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Re: immediate annuity (again)
Old 09-22-2006, 02:17 PM   #101
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Re: immediate annuity (again)

Quote:
Originally Posted by HaHa

For a time in the 80s I sold immediate annuities.
"Confessions of a former annuity salesman...."

Ha, are you going to tell us you finally came to your senses and got a more prestegious job playing piano in a ....

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Re: immediate annuity (again)
Old 09-22-2006, 02:22 PM   #102
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Re: immediate annuity (again)

Quote:
Originally Posted by JohnEyles
Hmm, so the idea is that the NAV will keep up with inflation even in income
funds (and without DRIP'ing), so if you can live off dividend+interest you
are cool ?* And if those are 4+%, presto !

Most of my taxable account investments are less income-producing, but much
is cash too.* Should I gradually start spending the cash in the near-term, until
I can start tapping tax-advantaged money too, and also gradually sell those
growth type stocks and stock funds to the extent I can stay in the ultra-low
cap-gains brackets, and use the proceeds to move into balanced income
funds like Wellesley ?
Here's a link to ORP -- *http://i-orp.com/TaxCutForm.html

It will "optimize" your withdrawls based on taxes. *As for what asset class to sell when, most here will suggest you keep your investments balanced while you draw down or watch your "stash" grow.

I don't recommend Wellesley because it is part bond fund. *I prefer to own individual bonds and CDs where I know the bond/CD will mature at a specific time and I'll get my principle back. *You can also get a better overall return buying your own bonds because the fees are lower. *The equity portion can be matched with Fidelity Equity Income or equivalent.
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Re: immediate annuity (again)
Old 09-22-2006, 02:23 PM   #103
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Re: immediate annuity (again)

Quote:
Originally Posted by REWahoo!
"Confessions of a former annuity salesman...."

Ha, are you going to tell us you finally came to your senses and got a more prestegious job playing piano in a ....

After they found out about the annuity salesman background, they wouldn't have him. They do have their principals.
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Re: immediate annuity (again)
Old 09-22-2006, 02:36 PM   #104
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Re: immediate annuity (again)

Quote:
Originally Posted by FinanceDude
I don't recall EVER saying to buy an annuity of ANY kind if YOU DON'T NEED IT................
The only time I can see annuities may make sense is for very highly compensated individuals with unique tax issues. Our current tax law almost eliminates this area.

One exception is for asset protection like Jeff Skilling and Ken Lay did. They may be convicted and stripped of all of their assets but current law protects annuities from creditors in most situations.

Quote:
Originally Posted by FinanceDude
IAll I was trying to get across was that SOME people want peace of mind so much they are willing to pay a lot for it, and that is THEIR emotional issue, NOT mine. MOST people (outside of the folks on this board) will need to draw money from their IRA's immediately after retirement...........which is reality for the 95% of Americans not doing LBYM...............
Personally, I will be drawing out IRA money almost immediately when I retire. I want to maximize the amount of money I draw at the lower tax rates and most of my assets are in IRA accounts.

Its a sad note that people would intentionally pay a premium for a "nanny" to give them an allowance when they could do so much better on their own. Fortunately, I don't think many on this board are cut from that cloth.

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Re: immediate annuity (again)
Old 09-22-2006, 02:47 PM   #105
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Re: immediate annuity (again)

Quote:
Originally Posted by REWahoo!
"Confessions of a former annuity salesman...."

Ha, are you going to tell us you finally came to your senses and got a more prestegious job playing piano in a ....
Hey man, I serviced the high end of the market.*

Ha
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Re: immediate annuity (again)
Old 09-22-2006, 02:53 PM   #106
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Re: immediate annuity (again)

Quote:
Originally Posted by HaHa
Hey man, I serviced the high end of the market.

Ha
Piano player, orchestra conductor... Whatever your postion, it still was a step up from selling annuities...

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Re: immediate annuity (again)
Old 09-22-2006, 02:54 PM   #107
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Re: immediate annuity (again)

I think he was a piano player,i heard he really sucked on the organ though.
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Re: immediate annuity (again)
Old 09-22-2006, 02:55 PM   #108
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Re: immediate annuity (again)

Quote:
Originally Posted by 2B


One exception is for asset protection like Jeff Skilling and Ken Lay did.* They may be convicted and stripped of all of their assets but current law protects annuities from creditors in most situations.
Not to pick on one small point you are making, but a good number of states provide only protections for annuities. *You are more likely to be able to protect an annuity if you have been funding it all along and established it specifically for retirement in the future. *Or you took an annuity as a distribution on a retirement plan. *However, if you have a pile of money, are worried about creditors on the horizon, and you use the money to buy an annuity, that annuity may very well be vulnerable to creditor claims.
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Re: immediate annuity (again)
Old 09-22-2006, 03:19 PM   #109
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Re: immediate annuity (again)

Quote:
Originally Posted by Martha
Not to pick on one small point you are making, but a good number of states provide only protections for annuities. *You are more likely to be able to protect an annuity if you have been funding it all along and established it specifically for retirement in the future. *Or you took an annuity as a distribution on a retirement plan. *However, if you have a pile of money, are worried about creditors on the horizon, and you use the money to buy an annuity, that annuity may very well be vulnerable to creditor claims.
I agree. They both had lots of time to craft their retirement annuity portfolio.
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Re: immediate annuity (again)
Old 09-22-2006, 03:56 PM   #110
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Re: immediate annuity (again)

Quote:
Originally Posted by 2B
Here's a link to ORP -- *http://i-orp.com/TaxCutForm.html

It will "optimize" your withdrawls based on taxes. ...
Interesting tool. It seems wildly optimistic, at least compared to FIRECalc.

It says I can have 4.5% initial withdrawal (except AFTER-tax, so the withdrawal
is actually more), for a 40yr payout and assuming 6% investment return in
retirement (beginning next year at 54yo). Assuming 3.5% inflation and SS.

It seems to want me to take ALL my income from taxable savings til 59yo.
Doesn't seem quite right - seems like I'd want to take as much tax-deferred
distributions (taxed as ordinary income) as would be cancelled out by
personal exemption and standard deduction. Of course this requires using
the Rule 72 thing.

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Re: immediate annuity (again)
Old 09-22-2006, 04:06 PM   #111
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Re: immediate annuity (again)

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Originally Posted by astromeria
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Re: immediate annuity (again)
Old 09-22-2006, 05:11 PM   #112
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Re: immediate annuity (again)

Quote:
Originally Posted by JohnEyles
Interesting tool.* It seems wildly optimistic, at least compared to FIRECalc.
FIRECalc is the most conservative calculator I've run across. It's also the most extensive in its features. You can find "better" answers elsewhere but a key thing to remember is that you want "retirement" to be forever. It's hell thinking about working a McDonalds because you took an un-SWR.

Quote:
Originally Posted by JohnEyles
It says I can have 4.5% initial withdrawal (except AFTER-tax, so the withdrawal
is actually more), for a 40yr payout and assuming 6% investment return in
retirement (beginning next year at 54yo). Assuming 3.5% inflation and SS.

It seems to want me to take ALL my income from taxable savings til 59yo.
Doesn't seem quite right - seems like I'd want to take as much tax-deferred
distributions (taxed as ordinary income) as would be cancelled out by
personal exemption and standard deduction. Of course this requires using
the Rule 72 thing.
Yes and no. There are plans that will allow a "SWR" up to 6.2% and some front load your withdrawls to account for the decreased desire to "consume" as we age. All of these alternative strategies require a little more guts than the FireCalc answer but, unfortunately, unless you get a real nice inheritance (as some on this board have) it's hard to save that amount of cash as a traditional "wage slave."

You can play with the math on how to best use the tax laws. I am personally planning on living on my meager after tax savings and converting as much of my IRA as possible at the 15% tax rate into my Roth. When I'm all out, I plan on taking enough out of my taxable IRA to continue to max out my 15% tax rate and withdraw any extra needed from my Roth.
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Re: immediate annuity (again)
Old 09-25-2006, 09:30 AM   #113
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Re: immediate annuity (again)

Quote:
Originally Posted by HaHa
Hey man, I serviced the high end of the market.

Ha
From your concern about your clients shooting their settlements up their arms I think we know what the "high" end was
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Re: immediate annuity (again)
Old 09-25-2006, 09:55 AM   #114
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Re: immediate annuity (again)

Quote:
Originally Posted by donheff
From your concern about your clients shooting their settlements up their arms I think we know what the "high" end was*


Yet you guys pick on me..................

None of my clients is currently in rehab or serving time at Leavenworth..........as far as I know.............
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Re: immediate annuity (again)
Old 09-25-2006, 12:52 PM   #115
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Re: immediate annuity (again)

Quote:
Originally Posted by donheff
From your concern about your clients shooting their settlements up their arms I think we know what the "high" end was*
Well, I should explain. I really feel good about this interlude of selling. What I meant by high end was large$ policies where the ultimate beneficiary was not in any condition by health or training or inclination to undertake stewardship of a large amount of money that he/she absolutely needed to rely on.

I didn't sell them; I sold their legal beagles who then advised them.

You or I can debate annuities vs. other things. These guys essentially annuitized or opened themselves up to a lot of low life predators, plus their own bad judgment.

And as for junk, I really don’t judge people with chronic severe pain who look for ways to alleviate it.

To this day though when I see someone in a wheelchair who seems to be doing well it makes me feel good for them.

Once I saw a guy in a motorized wheel chair going down the street with a woman sitting astride his lap. Her low riders were way down displaying some fine young butt-cheeks, her face nuzzled up against his neck.

I thought to myself, “I bet that dude has an annuity”.

Ha
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Re: immediate annuity (again)
Old 09-25-2006, 01:14 PM   #116
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Re: immediate annuity (again)

Quote:
Originally Posted by HaHa
To this day though when I see someone in a wheelchair who seems to be doing well it makes me feel good for them.

Once I saw a guy in a motorized wheel chair going down the street with a woman sitting astride his lap. Her low riders were way down displaying some fine young butt-cheeks, her face nuzzled up against his neck.

I thought to myself, “I bet that dude has an annuity”.

Ha

Or was married to Anna Nicole Smith...............
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Re: immediate annuity (again)
Old 09-25-2006, 01:22 PM   #117
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Re: immediate annuity (again)

Quote:
Originally Posted by HaHa
Well, I should explain. I really feel good about this interlude of selling. What I meant by high end was large$ policies where the ultimate beneficiary was not in any condition by health or training or inclination to undertake stewardship of a large amount of money that he/she absolutely needed to rely on.

I didn't sell them; I sold their legal beagles who then advised them.

You or I can debate annuities vs. other things. These guys essentially annuitized or opened themselves up to a lot of low life predators, plus their own bad judgment.
Ha
Actually, Ha, I think this is one of the few instances in which I like annuities. Only problem is that it is all too easy for people like this to sell off their payout in a lump sum to JG Wentworth, etc.
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Re: immediate annuity (again)
Old 09-25-2006, 01:38 PM   #118
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Re: immediate annuity (again)

For some who are not as concerned with the potential of leaving a lot of wealth at death and are willing to give up some control, annuitization makes sense. You can use FIRECalc to simulate the additional income you can receive with the same probability of success.

For example, desiring a $50,000/yr. income and assuming a $1 million portfolio (50/50 equity bond split - 25 bps AER) and $750 per month SS at 62. Gives a 91.5% success probability of success.

You can plug an immediate annuity with COLA (10% CAP) from Vanguard/AIG which would provide $2215 per month for a male ($26,580/yr) at a cost of $500,000 with all else the same. Of course, lower the portfolio to $500,000. (Use spouse's SS for the annuity). You can up the income to $56,000 per year with the same 91.5% probability of success. You give up some potential wealth transfer, gain more certainty with some of your portfolio and get 12% more income. Would be worth it for some people.

Furthermore, you can put SS off to 70 and project COLAs at 3% and income can be increased to $59,700 with the same 91.5% probability. *There are not many places one can increase income by 19% per year ($50,000 to $59,700) without taking huge risk. The give up is the "mortality premium" that you lose potential wealth if you die younger than the averages suggest.
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Re: immediate annuity (again)
Old 09-25-2006, 02:00 PM   #119
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Re: immediate annuity (again)


So given that some of you are still willing to talk to me if I decide
to buy a SPIA (with only 25% on my money, and waiting awhile
to see if interest rates go up a little) ...

What are the pros and cons of funding it with an IRA versus after-tax
money ?

Using taxable money would require me to take some capital-gains soon
(when I liquidate some of the account to buy the SPIA) and it would mean
the bulk of my remaining portfolio is in tax-advantged investments - a
good thing for tax-deferred growth, a bad thing for not being to take
advantage of lower capital-gains taxes. Using tax-advantaged money
has its own issues. Bottom line is I haven't quite yet figured out how
to think about the whole issue of stocks versus fixed-income
in tax-advantaged versus taxable accounts.

I'd appreciate some insight !

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Re: immediate annuity (again)
Old 09-25-2006, 02:05 PM   #120
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Re: immediate annuity (again)

Quote:
Originally Posted by New Thinking
Furthermore, you can put SS off to 70 and project COLAs at 3% and income can be increased to $59,700 with the same 91.5% probability.* There are not many places one can increase income by 19% per year ($50,000 to $59,700) without taking huge risk. The give up is the "mortality premium" that you lose potential wealth if you die younger than the averages suggest.
IMO this is one of the instances where the rational decision is pretty clear, but is hard to do because of control issues, issues of wanting to "hit it", etc.

I fully believe that we are in a period of suppressed volatility that is unlikely to be permanent.

Still, it would be hard for me to annuitize, unless I felt I really needed to do so.

Likely wouldn't buy that Boxster if I were getting an annuity

Ha
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