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Old 05-28-2011, 10:01 AM   #41
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I have some fears about cash flow that an annuity soothes in theory.

I know Ray Lucia in his Buckets of Money strategy uses annuities as a portion of his income. (bucket 2 I believe and short term for years 7-14 or\f retirement)

We would like both of us to be retired and traveling when there is a small number of years before the first of us could draw maximum social security.
Some short term cash is appealing.

We dealt with some of this by having a fixed amount (inflation guesstimated) of zero coupon treasuries come due each year for about half of our fixed current expenses for maybe 20 years.

To get the other half we can draw down from one of the 401k's OR put about 1/4 of the retirement money into annuities.

What gives me the hesitation about what to do is my projection for interest rates in the future. Should interest rates double I can get the annuity for about half the price quoted now or just reinvest old money into other fixed income.

To me the draw of an annuity is to be able to be relatively indifferent to the market. Losing or gaining an auto daily in a volatile market loses the thrill.

Ideally the cash flow should have a component safe from changing interest rates, and government tax decisions about corporate dividends.
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Old 05-28-2011, 10:24 AM   #42
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Like the one I/DW purchased? Yes, it is so, since no sales commission was paid nor any annual "maintenance fee" is paid, per our SPIA contract, through FIDO. Upon my questioning of this, they responded with the fact that they would be paying me (under a contracted payment schedule), and would be responsible for covering both their expenses and "profit" by investment techniques, using my premium. They were taking on the risk (and profit) possibilities, in the future.

I'm not saying all SPIA contracts are the same. Again, I only speak for ourselves, who actually have a contract.

...

Are you sure about that? Do you have a SPIA or a VA (payout annuity)

SPIAs have to be sold by a licensed agent. They typically get some sort of commission. Fidelity has an Insurance Agency that sells other insurance companies SPIAs.
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Old 05-28-2011, 11:14 AM   #43
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Are you sure about that? Do you have a SPIA or a VA (payout annuity)

SPIAs have to be sold by a licensed agent. They typically get some sort of commission. Fidelity has an Insurance Agency that sells other insurance companies SPIAs.
We have an SPIA via Fidelity. Their "insurance/annuity branch" had folks (with their insurance license) that are paid a salary, along with a slight bonus (not commission) on the amount they "sell". However, they do not act as a strict "commissioned agent" as a third party agent would normally act as.

Our contract (after much discussion with them on the subject) reflects that fact.
I’m not saying that is the situation of today; however it was the situation when we executed our contract in July, 2007.

Look at the site, http://www.immediateannuities.com/ I believe it will tell you what you can get from an insurance company as a monthly payment, based upon a certain premium base. Nowhere does it say "subject to sales charge or annual fee", that I know of. Our SPIA is the same way. We are taking the risk that the insurance company can pay the stated monthly income, for the rest of our lives. The insurance company is taking the risk that they can meet that commitment, along with providing a return for themselves, and their investors (e.g. shared risk).

The information on this "technique" is out there, if you are serious on pursuing this path, and if you are willing to do the research - as we did.

It's really not as difficult as some on this thread/forum would make you believe. Their "thoughts" are based upon assumptions (since they don't have an SPIA). Ours on the other hand is based upon fact, since we have actually gone through the process.

Do your own research and reach your own conclusion. Don't base your decisions upon other's opinions, IMHO. If you do the research and it doesn’t work as you believe it should, at least you can walk away with a bit of knowledge, rather than somebody's (who hasn’t done the actual investigation) of the product.
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Old 05-28-2011, 07:41 PM   #44
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When I am Doris' age I will probably consider an annuity.

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Old 05-28-2011, 07:49 PM   #45
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From the article:
Quote:
A healthy 90-year-old a Betty White look-alike..
If I reach age 90 and look like Betty White, I'll buy one too.
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Old 05-29-2011, 12:43 AM   #46
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There is also no carrier risk in the case of my pension purchase option.
Why not? I'd guess that there is a risk, however small, that even government pensions may be subject to change via legislation.
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Old 05-29-2011, 09:56 AM   #47
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Why not? I'd guess that there is a risk, however small, that even government pensions may be subject to change via legislation.
You're right by experience, but Brewer's right by virtue of the market (including its analysts) judging a government agency's payouts to be risk-free.

Unlike many corporate pensions, changes to military pensions have been imposed only on the recruits. There are people still on active duty who are eligible for a military pension system that ended back in 1980. A few of them might still be on active duty in 2020.
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Old 05-29-2011, 01:16 PM   #48
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From the article:If I reach age 90 and look like Betty White, I'll buy one too.
If we keep cranking out more and more of these, it's no wonder insurance products that provide protections into old age keep getting into trouble.
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Old 05-30-2011, 03:36 PM   #49
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Why not? I'd guess that there is a risk, however small, that even government pensions may be subject to change via legislation.
I figured someone would quibble. Not carrier risk, per se. More like legislative risk.
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Old 05-30-2011, 06:23 PM   #50
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Ok, sorry, thought you were in the private sector.
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Old 06-01-2011, 06:55 PM   #51
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I'm halfway through Dick Duff's book - highly recommend to anyone looking at the risks/benefits of any of the annuities for retirement income.

Dick Duff's Retirement Breakthrough Book
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Old 06-01-2011, 07:16 PM   #52
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I'm halfway through Dick Duff's book - highly recommend to anyone looking at the risks/benefits of any of the annuities for retirement income.

Dick Duff's Retirement Breakthrough Book
I haven't read the book but I'll wager the author leans toward loading up on annuities.

From his bio:
Quote:
Since he left the University of Iowa with a law degree more than four decades ago, this insurance-oriented retirement analyst...
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