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In Case You're Curious About Annuities! and cleaning ladies
Old 04-04-2008, 04:19 PM   #1
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In Case You're Curious About Annuities! and cleaning ladies

Oct. 10, 2008 is the day my Executive Life/Aurora annuity will begin to pay out. I had no choice in this matter; my previous employer put a defined benefit pension plan into this annuity for me. Last time this topic came up, several people here were knowledgeable about these two companies--feel free to comment.

I called Aurora today and was pleasantly surprised that she didn't give me the "it's too early" routine. She will send out a benefits questionnaire today and the next step will be to give me an "illustration."

I also made another major decision about retirement--gave the cleaning lady notice; her last day will be April 22. That will free up $50/week for other purposes, like if there is a shortfall from the annuity, or it could cover about a third of my medical insurance. The old papers from the annuity plan imply that the exact payout is to be determined. My earliest R date has been changed from May Day to Labor Day; Labor Day is looking really good.
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Old 04-04-2008, 04:26 PM   #2
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Originally Posted by CuppaJoe View Post
Oct. 10, 2008 is the day my Executive Life/Aurora annuity will begin to pay out. I had no choice in this matter; my previous employer put a defined benefit pension plan into this annuity for me. Last time this topic came up, several people here were knowledgeable about these two companies--feel free to comment.

I called Aurora today and was pleasantly surprised that she didn't give me the "it's too early" routine. She will send out a benefits questionnaire today and the next step will be to give me an "illustration."

I also made another major decision about retirement--gave the cleaning lady notice; her last day will be April 22. That will free up $50/week for other purposes, like if there is a shortfall from the annuity, or it could cover about a third of my medical insurance. The old papers from the annuity plan imply that the exact payout is to be determined. My earliest R date has been changed from May Day to Labor Day; Labor Day is looking really good.
How exciting!! Labor Day is not that far off. Congratulations on your impending retirement!
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Old 04-04-2008, 04:28 PM   #3
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Maybe this is the next segment in trouble Baby Boomer 's cleaning ladies ? Hope they made retirement plans !
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Old 04-04-2008, 04:28 PM   #4
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Umm, I think you are missing Cuppa's point (subtley put): Executive Life blew up some time ago and I believe Joe's annuity was impaired.
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Old 04-04-2008, 04:31 PM   #5
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My earliest R date has been changed from May Day to Labor Day; Labor Day is looking really good.
Are you planning on renaming the holiday from Labor Day to Liberation Day?
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Old 04-04-2008, 04:31 PM   #6
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Umm, I think you are missing Cuppa's point (subtley put): Executive Life blew up some time ago and I believe Joe's annuity was impaired.
Oh gosh, what a rotten thing to have happened. Joe, I hope it didn't decrease too much. Hopefully once you have turned in the forms, they'll give you a decent estimate.
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Huh?
Old 04-04-2008, 04:40 PM   #7
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Huh?

We're talking about an annuity that was not contracted by the person getting the proceeds (it was his company).

If a company went "broke" (example: Bethlehem Steel) and the worker's pension (which was paid out in the same manner as an annuity) was reduced/restricted due to the pension plan being given to the government, would we blame the worker? Of course not.

When you want to talk about annuities (more specifically, an SPIA) and what you can do with the vehicle, just let me know (since I'm a boomer, retired, and have a SPIA).

Too many negative comments concerning the word "annuity" on this forum these days. I'm willing to "talk" if you're willing to "listen" and have a constructive dialog on the subject...

- Ron
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Old 04-04-2008, 07:21 PM   #8
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Thanks for the nice posts. I'll invite comments again when they let me know my options. I'm staying calm but alert about this--it occurs to me that I may be hearing from their annuity sales team, after all I'm already doing business with them.

I don't feel too bad about the cleaning lady as she is a stop-gap after my other one quit two weeks ago to go back to school in Brazil. She was already booked up and fits my apt. in whenever she can.

Mmmm, Labor Day was for looking forward to a very long busy stretch until things slow down in mid-Dec. Labor Lib Day, yeah, sounds good. If my personal accounting checks out ok in mid-May, I think I will go with it. Don't think a down economy or stock mkt. will stop me. Some on this board look back to the gas shortages of the '70s in terror but that's when I picked up stakes and moved West, was too clueless and young to let it bother me. Let history repeat itself. But look at the five year stats on the mkt.--not bad!
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Old 04-04-2008, 08:23 PM   #9
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Sounds pretty sweet, Joe. Liberation on Labor day, just as the masses head back to work so that you have the place to yourself.
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Old 04-07-2008, 12:19 PM   #10
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The story so far: In 1986 my employer called us into a meeting with their financial advisor regarding the new pension/profit sharing plan. At the end of the meeting they asked those of us who had vested in the discontinued Defined Benefit Pension Plan to stay, both of us. I was furious that they had cancelled this plan just before a slew of my buddies would have vested. We were told that the plan was put into an Executive Life Insurance Company annuity (non-COLAed). During the meeting I remember thinking 15%!!! expected return, I thought my employer was getting off really cheap. (To be fair I may have mis-remembered it as 15%).

Here are the facts and numbers:

Executive Life Insurance Company Single Premium Retirement Annuity Contract, Life Annuity,
Monthly annuity payment: $326.25, first payment date, 10/01/08.
Cost of Retirement Annuity Contract applied for: $3,438.99.
May the Participant surrender his individual contract after it is issued but before his retirement? The "No" box is checked.

From a letter from my employer: "...a contract will be issued in your name which will guarantee the benefits provided by the plan. This will assure that the contract is in your possession and that your vested benefit will not be jeopardized by the future of the company, or the trustees’ inability to locate you in the future."
*****
Executive Life Insurance Company failed, got restructured by the State of Ca, and my contract was sold to Aurora National Life Assurance Company of Los Angeles.
*****
The State took over the contract 9/3/93:
This contract is issued pursuant to the Plan of Rehabilitation for Executive Life Insurance Company as ordered by the Superior Court of the State of California for the County of Los Angeles and replaces the Owner’s prior contract.
Date of prior contract: 2/28/86; Account Value on contract date before enhancement: $9,806.91, covered percentage: 100.0000%; Guaranty Association Enhancement Amount on Contract Date: $6,856.45, Allocation Holdback Amount on Contract Date: $1,471.04, additional holdback amount on contract date: $412.71, conservation date statutory reserve: $12,621.50, deferral interest rate, years 1-15 after issue date of prior contract: 11.000%, Annuity rate: 10.5000%, years 16-25 after issue date of prior contract: 10.500%, after 25th anniversary of issue: 10.500%, annuity mortality table: 83. Anticipated basic benefit payment: $192.00; anticipated Guaranty Association Benefit Payment Enhancement: $134.25; sum: $326.25.

*****
Aurora bought the contract:
Contract Values Summary as of 9/03/93 (including Election Forms):
Total estimated Aurora Account Value: $16,551
The statutory limit for your contract under your Participating Guaranty Association is: $100,000.

I didn’t opt out but here are the numbers: Total estimated first opt-out payment: $7,099; the amount above is after deduction of the Holdback Amount: $1,471.

Credited Interest Rates, daily basis: Unloaned account value 9/03/03 to 2/27/94: Short Term Interest Rate based on the 30 day U.S. Treasury Bill; 2/28/94 to first contract anniversary on or after 2/28/94: 5.34%, thereafter as declared by Aurora (Minimum 4%)

Loaned account value 9/03/03 to 2/27/94: 5.25%; 2/28/94 to first contract anniversary on or after 2/28/94: 5.25%, thereafter rate charged by Aurora on the loan balance less 2.25% (Minimum 4%)

From a letter from Aurora dated August 2000: "To better serve you, we are pleased to announce that on October 5, 2000, the MYND Corporation in Wethersfield, CT, which is in the greater Hartford area, will become the administrator of Aurora’s life insurance and annuity contracts. The MYND Corporation service team is committed to providing you with world class customer service and will be able to address all requests related to your life insurance or annuity contract.... Aurora appreciates the confidence you’ve placed in our company and looks forward to meeting your needs to come...."

On April 4, 2008 I requested info about my annuity, they will send out a benefit questionnaire and then will send me an "illustration."

To be continued.
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Old 04-07-2008, 01:29 PM   #11
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Sounds like even in 1993, the monthly annuity payment to be begun on 10/01/2008 was just $326.25. This would be before taxes, too.

So, I would conclude that (fortunately), whatever they tell you probably won't affect your ER date. It will be interesting to see what they say as an "illustration".
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Old 04-07-2008, 03:54 PM   #12
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Ok - I got lost reading all of that, but I did notice percentages and amounts kept decreasing as companies changed hands - will your monthly check now be $5 after all the 'holdbacks?' Hmmm - very interesting - the games that are played.....
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Old 04-07-2008, 04:05 PM   #13
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Ok - I got lost reading all of that, but I did notice percentages and amounts kept decreasing as companies changed hands - will your monthly check now be $5 after all the 'holdbacks?' Hmmm - very interesting - the games that are played.....
No, the monthly check should be $326.25 pre-tax (it was from a defined benefit pension). When I try to cut-to-the-chase on this, I look at what they paid for the contract: $3,438.99 which will pay $326.25/mo. some 22 years later.

It would take about $97,000 at a 4% withdrawal rate to equal the $326.25 monthly payout.
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Old 04-07-2008, 06:35 PM   #14
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No, the monthly check should be $326.25 pre-tax (it was from a defined benefit pension). When I try to cut-to-the-chase on this, I look at what they paid for the contract: $3,438.99 which will pay $326.25/mo. some 22 years later.

It would take about $97,000 at a 4% withdrawal rate to equal the $326.25 monthly payout.

A couple of comments the 97K isn't an Apples to Apples to comparison because the 4% withdrawal rate is COLA and your $326.25 is fixed.

According to Vanguard/AIG it would require $44K to buy a SPIA for a 65 year old male that pays 326.25/monthly.

The required return to turn $3439 to $44,000 is 12.2% over 22 years
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Old 04-07-2008, 06:41 PM   #15
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A couple of comments the 97K isn't an Apples to Apples to comparison because the 4% withdrawal rate is COLA and your $326.25 is fixed.

According to Vanguard/AIG it would require $44K to buy a SPIA for a 65 year old male that pays 326.25/monthly.

The required return to turn $3439 to $44,000 is 12.2% over 22 years
Thanks, I knew you could figure it out, and I did forget about COLA for the SWR.
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