One of the things annuity boosters never seem to want to accept is that once they sign on the dotted line their principle is now zero.
I agree with your use of annuities for asset protection in certain high risk occupations. That's a separate discussion topic for a very limited group of which I'm not among. I suspect very few on this forum would be in that group.
I'm back! (based upon your last comment
)...
While I certainly agree that your "principle (balance)" is reduced to nothing, your "income" (which was nothing) now has value, and should be considered.
I'm currently working with an elder law attorney to re-draw all of our estate documents (last done about 20+ years ago
). Anyway, his request to supply information related to our estate (separate documents required for my DW, me, joint holdings) came up with the question on how you "value" an annuity (for estate tax/holding/etc.) He's worked with a growing number of "elderly" (yeah, like me...) who have "annuities" (all types) and depending on their "structure" he assigns a current value. For my SPIA (non-inflation, fixed payment for 28-year certain, at 100% payments to my wife if I would die - including remaining payments to our estate if we both passed before the 28 years was up) was quite simple. He simply took our monthly payment x 336 (number of "guaranteed payments") minus the amout that was already paid to me for the last year. BTW, the total payout was calculated to be slightly over 2x my original "investment" - not much (accounting for inflation) but the vehicle still has "value" (from an estate sense).
In other words, the SPIA reduces a bit of "investment risk". That's why those with a good pension (along with SS) can take more risk in their investments. Their level of "guaranteed income need", generated by their investment portfolio is not as critical as if they did not have a pension or SS (BTW, I have neither
- another reason an SPIA "fit my need".)
BTW, your second comment related to "high risk occupations" certainly pertains to "retirees"
... If being retired was not "high risk" (from an income point of view) this forum would not exist (IMHO)....
- Ron