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Old 11-27-2008, 11:20 AM   #21
ziggy29's Avatar
Join Date: Oct 2005
Location: Texas
Posts: 15,419
Originally Posted by 2B View Post
I don't think annuities are ever a "good investment." If you want the illusion of a guaranteed income from an insurance company, an SPIA fits the bill and if the value is under $100,000 (in most states) it is covered by the state's guarantee. This guarantee fund is usually poorly funded and doesn't have the state's "full faith and credit" guarantee.
I don't even think of them as an investment at all, even though the underlying assets are invested in one way or another.

Basically it's an insurance product like any other -- you are "buying" financial security, in this case insurance against running out of money. Actuarially they aren't a good deal for individuals, but if one is risk-averse enough, understands what they are buying and is willing to pay that "financial security premium" in order to ensure a lifetime income stream they can't outlive, more power to them.

Depending on circumstances in a couple decades, I'm keeping an open mind about something like an SPIA as a possibility for a portion of my retirement assets. (We have no children and thus less concern for leaving assets to heirs than many others would have.) I don't think I'd do it today, but it depends on our financial situation and the economic environment at the time.

"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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