Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Variable Annuity, Has anyone purchased and why?
Old 08-15-2013, 03:57 PM   #1
Dryer sheet wannabe
 
Join Date: Jul 2012
Posts: 15
Variable Annuity, Has anyone purchased and why?

We are considering a variable annuity for a portion of our retirement income, and since we are going to travel quite a bit internationally we will not have time to manage our funds too closely. This product appears to be a good choice for funds to sit and grow, until we are ready to turn on income stream, with little management. I am interested in hearing from anyone who has purchased a variable annuity, and what was their reasons. Thanks!
__________________

__________________
Grammymissy is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 08-15-2013, 04:01 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Do yourself a favor and run away from this product and all like it.
__________________

__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 08-15-2013, 04:12 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,182
Watch out for high fees, and return of capital masked as part of the annual return rate.

How about a Target Retirement Fund from a low cost company like Vanguard or Fidelity? You could just invest and forget. Or even a simple mix of a total stock market, total international, and total bond fund should take very little of your time to manage and can be done anywhere you have internet access. Rebalance once a year or even less often.
__________________
RunningBum is offline   Reply With Quote
Old 08-15-2013, 04:23 PM   #4
Full time employment: Posting here.
 
Join Date: Nov 2008
Posts: 728
variable annuities are very expensive. I'd call Vanguard and ask for their opinions and costs of an annuity vs a target retirement fund. Or.....I'd ask about a fixed annuity purchased now but payments held until you need the money. You have lots of options and usually the most expensive option is the worst one in the long term.
__________________
jerome len is offline   Reply With Quote
Old 08-15-2013, 07:10 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,428
Quote:
Originally Posted by Grammymissy View Post
We are considering a variable annuity for a portion of our retirement income, and since we are going to travel quite a bit internationally we will not have time to manage our funds too closely. This product appears to be a good choice for funds to sit and grow, until we are ready to turn on income stream, with little management. I am interested in hearing from anyone who has purchased a variable annuity, and what was their reasons. Thanks!
There are lots of investments that you can leave alone and not have to spend a lot of time managing if that is your objective that would NOT have the fees and expenses associated with a variable annuity.

For example, you could buy a good, no-load, low cost balanced mutual fund like Wellesley, Wellington or a target date fund and let it sit and grow and then later use that money to buy a single premium immediate annuity.

I think in most cases you would end up with a higher monthly benefit than buying a VA with a similar asset allocation and then annuitizing it.

Is this in a taxable account or a tax-deferred account (like an IRA)?
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 08-15-2013, 07:27 PM   #6
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,331
You can invest in Pssstt Wellesly or Ahhhhh Wellington for a lot less in fees. Just let the income and gains ride until you need the money. When the time comes that you need the money, tell them to send you $x,xxx a month. Just make certain you set that number so you don't run out of money before you both run out of time.

Enjoy your traveling! What a great way to spend ER.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 08-15-2013, 07:34 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by RunningBum View Post
How about a Target Retirement Fund from a low cost company like Vanguard or Fidelity? You could just invest and forget. Or even a simple mix of a total stock market, total international, and total bond fund should take very little of your time to manage and can be done anywhere you have internet access. Rebalance once a year or even less often.
Quote:
Originally Posted by pb4uski View Post
For example, you could buy a good, no-load, low cost balanced mutual fund like Wellesley, Wellington or a target date fund and let it sit and grow and then later use that money to buy a single premium immediate annuity.

I think in most cases you would end up with a higher monthly benefit than buying a VA with a similar asset allocation and then annuitizing it.
Yes to the above. VA's are high-cost investments that do nothing particularly well (except line the pockets of VA salesmen, which is why they push them so hard). In most cases, putting your funds into a well-chosen mix of low-cost index funds (or a single Target Date fund) and rebalancing only infrequently is >>better<< than constantly fiddling with the assets, buying and selling on the day's news. Checking on the balances and doing some shifting around once per year is all I do, and my results have been fine.

There's a place for some annuity products in certain situations, but (in my opinion) variable annuities are not useful for anyone.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 08-15-2013, 07:41 PM   #8
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,974
Just Google variable annuities and you'll find countless articles from a wide variety of sources recommending you steer clear. Only a VA salesperson will try to convince you to buy one, beware...

9 Reasons You Need To Avoid Variable Annuities - Forbes
3 Reasons To Buy a Variable Annuity - NASDAQ.com
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 08-15-2013, 08:24 PM   #9
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 1,823
Because VAs are complex financial instruments, the only people who are really qualified to buy them are those who research them thoroughly and fully understand all of the nuances of the investment prior to purchasing.

The problem is, anyone who actually learns enough about them to achieve a full understanding of them becomes most qualified to educate the rest of us on how awful they really are. So the more you educate yourself, the less desirable they will be to you.

Or, you could just take everyone's advice here and forget the whole thing, as most people who spend time on this forum have done.
__________________
Ready is offline   Reply With Quote
Old 08-15-2013, 09:15 PM   #10
Dryer sheet wannabe
 
Join Date: Jul 2012
Posts: 15
I understand that the funds we have earmarked for a variable annuity could be invested elsewhere, perhaps just as easily. However since these funds are being set aside for the later years, for elderly care and or housing, I like the idea of the income stream for life, and then death benefit is paid. . Our living and traveling expenses are being funded by our pension and savings, and then ss in approximately 10 years when husband turns 67. Retiring at 51 and 56 means that , hopefully we will have many years ahead of us, and lifetime benefits is appealing.
__________________
Grammymissy is offline   Reply With Quote
Old 08-15-2013, 09:22 PM   #11
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,107
Quote:
Originally Posted by Grammymissy View Post
I understand that the funds we have earmarked for a variable annuity could be invested elsewhere, perhaps just as easily. However since these funds are being set aside for the later years, for elderly care and or housing, I like the idea of the income stream for life, and then death benefit is paid. . Our living and traveling expenses are being funded by our pension and savings, and then ss in approximately 10 years when husband turns 67. Retiring at 51 and 56 means that , hopefully we will have many years ahead of us, and lifetime benefits is appealing.
History indicates you'll do much better (lower costs, higher return) by investing in a quality balanced fund. Once you think you are ready for those lifetime benefits, you can always use the appreciated investment to purchase a SPIA at a substantial savings (ie, greater income) vs. the fees buried in a VA.

Variable annuities are excellent products - but only if you are the insurance company or the salesman getting the commission check.
__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 08-15-2013, 09:47 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Most of the people who are on this board were in, or are now in, your situation. We considered various investments, including annuity products. If you have the time, do a search of the previous postings here on VAs, in a very short time you'll learn a lot about them, and why virtually everyone here has found far better ways to achieve their objectives--objectives much the same as the ones you outlined.

Run away from VAs. And if there's someone trying to sell you one, do NOT feel bad about being blunt with them. They are putting their own interests ahead of yours.
__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Old 08-15-2013, 10:16 PM   #13
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 1,823
Quote:
Originally Posted by Grammymissy View Post
I understand that the funds we have earmarked for a variable annuity could be invested elsewhere, perhaps just as easily. However since these funds are being set aside for the later years, for elderly care and or housing, I like the idea of the income stream for life, and then death benefit is paid. . Our living and traveling expenses are being funded by our pension and savings, and then ss in approximately 10 years when husband turns 67. Retiring at 51 and 56 means that , hopefully we will have many years ahead of us, and lifetime benefits is appealing.
Annuity salespeople look for folks like yourself to make their living on. I don't know what else we can tell you here other than what has already been said...that VA's are a complete scam, ripoff, terrible investment. Nobody who understands them would ever buy one. If that isn't enough to make you think twice, I'm not sure what else can be said.
__________________
Ready is offline   Reply With Quote
Old 08-15-2013, 10:46 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Apr 2013
Posts: 5,580
Quote:
Originally Posted by Ready View Post

Annuity salespeople look for folks like yourself to make their living on. I don't know what else we can tell you here other than what has already been said...that VA's are a complete scam, ripoff, terrible investment. Nobody who understands them would ever buy one. If that isn't enough to make you think twice, I'm not sure what else can be said.
True. My father sold them, but told me never to buy.

MRG
__________________
MRG is online now   Reply With Quote
Old 08-16-2013, 12:43 AM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
To hop on the bandwagon. There is a wide variety opinions on the forum from everything from the best brokerage, Obamacare, to who is going to the World Series.

At least 90% and perhaps 95% of the forum believes that variable annuity are horrible product unless you are a variable annuity salesman, and have 3 kids who you need to put through college. In which case they are great products.

If you are looking for lifetime income they are many options include immediate annuities but variable annuities are among the worst option.

If you are not convinced after doing some research these are bad ideas go ahead and post the name of the variable annuity and we can provide more detail.
__________________
clifp is offline   Reply With Quote
Old 08-16-2013, 04:55 AM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
RunningBum's Avatar
 
Join Date: Jun 2007
Posts: 5,182
Quote:
Originally Posted by Grammymissy View Post
I understand that the funds we have earmarked for a variable annuity could be invested elsewhere, perhaps just as easily. However since these funds are being set aside for the later years, for elderly care and or housing, I like the idea of the income stream for life, and then death benefit is paid. . Our living and traveling expenses are being funded by our pension and savings, and then ss in approximately 10 years when husband turns 67. Retiring at 51 and 56 means that , hopefully we will have many years ahead of us, and lifetime benefits is appealing.
Well, keep trying, maybe you can find someone to give you positive reinforcement on what you've already decided to do. But very possibly not here!

Consider holding off on SS as late as possible as a way of maximizing the SS "annuity" for long-life protection. The strategy for couples isn't so simple so look deeper into that.
__________________
RunningBum is offline   Reply With Quote
Old 08-16-2013, 06:45 AM   #17
Dryer sheet wannabe
 
Join Date: Jul 2012
Posts: 15
Thank you for all of your responses, it is obvious to me that even if someone purchased a variable annuity, they would not admit on this website. And since my question was for someone who has purchased a variable annuity, i will move on. We are in the research phase, so we will continue researching elsewhere. No worries🌻
__________________
Grammymissy is offline   Reply With Quote
Old 08-16-2013, 07:00 AM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
clifp's Avatar
 
Join Date: Oct 2006
Posts: 7,450
Actually plenty of people on the forum of have purchased variable annuities. Not all of them regretted but I'd say most have.

I am curious what it is about the product that appeals to you, more than say a fixed annuity, or regular mutual funds, or a manage payout fund, all of which can provide income for life.
__________________
clifp is offline   Reply With Quote
Annuities
Old 08-16-2013, 07:02 AM   #19
Confused about dryer sheets
 
Join Date: Aug 2013
Posts: 1
Annuities

I have checked into different annuities, after 35 years of investing in mutual funds and doing quite well financially. When the market peaked in 2013 I did not want to worry about losing what I have gained. We transferred 80% of or retirement into a fixed index annuity with Allianz with a 360 rider. Yes the fee is high 1.05% but we are guaranteed to have a great income for the rest of our lives with no fear of loss from the market, plus the income can go up but never down. I have 7 years before I retire and still invest 23% of my income in mutual funds that will be a plus if the market continues up but won’t be a burden if the market goes down.
__________________
Johnschanzer is offline   Reply With Quote
Old 08-16-2013, 07:34 AM   #20
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2004
Posts: 11,615
Quote:
Originally Posted by Johnschanzer View Post
I have checked into different annuities, after 35 years of investing in mutual funds and doing quite well financially. When the market peaked in 2013 I did not want to worry about losing what I have gained. We transferred 80% of or retirement into a fixed index annuity with Allianz with a 360 rider. Yes the fee is high 1.05% but we are guaranteed to have a great income for the rest of our lives with no fear of loss from the market, plus the income can go up but never down. I have 7 years before I retire and still invest 23% of my income in mutual funds that will be a plus if the market continues up but won’t be a burden if the market goes down.
So, is the index one that goes up with inflation? If not, then I'm sure you understand that you've only traded market volatility (which has historically moved prices in both directions, and overwhelmingly in the "right" direction for investors over time) for inflation risk (which has generally moved in one direction in the US, a direction that does not favor fixed income investments). If we get 10 years of 8% inflation, how will that "payout can't go down" guarantee from Allianz help the owner of one of these products?

You say you are still working and investing, which is good. Keep socking away that money into something that offers the potential for keeping up with inflation, it might come in very handy. Plus, you'll have resources on hand to handle big expenses/desired spending that exceed the monthly stipend Allianz will send you.

Welcome to the board!
__________________

__________________
"Freedom begins when you tell Mrs. Grundy to go fly a kite." - R. Heinlein
samclem is online now   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 10:50 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.