Quote:
Originally Posted by 2B
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.