% annual growth between the time I buy into the pension and 55 my $250k will have grown to $275k....with a $21k income the payout rate is 7.6%. It's nice to have access to your principal, but a 7.6% COLA'ed payout is hard to pass up.
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Old 08-03-2014, 02:55 PM   #25
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Hi. I just found this site. Looking for some advice. I just retired and have a good nest egg. Currently I have the $s divided into 2 strategies...1 a typical diversified portfolio-50/40/10. The larger portion is a tactically managed dividend income interest portfolio.
I am 62...have enough cash for 3 years of spend so I wasnt hitting the $s for 3 years.
The nervous side of me is starting to think of getting a deferred annuity that can start in 3 years....sort of making sure that with SS and the annuity my essentials are covered for life....I wonder whether to have the major bulk of my $s in the market....maybe ladder the strategic $s into CDs?
Just looking for any assistance at this point
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Old 08-03-2014, 03:16 PM   #26
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Originally Posted by wfobrien View Post
Hi. I just found this site. Looking for some advice. I just retired and have a good nest egg. Currently I have the $s divided into 2 strategies...1 a typical diversified portfolio-50/40/10. The larger portion is a tactically managed dividend income interest portfolio.
I am 62...have enough cash for 3 years of spend so I wasnt hitting the $s for 3 years.
The nervous side of me is starting to think of getting a deferred annuity that can start in 3 years....sort of making sure that with SS and the annuity my essentials are covered for life....I wonder whether to have the major bulk of my $s in the market....maybe ladder the strategic $s into CDs?
Just looking for any assistance at this point
Well, you won't find many annuity fans around here--but many of us would grudgingly go that route if forced into a corner. Annuities have high costs, they are only as safe as their issuing company, obviously they reduce the value of what will be passed to your heirs, and the present low-interest rate environment is not a great time to be buying them. But if a retiree can't maintain a sufficient income flow with SS, pensions, and the expected safe withdrawal from their investments, then it may make sense to enhance the annual take from those investments by using an inflation-adjusted annuity.

Search the threads here for discussions about Jim Otar, his book gives some good discussion and ways to analyze the situation. If you are in Otar's "Green Zone", then an annuity probably isn't for you. If you are in his Red Zone, it may be time to bite the bullet: the significant negatives of an annuity may be outweighed by their value in these cases. Interest rates are much more likely to rise than to fall, so if you can wait, that together with your increasing age might increase the amount an annuity would pay monthly.

Welcome to the board!
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Old 08-03-2014, 09:05 PM   #27
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Originally Posted by wfobrien View Post
Hi. I just found this site. Looking for some advice. I just retired and have a good nest egg. Currently I have the $s divided into 2 strategies...1 a typical diversified portfolio-50/40/10. The larger portion is a tactically managed dividend income interest portfolio.
I am 62...have enough cash for 3 years of spend so I wasnt hitting the $s for 3 years.
The nervous side of me is starting to think of getting a deferred annuity that can start in 3 years....sort of making sure that with SS and the annuity my essentials are covered for life....I wonder whether to have the major bulk of my $s in the market....maybe ladder the strategic $s into CDs?
Just looking for any assistance at this point
One simple note - you can "buy an annuity" by deferring your SS start date. When I look at the numbers, it appears to me that the gov't gives me a better deal than private insurance companies.
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