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07-27-2012, 02:56 PM
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#21
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 13,856
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 Quote:
Originally Posted by sheehs1
Wow obgyn65...where did you get that payout if you don't mind my asking. Is it a guaranteed payout? In recent years going back to 2007/2008 the most I heard of was 8% or 7% and those quickly went away after the bust. 5% is about as high as I have heard of in the last 2 years. Does it include some extra payout on top of what the contract says?
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Sounds like a deferred payout annuity AKA longevity insurance. He will not get a payout for another 15 years (giving the insurer time to compound the money) and will get nothing if he croaks in the interim (providing mortality credits to him if he does live long enough to collect). I am too young now, but may be very interested in a similar strategy as I get older.
Obgyn, I hope you chose the insurer carefully. You will be exposed to them for a longtime.
__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
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07-27-2012, 03:13 PM
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#22
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 6,664
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Yes, I understand there are many reasons to wait. I'm just suggesting that waiting for higher interest rates may not work out to be a good strategy. And, actually, IMO long-term rates could still go down more even though it seems incredible. The paper shows why it's possible.
Regardless of what happens with interest rates, there are lots of other good reasons to wait to buy an SPIA, as I plan to do.
__________________
Life After FIRE - we redesign it every 5 years!
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07-27-2012, 03:30 PM
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#23
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Moderator
Join Date: May 2007
Location: San Francisco
Posts: 8,281
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Is it possible to find COLA'd deferred payout annuities at this point?
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07-27-2012, 03:36 PM
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#24
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 13,856
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Quote:
Originally Posted by FIREd
Is it possible to find COLA'd deferred payout annuities at this point?
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No idea. Theoretically, it shouldn't be terribly hard for the insurers to design such a product.
__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
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07-27-2012, 05:11 PM
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#25
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 3,516
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It is a deferred annuity, not an immediate annuity. The rate is 11.88% payout at age 62. In makes sense in my case as I have worked only 10 years in the USA (have not gotten my 40 quarters yet). No heir. Small pension. There is no extra payout.
Quote:
Originally Posted by sheehs1
Wow obgyn65...where did you get that payout if you don't mind my asking. Is it a guaranteed payout? In recent years going back to 2007/2008 the most I heard of was 8% or 7% and those quickly went away after the bust. 5% is about as high as I have heard of in the last 2 years. Does it include some extra payout on top of what the contract says?
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__________________
Very conservative with investments. Not ER'd yet, 48 years old, about 98-99% in cash, CDs, munis, sizeable nest egg, WR < 3.5%, pensions, annuities, no debt, and 47-year planning horizon. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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07-27-2012, 05:13 PM
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#26
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 3,516
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Thank you for the advice, Brewer. Yes, I have chosen one of the three top companies in that market, already discussed in other threads.
Quote:
Originally Posted by brewer12345
Obgyn, I hope you chose the insurer carefully. You will be exposed to them for a longtime.
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__________________
Very conservative with investments. Not ER'd yet, 48 years old, about 98-99% in cash, CDs, munis, sizeable nest egg, WR < 3.5%, pensions, annuities, no debt, and 47-year planning horizon. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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07-27-2012, 05:17 PM
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#27
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 3,516
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I asked for quotes from 3 companies re: deferred annuities. None of them was COLA'd.
Quote:
Originally Posted by FIREd
Is it possible to find COLA'd deferred payout annuities at this point?
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__________________
Very conservative with investments. Not ER'd yet, 48 years old, about 98-99% in cash, CDs, munis, sizeable nest egg, WR < 3.5%, pensions, annuities, no debt, and 47-year planning horizon. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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07-27-2012, 05:23 PM
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#28
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 3,516
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True if you are considering immediate annuities. However, I am not sure if this assumption is still true for deferred annuities. As mentioned above, I got 11.88% payout in 15 years' time. My net withdrawal from my nest eggs (i.e after tax) has gone from about $92K a year to $96 until age 95. If I die before age 62, I lose the cost of the annuity (about 1% of my net worth). It's a risk I am willing to take...
Quote:
Originally Posted by Midpack
Apart from interest rates, annuities get less expensive the longer one waits simply due to fewer years to fund.
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__________________
Very conservative with investments. Not ER'd yet, 48 years old, about 98-99% in cash, CDs, munis, sizeable nest egg, WR < 3.5%, pensions, annuities, no debt, and 47-year planning horizon. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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07-27-2012, 05:30 PM
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#29
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Thinks s/he gets paid by the post
Join Date: Mar 2010
Posts: 1,051
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Quote:
Originally Posted by obgyn65
It is a deferred annuity, not an immediate annuity. The rate is 11.88% payout at age 62. In makes sense in my case as I have worked only 10 years in the USA (have not gotten my 40 quarters yet). No heir. Small pension. There is no extra payout.
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Yes...I got that it was deferred. When I was looking at variable deferred back in 2009 or so...I was not quoted these payout percentages. In terms of yearly payout 5% was what I was quoted from a couple of well known firms.
ummm. Interesting obgyn65. I believe you. Just trying to determine what I missed.
Is there a difference between variable deferred and deferred.? Meaning is return of capital part of your annuity pay out?
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07-27-2012, 05:39 PM
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#30
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 3,516
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I apologize, sheehs1. I do not know the answer to this question as I only have the simple deferred format. I did not even know that variable deferred existed.
Quote:
Originally Posted by sheehs1
Is there a difference between variable deferred and deferred.? Meaning is return of capital part of your annuity pay out?
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__________________
Very conservative with investments. Not ER'd yet, 48 years old, about 98-99% in cash, CDs, munis, sizeable nest egg, WR < 3.5%, pensions, annuities, no debt, and 47-year planning horizon. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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07-27-2012, 05:55 PM
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#31
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Moderator
Join Date: Jul 2005
Location: Traveling....
Posts: 12,706
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Quote:
Originally Posted by obgyn65
..... I have worked only 10 years in the USA (have not gotten my 40 quarters yet).....
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You must only have a few weeks to go to get those 40 quarters, then you can look forward to a COLA'ed annuity from Uncle Sam 
__________________
Retired in Jan, 2010 at 55
Now it's adventure before dementia
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07-27-2012, 08:10 PM
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#32
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Thinks s/he gets paid by the post
Join Date: Sep 2010
Location: midwestern city
Posts: 3,516
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Yes. A couple of months to wait only... Can't wait.
Quote:
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Originally Posted by Alan
You must only have a few weeks to go to get those 40 quarters, then you can look forward to a COLA'ed annuity from Uncle Sam |
__________________
Very conservative with investments. Not ER'd yet, 48 years old, about 98-99% in cash, CDs, munis, sizeable nest egg, WR < 3.5%, pensions, annuities, no debt, and 47-year planning horizon. Please do not take anything I write or imply as legal, financial or medical advice directed to you. Contact your own financial advisor, healthcare provider, or attorney for financial, medical and legal advice.
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07-27-2012, 09:02 PM
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#33
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Full time employment: Posting here.
Join Date: Feb 2011
Posts: 592
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I'm MUCH less confident that "Uncle Sam COLA'ed annuity" will continue indefinitely for those of even median US net worth. SS is already mostly taxed as ordinary income, and I foresee institution of formal means testing as a way to decrease the unsustainable $$$ outflows from the program. DW & I are mid-50's & have instructed our financial advisor NOT to include SS payments in our retirement financial plan. Of course, I hope I'm wrong- in which case we'll have more $$ for luxuries 
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07-27-2012, 09:04 PM
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#34
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Thinks s/he gets paid by the post
Join Date: Nov 2010
Posts: 3,779
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Quote:
Originally Posted by brewer12345
No idea. Theoretically, it shouldn't be terribly hard for the insurers to design such a product.
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Finding sufficient variable rate assets that provide returns sufficient to fund the benefits and expenses and provide an adequate return on capital is the problem.
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07-27-2012, 09:18 PM
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#35
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 13,856
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Quote:
Originally Posted by pb4uski
Finding sufficient variable rate assets that provide returns sufficient to fund the benefits and expenses and provide an adequate return on capital is the problem.
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Lots of ways to skin that cat. One major way is to raise the price of the annuity.
__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
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07-27-2012, 09:24 PM
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#36
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Thinks s/he gets paid by the post
Join Date: Nov 2010
Posts: 3,779
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If it is so easy, how do you explain that there are there virtually no inflation adjusted deferred annuities and very few inflation adjusted immediate annuities offered by insurers?
If it was easy and sufficiently profitable then they would be writing them - they know it would be popular.
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07-27-2012, 09:28 PM
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#37
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Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Join Date: Mar 2003
Posts: 13,856
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Quote:
Originally Posted by pb4uski
If it is so easy, how do you explain that there are there virtually no inflation adjusted deferred annuities and very few inflation adjusted immediate annuities offered by insurers?
If it was easy and sufficiently profitable then they would be writing them - they know it would be popular.
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Most likely because they are expensive and therefore a tough sell. Lazy insurance agents like stuff that is easy to sell to their generally unsophisticated customers and the necessarily small payout that would result from an indexed SPIA is a tough sell to most of the rubes.
__________________
"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
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07-27-2012, 09:33 PM
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#38
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Thinks s/he gets paid by the post
Join Date: Nov 2010
Posts: 3,779
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Quote:
Originally Posted by brewer12345
Most likely because they are expensive and therefore a tough sell. Lazy insurance agents like stuff that is easy to sell to their generally unsophisticated customers and the necessarily small payout that would result from an indexed SPIA is a tough sell to most of the rubes.
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You're right brewer. Those simple and inexpensive VAs and EIAs are a much easier sell. 
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07-27-2012, 09:41 PM
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#39
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Moderator
Join Date: Jul 2005
Location: Traveling....
Posts: 12,706
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DW & I ER'ed in our mid-50's 3 years ago. We need folks like you to keep on working to build a bigger nest egg for your retirement. (and keep paying FICA).
It all depends on how you gamble - stocks, bonds, real estate, private pensions, Uncle Sam ....
Our plan is for 50% of our estimated SS benefits.
__________________
Retired in Jan, 2010 at 55
Now it's adventure before dementia
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07-27-2012, 09:43 PM
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#40
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Recycles dryer sheets
Join Date: Dec 2011
Posts: 305
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Quote:
Originally Posted by pb4uski
If it is so easy, how do you explain that there are there virtually no inflation adjusted deferred annuities and very few inflation adjusted immediate annuities offered by insurers?
If it was easy and sufficiently profitable then they would be writing them - they know it would be popular.
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No demand. People don't like annuities, irrationally. Then, among the remaining pool of prospects not many are astute enough to focus on inflation risk.
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