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Do you have an annuity for retirement income?
Old 11-02-2008, 11:16 PM   #1
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Do you have an annuity for retirement income?

I'm thinking of adding a TIAA Traditional Annuity to my retirement investments. Do you have an annuity, if so what, and how does it fit in with the rest of your investments?
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Old 11-02-2008, 11:20 PM   #2
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An a**uity?
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Old 11-03-2008, 06:59 AM   #3
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FWIW, my retirement funds are in laddered fixed annuity contracts that provide me penalty free access to funds if needed and they're tax deferred.

Metlife is offering Fixed Annuities @

6.75% 10-yrs
5.8% 5-yrs
4.6% 3-yrs
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Old 11-03-2008, 07:29 AM   #4
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see Annuity Opinions Needed

my immediate fixed annuity is for present day income, along with a modest survivor's pension, until my own deferred retirement pension kicks in in 6 years.
my real retirement portfolio is set for 100% reinvest all dividends & gains.

added to clarify...please note that i own an immediate fixed annuity because it was my best option to be able to FIRE at 48 and was able to convert my TSP balance into a monthly paycheck without severe tax or early withdrawal penalties under the FERS and IRS 72(t) SEPP rules. this is a SPECIAL case.

I do not espouse annuities. every situation is different.
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Annuties?
Old 11-03-2008, 07:54 AM   #5
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Annuties?

well, playing devils advocate>

IAD..It All Depends.. and on what kind ( of the one's you need to Wear) LOL

and being in the Ins. Business for a few Yrs..I don't trust them..any of them..
and of course, IMBW...

Unless they will Not take the balance of the Money in it after I die?
And They cost way to much in fees/costs and have too much surrender fees and I'm not so sure on how safe they really are now..

I have made more with just Plain Treasuries and a few other Bonds and I know where my $ is and it can go to Heirs after am gone..
Of course, for you richer people that need to hide some after tax $, it maybe worth your while..

I'd rather Buy
> A Rental property ( Owned Twnhome for 15 yrs and now paid for )
> My 6.3% Municipals thru my Local Town instead..

> You can buy even VWINX fund, take out -4% apy and be way ahead of the game.., but it's not tax deferred..
> Or if your getting say $8k yr for life on a $200k Annuity? Vs In Bonds at 6% = $12k yr and you will have at least that $200k+ another $3k after taxes to help off set some of the inflation.. If you getting More? I'd just Divide how much your getting into the Total Amt. you Invested and see how long that will last on it's own first..
> I also found So many being misled into think they are going to Live to 8's- 90's, etc.. when they'll be lucky to live to the ave of 75 for men and 80 for women... Ins. Co.'s Count on this ..
> The same for SS... Delay taking it? Sure, they'd Love everyone to do that.. a vast majoirty will die alot sooner than they think... take it at age 70 vs 65 and die at age 75.. and most end up spending their last 5-10 yrs in retirement In Moderate to Poor Shape to do much.. So why wait.. Take it as soon as you can and go out an enjoy what life you have left and being able to do it...
> Those who already have an annuity? Maybe you can tell me Howmuch will be Left to go to Heirs/Etate when oyu Die say in the next 5 yrs? or after that annuity is 10 yrs old.? If it will have (a) Or original Cost basis/Principal invested and (b) 3% added to it for Inflation? (d) give me at least 4% Yr? I'm In... let me know, I'll buy it..
\
> Who wants Tax deffered after Retiring? Your Taxes are going to Be HIGHER, Not Lower... that is, if you have anykind of $ saved up and making as much or more than you were while working, as I am.. Just like IRA's are a con game too.. the old Bait and Switch game by our Gov't..
And only good for the Higher income/Wealthy people who have +28% taxes, etc., but not for the Rank and file .. Whom many are now finding out they are paying higher Taxes now , after retiring than they did while working... Like Taxes are Going to Go Down or The only way your going to pay Less taxes at retirement time is if you have Alot Less Income..

They ( IRS and The Gov't) had this all figured out when they set this bait & switch game up...Just like they did with the SS and Medicare Program..

According to "Think Tank" a PBS show? We should be getting 36% more than we are on those 2 programs, not less!

Vanguards have been about the "Best of the Worse" I've found so far, hopefully they will get better in time, but not yet...

Of course, it's just IMO..
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Old 11-03-2008, 08:19 AM   #6
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Quote:
Originally Posted by freebird5825 View Post
see Annuity Opinions Needed

my immediate fixed annuity is for present day income, along with a modest survivor's pension, until my own deferred retirement pension kicks in in 6 years.
my real retirement portfolio is set for 100% reinvest all dividends & gains.
That's my plan too. $200k in the TIAA at 55 will give me $15k a year for life and along with $15k from rental income I have my basic living expenses covered even before SS and drawing on the rest of my investments that are in a 50/50 mix of index funds.
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Old 11-03-2008, 08:32 AM   #7
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updated for any continuing dialogue

Quote:
Originally Posted by freebird5825 View Post
see Annuity Opinions Needed

my immediate fixed annuity is for present day income, along with a modest survivor's pension, until my own deferred retirement pension kicks in in 6 years.
my real retirement portfolio is set for 100% reinvest all dividends & gains.

added to clarify...please note that i own an immediate fixed annuity because it was my best option to be able to FIRE at 48 and was able to convert my TSP balance into a monthly paycheck without severe tax or early withdrawal penalties under the FERS and IRS 72(t) SEPP rules. this is a SPECIAL case.

I do not espouse annuities. every situation is different.
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Old 11-03-2008, 08:40 AM   #8
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Originally Posted by nun View Post
That's my plan too. $200k in the TIAA at 55 will give me $15k a year for life and along with $15k from rental income I have my basic living expenses covered even before SS and drawing on the rest of my investments that are in a 50/50 mix of index funds.
are we related? i'm holding a 55/45 AA. recent market activity has me at 50/50 (today's story).
martha just recently posted a link to the national (by state) chart for insurance guaranty for life insurance products. i can't find the exact post right now.
as she and others so smartly pointed out, it would benefit anyone to check out their "coverage" by state before entering into one of these.
NY has a $500K coverage level, so i'm pretty comfy with that. i understood the carrier default risk issue when i went down this path. my carrier is historically one of the most stable in the biz.
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Old 11-03-2008, 10:59 AM   #9
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I inherited a variable annuity with John Hancock from my mother. At the time of her death there were still significant surrender charges so I just had the annuity reregistered in my name. I have it invested in several different small cap and international funds. Performance has been so-so. I would not have bought it for myself but I see no reason to cash out of it now.
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Old 11-03-2008, 11:16 AM   #10
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Does an annuity make any sense for someone in the 15% tax bracket?
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Old 11-03-2008, 11:57 AM   #11
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I inherited a variable annuity with John Hancock from my mother. At the time of her death there were still significant surrender charges so I just had the annuity reregistered in my name. I have it invested in several different small cap and international funds. Performance has been so-so. I would not have bought it for myself but I see no reason to cash out of it now.
I'd never buy a variable annuity because the main feature for me is the fixed nature of the TIAA Traditional annuity. It gives me a firm foundation. Also I'm not buying it form some agent that charges commissions etc it's right there as one of the standard options in my retirement account.
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Old 11-03-2008, 12:09 PM   #12
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I go back and forth whether to take part of the TSP withdrawals as an annuity.
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Old 11-03-2008, 12:23 PM   #13
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I go back and forth whether to take part of the TSP withdrawals as an annuity.
I'm in the same boat, although leaning towards the fixed annuity as part of my planning. I think there are some good annuities and some that are a rip off. I'd put TSP and TIAA annuities in the good column. Many people reject them out of hand as they often get bad press, particularly here, and some buy bad ones because they don't really understand the product, but they should be considered as part of a balanced portfolio.
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Old 11-03-2008, 12:50 PM   #14
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Quote:
Originally Posted by grumpy View Post
I inherited a variable annuity with John Hancock from my mother. At the time of her death there were still significant surrender charges so I just had the annuity reregistered in my name. I have it invested in several different small cap and international funds. Performance has been so-so. I would not have bought it for myself but I see no reason to cash out of it now.
There should NOT be any surrender charges to the beneficiary on an inherited annuity. You could have moved it anywhere you wanted, and probably still can.
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Old 11-03-2008, 01:10 PM   #15
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There should NOT be any surrender charges to the beneficiary on an inherited annuity. You could have moved it anywhere you wanted, and probably still can.
My father bought his children a VA. It was set up where it was not owned by him but by us. It was also set up to not be accessible until the oldest sibling reaches 59 1/2. It was set up with my sister having "control" and she supposedly will have to take the entire withdrawl against her income (she says) when the cash out date arrives in a couple of months. She is then to make disbursements to her siblings. I have no access to the account that I am aware of.

I can't figure out why we can't each get separate checks with our own 1099 forms. My sister insists we can't.

Do you have any thoughts?
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Old 11-03-2008, 01:19 PM   #16
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My father bought his children a VA. It was set up where it was not owned by him but by us. It was also set up to not be accessible until the oldest sibling reaches 59 1/2. It was set up with my sister having "control" and she supposedly will have to take the entire withdrawl against her income (she says) when the cash out date arrives in a couple of months. She is then to make disbursements to her siblings. I have no access to the account that I am aware of.

I can't figure out why we can't each get separate checks with our own 1099 forms. My sister insists we can't.

Do you have any thoughts?
So, it was set up in a trust, it seems. Your sister is the trustee and executor, and so she controls the disbursements to you. Without knowing the structure and language of the trust, it's hard to advise you on what to do.

Your sister should ask the insurance company if that can be changed in how its set up. If it is irrevocable, then your sister could always calculate how much tax will be owed this year upon lump sum withdrawal, and keep the tax consequence, and give each of you the net amount. Hopefully all of you get along well enough that it would not be a problem.........
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Old 11-03-2008, 01:22 PM   #17
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I go back and forth whether to take part of the TSP withdrawals as an annuity.
as a FERS (right? or are you CSRS?) retiree, is that allowed prior to age
59 1/2? i thought it was an all-or-nothing conversion.
but then again i resigned, not retired, so please correct me.
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Old 11-03-2008, 01:50 PM   #18
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as a FERS (right? or are you CSRS?)
I'm both, one of the folks who switched.

Quote:
retiree, is that allowed prior to age
59 1/2
? i thought it was an all-or-nothing conversion.
but then again i resigned, not retired, so please correct me.
As an early retiree (buyout for RIF), I could have elected all annuity or all actuarial payments or rollover to IRA some combination thereof, at retirement, as long as it involved committing all the money to a plan.

I considered setting up a payout plan last year, but missed the high market window (I'm lazy); I'll probably defer until age 62 (when the pension decreases) or a new market high.
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Old 11-03-2008, 01:55 PM   #19
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So, it was set up in a trust, it seems. Your sister is the trustee and executor, and so she controls the disbursements to you. Without knowing the structure and language of the trust, it's hard to advise you on what to do.

Your sister should ask the insurance company if that can be changed in how its set up. If it is irrevocable, then your sister could always calculate how much tax will be owed this year upon lump sum withdrawal, and keep the tax consequence, and give each of you the net amount. Hopefully all of you get along well enough that it would not be a problem.........
Thanks for the comments. I hadn't thought about the trust possibility. It's not all that much money. I expect to get about $35,000 when it's all said and done.

Whatever it is it's irrevocable. When my sister found out he bought a VA she tried to get it undone. My father became obsessed with leaving something to his children and he didn't want to pay taxes if he could avoid them. His 15% marginal rate was obviously crushing him. He was the classic case of someone that shouldn't get a VA getting one sold to him.

The plan according to my sister is exactly what you suggest. She will pay the tax and write individual checks. It screws up things like possible gift taxes and I'd sure hate to have this "non-income" show up during an IRS audit. I'd feel so much better with my own little 1099.
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Old 11-03-2008, 02:02 PM   #20
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Thanks for the comments. I hadn't thought about the trust possibility. It's not all that much money. I expect to get about $35,000 when it's all said and done.

Whatever it is it's irrevocable. When my sister found out he bought a VA she tried to get it undone. My father became obsessed with leaving something to his children and he didn't want to pay taxes if he could avoid them. His 15% marginal rate was obviously crushing him. He was the classic case of someone that shouldn't get a VA getting one sold to him.

The plan according to my sister is exactly what you suggest. She will pay the tax and write individual checks. It screws up things like possible gift taxes and I'd sure hate to have this "non-income" show up during an IRS audit. I'd feel so much better with my own little 1099.
The IRS won't care about you, they have your sister to chase after if the taxes are underreported. Make sure she has a good CPA.......
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