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Old 07-27-2012, 03:56 PM   #21
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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?
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.
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Old 07-27-2012, 04:13 PM   #22
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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.
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Old 07-27-2012, 04:30 PM   #23
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Is it possible to find COLA'd deferred payout annuities at this point?
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Old 07-27-2012, 04:36 PM   #24
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Is it possible to find COLA'd deferred payout annuities at this point?

No idea. Theoretically, it shouldn't be terribly hard for the insurers to design such a product.
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Old 07-27-2012, 06:11 PM   #25
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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.
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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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Old 07-27-2012, 06:13 PM   #26
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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.
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Obgyn, I hope you chose the insurer carefully. You will be exposed to them for a longtime.
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Old 07-27-2012, 06:17 PM   #27
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I asked for quotes from 3 companies re: deferred annuities. None of them was COLA'd.
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Is it possible to find COLA'd deferred payout annuities at this point?
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Old 07-27-2012, 06:23 PM   #28
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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...
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Apart from interest rates, annuities get less expensive the longer one waits simply due to fewer years to fund.
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Old 07-27-2012, 06:30 PM   #29
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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.
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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Old 07-27-2012, 06:39 PM   #30
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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.
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Is there a difference between variable deferred and deferred.? Meaning is return of capital part of your annuity pay out?
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Old 07-27-2012, 06:55 PM   #31
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..... I have worked only 10 years in the USA (have not gotten my 40 quarters yet).....
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
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Old 07-27-2012, 09:10 PM   #32
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Yes. A couple of months to wait only... Can't wait.
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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
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Old 07-27-2012, 10:02 PM   #33
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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
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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Old 07-27-2012, 10:04 PM   #34
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No idea. Theoretically, it shouldn't be terribly hard for the insurers to design such a product.
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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Old 07-27-2012, 10:18 PM   #35
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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.
Lots of ways to skin that cat. One major way is to raise the price of the annuity.
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Old 07-27-2012, 10:24 PM   #36
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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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Old 07-27-2012, 10:28 PM   #37
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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.
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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Old 07-27-2012, 10:33 PM   #38
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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.
You're right brewer. Those simple and inexpensive VAs and EIAs are a much easier sell.
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Old 07-27-2012, 10:41 PM   #39
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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
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.
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Old 07-27-2012, 10:43 PM   #40
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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.
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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