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Old 10-12-2013, 07:46 AM   #81
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Originally Posted by LitGal View Post
......... It would cost her 7% to change her mind and get out of this product..........
I wonder if by some coincidence the agent makes a 7% commission?

Yes, I have achieved work / life balance.
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Old 10-12-2013, 08:28 AM   #82
Thinks s/he gets paid by the post
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Join Date: Feb 2006
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Originally Posted by Huston55 View Post
Nun-As I recall, your AA and investing approach are relatively conservative, which, I presume, is the reason you own annuities. Without revealing any private details, I'd like to know what annuities you purchased, why you purchased them, if they're performing the function intended, and if you'd make the same decision in today's low rate environment. Thx.
I'd say I'm pretty middle of the road in my AA it being 50/50 overall. But I have arrange things so that my basic income can come from pretty stable sources like rent, SS, pension and annuities. I'm very glad I bought my TIAA-Traditional deferred annuity years ago as it just keeps plugging away giving me good tax deferred interest and it's part of my income foundation.

As I have retirement money with TIAA-CREF it's by default invested in annuities. However, the TIAA-CREF variable annuities in a 401a or 403b account function just like mutual funds with ERs around 0.4% or 0.5%. There are no other fees or withdrawal restrictions and they can be rolled over into IRAs. TIAA-CREF does encourage you to turn the VA accumulation into a one or two life annuity at retirement to provide income for life, but you can ignore that and just live of the gains etc if you want, or roll it over to a Vanguard IRA to save money on fees.

As well as the VAs, TIAA offers a deferred annuity called TIAA-Traditional. I bought this 27 years ago and have put money into it as part of my fixed income allocation, today it's only 5% of my portfolio. It has access restrictions and if you want to take money out you either do it through a life time annuity or in equal amounts over 10 years. But you do get good interest rates for giving up control; 3% minimum, but today it's paying 4.416%. Actually money inside the annuity gets different interest rates depending on when it was contributed, so today's contributions get 4.416%, but contributions made earlier get higher rates. Costs etc are taken out before the interest rate is declared, so it basically acts like a tax deferred high interest savings account or CD, but you can't get at your money. At retirement you turn it into an income stream or it pays out over 10 years. I got a quote for a single life fixed annuity for a 55 year old male and the payout rate was 7% which is about 1% higher than other quotes I've seen.

Because I have access to TIAA-CREF's annuities and they seem to give far better deals than most annuities I would not buy one from another company. I will probably leave my TIAA-Traditional to compound after I retire and use it as longevity insurance.

“So we beat on, boats against the current, borne back ceaselessly into the past.”

Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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