VA Owner Vindication

[chinaco]

Well... maybe!

This is a continuation of the confessions thread but with a shift on the topic.


As I stated, I have considered a SPIA as a viable tool to build our base income. But with interest rates where they are... I was intending to just wait and buy later when I could get a better deal.

My goal for those VAs at the time was to shield the taxes and grow during accumulation. I hadn't put much more thought into them than that. Frankly, I always assumed we would just cash them out at 59.5 and use the lump for income during FIRE. It was not a strategic tool... just a lump sum of money.



Since I dusted off that contract and read it's payout features... and since the GMWB is competitive with a SPIA, I am wondering if I should use those to create the first rung or two in the ladder.

We own these things, I intend to buy some SPIAs to guarantee income. Should those contracts be part of our strategic plan for generating income? The insurance company has a decent rating, the amount would be within the State Guaranty limits. The fees are low.


If I took a variable payout option.... our minimum would seem to be the same as a SPIA today. But I would get some market upside during years the market does well.



What do you think?

 

[jazz4cash]

Since I, for one have NO CLUE what GMWB stands for, I will offer one of the two results from my forum search for the term.........
http://www.early-retirement.org/forums/f28/va-with-gmwb-or-gmib-confused-23217.html?highlight=GMWB

 

[dex]

What do you think?

Take a look at the currency markets - dollar getting stronger; stock market off its highs - the past relationship was - dollar stronger, stocks weaker, US treasuries stronger.

Korea, Ireland, Greece, Spain, Portugal problems plus if holiday sales are viewed negatively US treasuries will do well in the short term.

 

[chinaco]

I posted the wrong guarantee. It is not A GMWB. There is a Guaranteed Minimum Payout when it is annuitized whether the payout option is Fixed or Variable.

For Fixed, I assume that if interest rates are up when a contract owner annuitizes they could be offered a higher rate.

For variable it looks like the minimum that will be paid is the guaranteed rate. But if the investment choices perform well, one will receive a higher payout (than the minimum).

 

[FinanceDude]

I posted the wrong guarantee. It is not A GMWB. There is a Guaranteed Minimum Payout when it is annuitized whether the payout option is Fixed or Variable.

For Fixed, I assume that if interest rates are up when a contract owner annuitizes they could be offered a higher rate.

For variable it looks like the minimum that will be paid is the guaranteed rate. But if the investment choices perform well, one will receive a higher payout (than the minimum).

The annuitization depends on whether it is an older policy or not. Most newer GMWB's do NOT require annuitization to get the guaranteed payout.

 

[chinaco]

The annuitization depends on whether it is an older policy or not. Most newer GMWB's do NOT require annuitization to get the guaranteed payout.

It was purchased in the early 90's. Looking at the contract, it appears to only be on the payout.

The contract does use specific language like GMIB... but in the Annuity Tables for annuity payout... it lists the Guaranteed minimum payout factor for each gender and age for Single Life and SL with several period certain options. There is also a factor table for Joint Life.