Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Met Life Annuity 4% guaranteed interest
Old 09-17-2018, 05:14 AM   #1
Confused about dryer sheets
 
Join Date: Oct 2017
Location: Midlothian
Posts: 3
Met Life Annuity 4% guaranteed interest

My husband bought a MetLife annuity/life insurance policy about 40 years ago that guarantees 4% interest. He's 69 and retired. I'm 59 and working full time and putting money into 401Ks and 403Bs. Since I'm getting close to retirement age, possibly at 62, I'm thinking about putting some of my investments into this annuity since it's guaranteed 4%. He will have to start withdrawing from it at 74, but I could just reinvest that somewhere else when the time comes. I'm the sole beneficiary. I'm thinking it's a safe place to get 4% interest.

Can anyone think of a reason why this wouldn't be a good idea?

Any advice is appreciated.
__________________

Kayzmum is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 09-17-2018, 05:21 AM   #2
Thinks s/he gets paid by the post
 
Join Date: Mar 2011
Posts: 4,753
Quote:
Originally Posted by Kayzmum View Post

Can anyone think of a reason why this wouldn't be a good idea?
Inflation. It's 4% of a static amount.

If that 4% is getting say, $1000 a year that might be nice. But in 20 years that $1000 might only buy dinner.
__________________

__________________
Living well is the best revenge!
Retired @ 52 in 2005
marko is offline   Reply With Quote
Old 09-17-2018, 05:34 AM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 19,340
4% with no interest rate risk and negligible credit risk is pretty attractive in this interest rate environment.

I have an old whole life policy that is similar and I am still making premium payments and consider the cash value to be part of my fixed income allocation.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is online now   Reply With Quote
Old 09-17-2018, 05:48 AM   #4
Full time employment: Posting here.
VanWinkle's Avatar
 
Join Date: Oct 2017
Location: Brighton
Posts: 673
Make sure the guaranteed 4% is not including a return of principle......
__________________
Retired May 13th(Friday) 2016 at age 61.
VanWinkle is offline   Reply With Quote
Old 09-17-2018, 06:20 AM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 19,340
It doesn't.... you are confusing interest rates with payout rates.... this is an interest rate on a deferred annuity or accumulation phase annuity.... NOT a payout rate.

4% was a common minimum rate guarantee back in the 70s and 80s.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is online now   Reply With Quote
Old 09-17-2018, 08:01 AM   #6
Full time employment: Posting here.
 
Join Date: Jun 2017
Location: Western NC
Posts: 827
But what are the annual fees?
ncbill is offline   Reply With Quote
Old 09-17-2018, 08:40 AM   #7
Recycles dryer sheets
 
Join Date: Jan 2008
Location: chicago suburbs
Posts: 380
4% return with a A++ insurance company for fixed income right now seems like a very good option for a portion of fixed income.

Where do I get one like this, assuming the 4% is after the fees?
capjak is offline   Reply With Quote
Old 09-17-2018, 08:52 AM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 7,633
The only way I know to get such a sage secure guaranteed 4% is to pay off a 4% loan such as a mortgage.

Sounds like a deal to me. I also like PB4's idea of fitting it into your AA.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 09-17-2018, 08:57 AM   #9
Recycles dryer sheets
 
Join Date: Aug 2015
Posts: 260
Can you put my money in it, too? If it's 4% guaranteed after ALL fees, taxes, quid pro quo, etc... and it's liquid, I would put a lot of my fixed income into it. Heck, 4% is what I am forecasting for the nominal return on my 60/40 portfolio. Good stuff if it checks out.
corn18 is online now   Reply With Quote
Old 09-17-2018, 09:16 AM   #10
Thinks s/he gets paid by the post
 
Join Date: Mar 2015
Posts: 1,613
Quote:
Originally Posted by Kayzmum View Post
My husband bought a MetLife annuity/life insurance policy about 40 years ago that guarantees 4% interest. He's 69 and retired. I'm 59 and working full time and putting money into 401Ks and 403Bs. Since I'm getting close to retirement age, possibly at 62, I'm thinking about putting some of my investments into this annuity since it's guaranteed 4%. He will have to start withdrawing from it at 74, but I could just reinvest that somewhere else when the time comes. I'm the sole beneficiary. I'm thinking it's a safe place to get 4% interest.

Can anyone think of a reason why this wouldn't be a good idea?

Any advice is appreciated.
Take a good look at your husband's statements.
Carefully compare what was invested and what the payout will be.
Check for surrender charges and surrender period.
Determine what "4% guaranteed" actually means for this policy.

You'll likely find that this isn't like a 4% compounded return, but is instead a 4% payout of what you invested and what the funds earned. And likely the commissions were taken off the top at investment time, along with fees deducted periodically along the way.

Before purchasing any product, read carefully and understand all of the details.

How much did he invest 40 years ago? It's not hard to calculate what $X invested at 4% compounded for 40 years would be worth today.

If you aren't able to interpret your husband's statement, a good fee-only fiduciary financial adviser can do it for you. They can explain exactly what he invested, what he can get out, and what kind of return that actually translates to.
__________________
Old enough to know better.
joeea is online now   Reply With Quote
Old 09-17-2018, 09:17 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Aug 2013
Location: North
Posts: 1,342
Quote:
Originally Posted by Chuckanut View Post
The only way I know to get such a sage secure guaranteed 4% is to pay off a 4% loan such as a mortgage.

Sounds like a deal to me. I also like PB4's idea of fitting it into your AA.

+1 the only 4% guarentee I have is on my mortgage. Paying myself against the interest rate of the loan is a great bet and everyone need's a home somewhere. Equity gains and tax deductions are a bonus IMHO.



Used to work at an annuity shop doing IT work and only the boomers were offered those rates...certainly none of our new products could compete with that. Layoffs ensued.
__________________
AA (Stock/Bond/Cash ): 99/0/1% MIX (Small/Mid/Large): 50/25/25% BLEND(US/Foreign): 100/0%, REIT (Real Estate Equity): 50% of Assets

FIRE in 2031 @ 50yrs old (+/- 2yrs) w/ a hypothetical $2.5mil portfolio, 3 appreciated homes worth $1.0mil and rental income to fund my gap years until RMD. Assets will go to an inherited IRA where I plan on watching the investments grow until I die or the trust gets executed.
kgtest is online now   Reply With Quote
Old 09-17-2018, 09:29 AM   #12
Thinks s/he gets paid by the post
 
Join Date: Jan 2018
Location: Tampa
Posts: 1,818
Not a guarantee, but currently getting 4.24% on my 401k Stable Value fund.
__________________
TGIM
Dtail is offline   Reply With Quote
Old 09-17-2018, 09:52 AM   #13
Recycles dryer sheets
fosterscik's Avatar
 
Join Date: Jun 2013
Posts: 243
Quote:
Originally Posted by pb4uski View Post
It doesn't.... you are confusing interest rates with payout rates.... this is an interest rate on a deferred annuity or accumulation phase annuity.... NOT a payout rate.

4% was a common minimum rate guarantee back in the 70s and 80s.
I have a similar policy from valic with a 4.5% min guarantee. It has no fees associated with it and pays exactly 4.5% interest (pretty easy to check the balance over time). It also has no surrender charges because, in my case, it meets the 10 year funded threshold. There is no way I will surrender this policy unless/until interest rates rise considerably. Its a valuable part of my fixed income AA.
__________________
When most people say they want to be a millionaire, what they really mean is I want to spend a million dollars, which is literally the opposite of being a millionaire.
fosterscik is online now   Reply With Quote
Old 09-17-2018, 09:52 AM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
imoldernu's Avatar
 
Join Date: Jul 2012
Location: Peru, il
Posts: 5,036
DW has a policy that was originally "Travellers" but changed hands and is now a Met Life policy, managed by Brighthouse, whatever that is.
Bought in 1984 for $8000.
Current annuity cash out value $56,000 or, $67,000 based on ten years payout of $701/mo.
The original interest rate was@about 11% dropping to a minimum of 4%.

I didn't know one could add to annuity, but then I'm not very smart about money. With a $20/yr. "management" fee, it still seems like a pretty good deal. We're just leaving it in the account to build, as we don't need it right now.
__________________
We only know, what we know.
imoldernu is offline   Reply With Quote
Old 09-17-2018, 10:54 AM   #15
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 4,194
I've got a Flexible Premium Retirement Annuity with a 4.5% guarantee. No fees, no surrender charge. Bought it in 1981. In this rate environment, I'm happy to keep it.

The "Flexible Premium" title says I should be able to add more money. But, the contract says that if you go x years without adding any, you lose the option of adding more.

I'd suggest looking at the contract and/or calling the company to make sure you have the option of adding money.
Independent is offline   Reply With Quote
Old 09-17-2018, 10:56 AM   #16
Thinks s/he gets paid by the post
 
Join Date: Oct 2006
Posts: 4,194
Quote:
Originally Posted by joeea View Post
Take a good look at your husband's statements.
Carefully compare what was invested and what the payout will be.
Check for surrender charges and surrender period.
Determine what "4% guaranteed" actually means for this policy.
I do this math every year. For mine, the 4.5% is exact.

The key is that, like the OP, I bought the policy a long time ago.
Independent is offline   Reply With Quote
Old 09-17-2018, 11:08 AM   #17
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 19,340
Quote:
Originally Posted by ncbill View Post
But what are the annual fees?
None, it is an old-style fixed annuity.... the annuities with fees are usually variable annuities or indexed annuities.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.

Retired Jan 2012 at age 56...60/35/5 AA
pb4uski is online now   Reply With Quote
Old 09-17-2018, 12:33 PM   #18
Full time employment: Posting here.
 
Join Date: Aug 2014
Posts: 693
I can't speak about MetLife annuities. I can say, read and understand the policy and its guarantee. My recent experience with MetLife on a 45 yr old insurance policy taught me that the 1st 2nd and 3rd tier help at MetLife give answers that is beneficial to them, not the consumer. It took me several months to arrange payouts according to my written policy which was ~20% higher than what the 1st tier people told me I needed to do.

Maybe, being an annuity to start with, you only have to deal with the one spin-off, Brighthouse.
CRLLS is offline   Reply With Quote
Old 09-17-2018, 01:03 PM   #19
Full time employment: Posting here.
 
Join Date: Oct 2006
Posts: 572
I bought a $100,000 universal life insurance policy back in 1980. I think I initially invested $6,000 into it. I made monthly payments until retiring 4 years ago. Currently the earnings are more than paying for the insurance portion and the cash value increases every month. I have not paid much attention to it but I think it is guaranteed to earn in the 4% to 4.5% range.

Recently the agent mentioned I could add $ to increase cash value to pass on to heirs tax free. At this point I have not done this but I do consider the cash value as part of my net worth.
__________________
***********
My motto is.... "a dollar saved is better than a dollar earned. I don't pay tax on the dollar I saved."
Tom52 is offline   Reply With Quote
Old 09-18-2018, 11:22 AM   #20
Full time employment: Posting here.
 
Join Date: Aug 2014
Posts: 693
Tom, you do understand that the guaranteed rate is reduced by the premium it is paying. So you may be earning only ~3% ish?

Look closely at your policy. Do you have a guaranteed settlement paragraph in your WL policy? This option was ~ 20% higher than a comparable immediate annuity quotes for my policy earlier this year.

Of course, if you stay the current course, let the policy pay the premiums and add $, your agent and your heirs will thank you when the time comes. The decisions are all personal choices.
__________________

CRLLS is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Met Life GMIB lacawac FIRE and Money 22 04-12-2013 10:06 AM
New-style annuity offers guaranteed income, access Tiger FIRE and Money 27 01-12-2008 07:23 PM
Annuity Payments Are "Guaranteed" ... TickTock FIRE and Money 12 12-07-2007 09:15 AM
What to do with Met Life Ins. Policy Adventuregirl FIRE and Money 6 02-04-2006 05:50 AM
Annuity w/guaranteed floor PLUS upside potential Jer FIRE and Money 8 06-07-2004 10:49 AM

» Quick Links

 
All times are GMT -6. The time now is 09:05 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2018, vBulletin Solutions, Inc.