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Old 11-13-2017, 06:42 PM   #41
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+ 1. I have the same background and feel the same way about these things.


I don't have access to Excel right now...can anyone determine what the rate of return is on the annuity, given the investment amounts and dates above? The return could then be compared to similar vehicles. We would still need to know in which funds ("sub accounts") the money is invested.
That would be interesting to know!

I did go see the guy today and asked some questions. I can take everything out of the annuity any time I want. No limit and don't have to take anything if I don't want to, it is non pension annuity. If I want the total there is no surrender charge.

If I die the highest amount on my anniversary date is what I will get if the market has fallen below that. My wife can do nothing or take it out or get any amount she would like. It can be passed on to children when last spouse has passed.

There is a 1.8% fee every year on what that amount is on the anniversary date. I am paying fees I know that but the good thing is I can take it all out if I want with out a surrender charge put of course I would have to pay taxes on income/gains.
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Old 11-13-2017, 09:47 PM   #42
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I'm guessing that the 1.8% fee is at the account level and that there are subaccount expenses as well.... so it might be more like 2.3% rather than 1.8%.

Did he give you any insights on what the underlying investments are?

The incidious thing is that the first $53k taken out will be taxed as ordinary income and the remaining $160k will be basis. I would suggest that you look at your tax and ACA situation to see when the best time to get that money out would be.
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Old 11-13-2017, 11:00 PM   #43
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Originally Posted by Trooper View Post
+ 1. I have the same background and feel the same way about these things.


I don't have access to Excel right now...can anyone determine what the rate of return is on the annuity, given the investment amounts and dates above? The return could then be compared to similar vehicles. We would still need to know in which funds ("sub accounts") the money is invested.
A simple XIIR calculation with the information given gives a rate of 7.22% which is really not bad at all (assumes investments at beginning of 2002 and 2015 with the ending value at beginning of November 2017)
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Old 11-14-2017, 07:13 AM   #44
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A simple XIIR calculation with the information given gives a rate of 7.22% which is really not bad at all (assumes investments at beginning of 2002 and 2015 with the ending value at beginning of November 2017)
Thanks for running those numbers I appreciate that very much. Yes that info is correct in 2002 I started it with $10000 and then 2015 I dropped in $150,000. So for 13 years there was only the $10000 that was generating gains. I could go look what I had in that acct. when I dropped in the $150,000.

No other charges and there are no sub account charges that I can see and that was a question I asked him. He said once a year on anniversary date what that number is they take 1.8%. I can see that deduction from my transaction data and the numbers come out like he says.

For now I will see what I want to do with it. It is a lower one digit % of my portfolio so I will see what happens.
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Old 11-14-2017, 08:22 AM   #45
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If there are subaccount charges, as would be typical, you would never see them as they are embedded in the subaccount unit values just like mutual fund expenses are embedded in net asset values.
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Old 11-14-2017, 09:07 AM   #46
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If there are subaccount charges, as would be typical, you would never see them as they are embedded in the subaccount unit values just like mutual fund expenses are embedded in net asset values.

Thanks for your help I appreciate it very much.
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Old 11-14-2017, 09:23 AM   #47
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If there are subaccount charges, as would be typical, you would never see them as they are embedded in the subaccount unit values just like mutual fund expenses are embedded in net asset values.
Agree. You're likely paying somewhere between 50 and 100 basis points (0.5% and 1%) per year for the funds in which your money is invested, and those charges won't be itemized on your statements. This is on top of the 1.8% that you see on your statement.

The annuity probably isn't the best investment for you, but you will have to decide whether the exit costs (mainly taxes) are worth getting out.
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Old 11-14-2017, 09:55 AM   #48
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Agree. You're likely paying somewhere between 50 and 100 basis points (0.5% and 1%) per year for the funds in which your money is invested, and those charges won't be itemized on your statements. This is on top of the 1.8% that you see on your statement.

The annuity probably isn't the best investment for you, but you will have to decide whether the exit costs (mainly taxes) are worth getting out.

It might not be the best, I do agree with you. On the other hand the acct. really hasn't done horrible with the gains it has accumulated. If I would of had in fixed acct. MM/CD I would of never even seen close to this return.

My take on it is yes not a good investment but have not had to pay taxes on the money (until I take it). Money is fully invested in equity/bonds. It has earned 5 to 8% through those 15 years even with fees taken out.

Yes I could of saved that money in fees/costs but I didn't, I also with the costs involved do have some safe harboring and guarantee built into this account and that costs money. It is not RMD required, no surrender charges except taxes on earned moneys and I look at it better then money in a bank and is liquid to my asking. Most defiantly pros and cons.

Thanks for all your help and you all made me dig deep into this product good or bad. To answer my on question Annuity vs Mutual Funds. I most likely will never put money back into an annuity in y life. For reason I don't need that type of an acct. to pay me a fixed amount each month/year etc.. As for investing in equity/bond etc. I will keep buying and growing in y life time.

Thanks
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Old 11-14-2017, 01:08 PM   #49
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It might not be the best, I do agree with you. On the other hand the acct. really hasn't done horrible with the gains it has accumulated. If I would of had in fixed acct. MM/CD I would of never even seen close to this return.
Yes, totally agree versus a MM/CD. Below I put together (unaudited - LOL) what your investments would be worth had they been invested in Vanguard's S&P index fund. Given your sub-accounts have bond holdings, we would expect your ending balance to be lower than the S&P fund.

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My take on it is yes not a good investment but have not had to pay taxes on the money (until I take it). Money is fully invested in equity/bonds. It has earned 5 to 8% through those 15 years even with fees taken out.
Agree also. Deferral is good, as taxes are an expense that can otherwise be invested. Keep in mind however that annuities are taxed at ordinary income rates, while if you had the money in a taxable portfolio and paid taxes on dividends and capital gains distributions along the way, those taxes would be at the preferred capital gains rates (0%/15%).

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Thanks for all your help and you all made me dig deep into this product good or bad. To answer my on question Annuity vs Mutual Funds. I most likely will never put money back into an annuity in y life. For reason I don't need that type of an acct. to pay me a fixed amount each month/year etc.. As for investing in equity/bond etc. I will keep buying and growing in y life time. Thanks.
We all make mistakes and learn from them! I know what I know about annuities because I was sold them also. If you don't want to take the tax hit upon liquidation, but want to lower your fees, you can do a 1035 (tax-free) exchange into one of Vanguard's annuity products. That is what I did a few years ago.

If you want help analyzing the mutual funds you have with Thrivent, it might be best to start another thread and provide further details. Good luck.
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Old 11-14-2017, 01:58 PM   #50
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Yes, totally agree versus a MM/CD. Below I put together (unaudited - LOL) what your investments would be worth had they been invested in Vanguard's S&P index fund. Given your sub-accounts have bond holdings, we would expect your ending balance to be lower than the S&P fund.



Agree also. Deferral is good, as taxes are an expense that can otherwise be invested. Keep in mind however that annuities are taxed at ordinary income rates, while if you had the money in a taxable portfolio and paid taxes on dividends and capital gains distributions along the way, those taxes would be at the preferred capital gains rates (0%/15%).



We all make mistakes and learn from them! I know what I know about annuities because I was sold them also. If you don't want to take the tax hit upon liquidation, but want to lower your fees, you can do a 1035 (tax-free) exchange into one of Vanguard's annuity products. That is what I did a few years ago.

If you want help analyzing the mutual funds you have with Thrivent, it might be best to start another thread and provide further details. Good luck.
Thank you for all the illustrations and advise and I will be definitely will be looking into those options you noted. Thank you!

I look back on how I got to where I'm now financially and really can't believe I ever saved as much money as I did. I KNEW NOTHING but I saved. Thank God with all the things I did wrong I have way more then I could ever spend not knowing anything. Luck these mistakes along the way didn't hurt me where I couldn't RE. Lol
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Old 11-14-2017, 02:12 PM   #51
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IMO, fund and management expenses tend to get lost when compared to total returns (particularly in an up market). Here is another way to look at the expenses.

Current structure

Annual management fee 1.8%
Fund fees .5% (I used the low estimate from other posters)
Total annual costs 2.3%

If you are using a firecalc type SWR strategy of about 4% annually, these expenses have to be subtracted. So you are left with 1.7% to spend (4% - 2.3%).

OTOH, if you build a 2 fund portfolio with Vanguard total stock market index admiral shares (VTSAX .04% expense ratio) and Vanguard total bond market index admiral shares (VBTLX .05% expense ratio) your blended expense ratio will be around .045%. This would leave you 3.955% to spend (4% - .045%).

Summary: Current WR less expenses 2.3%
Vanguard WR less expenses 3.955%

The Vanguard structure would increase your net WR by 71%
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