First time poster.
I have read a lot of awful things about fixed index annuities (FIA). But it looks like just what I need for my situation. My wife and I are both retired, in our late 50’s, and have a nice nest egg for the future. It’s nice because it was invested in a diversified portfolio of low-cost stock and bond funds for a lot of good years in the markets. And we plan to stay invested for a long time. We currently live very well off of her pension, her part-time job, our non-qualified savings, and my golf winnings (OK, maybe not too much of that). In 10-12 years when the savings run out, we will have a cash flow shortfall. By that time, we can tap into our IRA’s.
But I can take 1/3 of the money in our qualified plans today, buy a FIA with a Lifetime Income Benefits Rider that guarantees (“subject to the financial health and claims paying ability of the insurer”, of course) to pay me, starting at age 70, an annual benefit that is sufficient to cover our cash flow shortfall for the rest of our joint lives. It has a 10% premium bonus, 8% compounded growth on the income base every year, 5.5% of the income base paid out annually for the rest of our joint lives. And that’s the WORST it can do. Guaranteed.
I don’t plan to cash it out early, so outrageous surrender charges are irrelevant. I have the other 2/3 of the nest egg to tap for emergencies, maybe even buy a LTC plan. It makes no difference to me what the market index side of the FIA account does – my income base is growing 8% per year, regardless of the market swings. If the market side, with all of its caps and participation rates, somehow beats the income base, great; our payments are based on whichever is larger. What if the account value goes to zero? So what, I’m still guaranteed our lifetime income benefit. There is little or no death benefit left after a few years of payments. It doesn’t matter to me; the payments are on our joint lives and it’s my job to fund our retirement, not the next generation’s. I don’t care that the agent gets paid a hefty commission or that the company makes obscene profits. Hell, I want the company to profit, the obscener the better. As long as they can pay me what they have contracted to do.
The great thing to us about this plan is we can be more aggressive with the other 2/3 of the nest egg in the stock market, knowing that our future basic needs are covered. No more losing sleep when the markets are crashing.
Sorry about the length of this post. I’m not an insurance salesman; forgive me if I sound like I’m pitching FIA’s. But this looks like a great deal for us. What am I missing?
I have read a lot of awful things about fixed index annuities (FIA). But it looks like just what I need for my situation. My wife and I are both retired, in our late 50’s, and have a nice nest egg for the future. It’s nice because it was invested in a diversified portfolio of low-cost stock and bond funds for a lot of good years in the markets. And we plan to stay invested for a long time. We currently live very well off of her pension, her part-time job, our non-qualified savings, and my golf winnings (OK, maybe not too much of that). In 10-12 years when the savings run out, we will have a cash flow shortfall. By that time, we can tap into our IRA’s.
But I can take 1/3 of the money in our qualified plans today, buy a FIA with a Lifetime Income Benefits Rider that guarantees (“subject to the financial health and claims paying ability of the insurer”, of course) to pay me, starting at age 70, an annual benefit that is sufficient to cover our cash flow shortfall for the rest of our joint lives. It has a 10% premium bonus, 8% compounded growth on the income base every year, 5.5% of the income base paid out annually for the rest of our joint lives. And that’s the WORST it can do. Guaranteed.
I don’t plan to cash it out early, so outrageous surrender charges are irrelevant. I have the other 2/3 of the nest egg to tap for emergencies, maybe even buy a LTC plan. It makes no difference to me what the market index side of the FIA account does – my income base is growing 8% per year, regardless of the market swings. If the market side, with all of its caps and participation rates, somehow beats the income base, great; our payments are based on whichever is larger. What if the account value goes to zero? So what, I’m still guaranteed our lifetime income benefit. There is little or no death benefit left after a few years of payments. It doesn’t matter to me; the payments are on our joint lives and it’s my job to fund our retirement, not the next generation’s. I don’t care that the agent gets paid a hefty commission or that the company makes obscene profits. Hell, I want the company to profit, the obscener the better. As long as they can pay me what they have contracted to do.
The great thing to us about this plan is we can be more aggressive with the other 2/3 of the nest egg in the stock market, knowing that our future basic needs are covered. No more losing sleep when the markets are crashing.
Sorry about the length of this post. I’m not an insurance salesman; forgive me if I sound like I’m pitching FIA’s. But this looks like a great deal for us. What am I missing?