Is it a bad time to buy a fixed annutity?

[nun]

Just pondering 72 amounts and the interest rates are obviously terrible right now. Still I still have my principal. But what about if you want to buy a fixed annuity. I tried to find the rates that TIAA-CREF is using at the monent, but no luck. Will they also be ridiculously low so your nest egg will buy you very little.

 

[MasterBlaster]

Is it a bad time to buy a fixed annutity?

Well if you believe that interest rates are artificially low due to Fed manipulation - then yes. Buying now will cost you big time.

If you believe that we are in for many years of very low interest rates - then no now is as good a time as any to buy.

What's your guess as to where interest rates are going ?

 

[FinanceDude]

As you can imagine, rates are low on everything. I guess I would buy a fixed annuity if I had to, but keep the term at 2 years or less. I would NOT buy a SPIA today unless I absolutely had no other choice...........

 

[dgoldenz]

As mentioned above, fixed annuity rates are pretty low right now, 1.5-2.5% for annuities less than 4 years in length. 3.15-3.8% for longer term fixed annuities (5-10 years)

 

[73ss454]

I there ever a good time to buy one?

 

[ziggy29]

I there ever a good time to buy one?

For the right circumstances and the right kind of annuity, I'd say yes. But this is a horrible time to buy an income stream, IMO, and I'd pretty much always run away screaming from many high fee variable annuities and equity-indexed junk. And of course there are people for whom annuities make no sense, just as it makes no sense for a single 80-year-old with no heirs to buy a whole life policy.

 

[FinanceDude]

I there ever a good time to buy one?

You would have LOVED your SPIA payments in the early 80's!!

 

[73ss454]

You would have LOVED your SPIA payments in the early 80's!!

Maybe but CD's rates were about 16%, so I would have gone in that direction.

 

[ziggy29]

Maybe but CD's rates were about 16%, so I would have gone in that direction.

Over a 30-year Treasury yielding 12%? Of course, that's only in hindsight as people were worried about MANY years of double-digit inflation ahead. Of course, as it turned out we only got that in health care...

 

[Midpack]

Current low rates are a big factor as posts above state.

In addition, your net worth relative to the cost of the annuity at any given time is also an important consideration. This was discussed in a recent thread which might interest you http://www.early-retirement.org/forums/f26/am-i-nuts-52412.html. Interest rates aside, waiting to purchase an annuity is preferable IMO.

If your net worth is far greater than the cost of the annuity, there's no hurry unless you're expecting rates to drop substantially. OTOH, if you net worth is already below the cost of an annuity, you've got some really tough decisions ahead.

 

[rescueme]

I there ever a good time to buy one?

Yes, when you need one

It was the solution to my needs (everybody is different)...

 

[rescueme]

...OTOH, if you net worth is already below the cost of an annuity, you've got some really tough decisions ahead.

In that case, how would you even purchase one?

 

[Midpack]

In that case, how would you even purchase one?

Might be smart to purchase a lesser annuity before you get even further behind the

 

[73ss454]

Yes, when you need one

It was the solution to my needs (everybody is different)...

I'd rather have hemroids.

 

[FinanceDude]

I'd rather have hemroids.

There's an annuity for that, too..........

 

[73ss454]

I'm sure!