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Old 09-25-2016, 10:11 AM   #21
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The crediting rate for this NYL annuity would be good to know. In an example they use 2.1% for the first 7 years and then 1% thereafter.....naturally this is given in small print. A single life policy for a 65 year old pays out 5.25%, that seems low although the literature makes no distinction between male and female, and 4.75% for a couple. There are also the fees to consider of 0.75%. So I do not like this annuity based on the literature.

To get your $15k at age 65 let's assume you buy a deferred annuity at age 60 with $285k and with 2% interest it will be $315k in 5 years. The joint lifetime annuity will pay 4.75%, which is $15k. Now what about just buying a CD ladder with your $285k. At 2% interest that will also be $315k when you start taking $15k out at age 65. With just 2% interest (ie a 5 year CD today) you can take that $15k out for 27 years and I think there's a strong probability that you will be able to buy new CDs with higher rates sometime in the future. There's a 33% chance of either you or your wife outliving the CD income at 2% interest, but a 67% of there still being money in the CD accounts to pass on to your heirs. If you want the longevity insurance of an annuity at those odds then at least look for one with slightly better terms.

As a comparison the current crediting rate for the TIAA-Traditional deferred annuity is 3.75%. Unfortunately, it's only available to people with TIAA retirement accounts as it's terms are better than most. I own one of these and it's growing at 4.8% this year with a guaranteed minimum of 3%. I use it as a sort of 10 year CD in my portfolio as it has a 10 year payout term. I plan NOT to annuitize that account and will just take the interest as income and leave the accumulation to my heirs.

TIAA-CREF - Retirement Annuity (RA)
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Old 09-26-2016, 05:59 AM   #22
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I made a mistake in the previous post. The Income Base is used to calculate the annuity income and that is your initial premium compounded by 5% each year. It's different from the amount of money you can access at surrender which is the Accumulated Value. Unfortunately you only have 3.5 years to compound at that rate.

So you will have 3.5 years of compounding at 5% meaning your initial premium will be $265000 to get to the $315k at 65 needed to generate $15k for a couple at 4.75% payout. The 2% CD will now support a $15k payout starting at 65 until age 90.
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Old 09-26-2016, 07:32 AM   #23
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nun, in post #11 I provided some calcs on what would happen if he bought $100k and deferred 5 years and either surrendered or annuitized assuming a 2.5% crediting rate. Not a great deal IMO.
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Old 09-26-2016, 09:20 AM   #24
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nun, in post #11 I provided some calcs on what would happen if he bought $100k and deferred 5 years and either surrendered or annuitized assuming a 2.5% crediting rate. Not a great deal IMO.
Yes I saw that. The good thing in the NYL annuity is the 5% annual increase in the amount used to calculate the income. But the OP only has 3.5 years of that. The bad is the joint life 4.75% payout rate quoted in the NYL literature.....also the 0.75% fee is a kick in the gut.


So if you put in $100,000 now, wait 3.5 years and then get a joint life annuity the OP will receive $5634/year for life. [($100,000*(1+0.05)^3.5)*4.75%].

If the OP buys a 3.5 year NYL joint life deferred life annuity through immediateannuities.com with a $100,000 deposit today in 3.5 years they would receive 5844/year. So again the simple deferred annuity wins.

Still, I'd rather defer SS for the longevity insurance and use a CD/short bond ladder for income and keep access to principal and have the chance to take advantage of interest rate rises rather than buying either of the annuities.
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Old 09-26-2016, 12:24 PM   #25
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....Still, I'd rather defer SS for the longevity insurance and use a CD/short bond ladder for income and keep access to principal and have the chance to take advantage of interest rate rises rather than buying either of the annuities.
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