What did Fixed Annuities pay in the early 80's

[jrobb45]

Does anyone remember what fixed annuities paid in the early 80's when CD rates were in the double digits? Were their rates competitive with CD's? It seems to me that FA never paid much more than mid single digit returns. But I would like to hear from someone with a better memory than mine.

Thanks,
jr

 

[OAG]

Frankly, I can not help, but having been into CD's for about 30 years I do not remember CD's (Bank/CU, FDIC/NCUA Insured CD's) being in the "double digits". Must be some old times myth. As far as fixed annuities I cannot help there either but maybe someone else will calling a current issuer of Annuities would help.

BTW Welcome to the Forum.

 

[ats5g]

TIAA traditional account paid about 11% at its highest in the early 80's. See page 3.

 

[FinanceDude]

As recently as 2000-2001, you could get 7% fixed for 6 years........

 

[CyclingInvestor]

I had a short-term 15.1% CD in the early 80s. I still have some 9.5% Cal GO munis that I bought in 1984 - they mature next year - my last non-stock holding. I hope California can afford to pay me off.

 

[Dawg52]

Yeah, no myth. My parents made a lot of their money with double digit cd's in late 70's and early 80's. I remember opening up my first IRA with a high return cd.

 

[OAG]

Well I stand corrected. This is interesting, wonder if we will get back there: Certificate of Deposit Index (CODI), Historical Data

 

[REWahoo]

Well I stand corrected.

I recall my dad having a 3 year CD back in the erly 80's paying 17%. I also remembered how he groused when it matured and he could get only a measly 10%...

 

[Martha]

Yeah, but our mortgage from the mid-eighties had a 14% interest rate.

 

[REWahoo]

Yeah, but our mortgage from the mid-eighties had a 14% interest rate.

Uh oh. Sounds Four Yorkshiremenish to me...

 

[Koolau]

Early '80s I had a 3 yr SPDA @ 11%. As I recall, most CDs and bonds paid double digits due to the very high inflation rate at the time.

 

[FinanceDude]

Well I stand corrected. This is interesting, wonder if we will get back there: Certificate of Deposit Index (CODI), Historical Data

We just might. I have a master plan, just make the CD rate the same as the unemployment rate..........

 

[OAG]

This "lay-off rate" is starting to look like a stampede. I wonder how many companies have suggested to their employees that they all (everyone, including the managers and the bosses) take a 10 or 20% pay cut and/or a reduction in hours to protect jobs in the company. If the books were transparent and the company could make a case for it most employees would opt for it for some limited period. I guess some are actually doing it but that is not considered newsworthy I guess.

 

[saluki9]

As recently as 2000-2001, you could get 7% fixed for 6 years........

We have a framed ad in our office from the treasury dept offering savings bonds at 11%

 

[FinanceDude]

We have a framed ad in our office from the treasury dept offering savings bonds at 11%

Where can I get some??

The best I know of right now, from a company that actually can pay the rate, is 6.5% for 10 years.........

 

[jrobb45]

Thank you all for your replies. I remembered that the mortgage rate on the house we bought in 1972 was about 6.75-7.00% and that the cd rates got into the double digits in the early '80's, but I couldn't remember what annuities were paying because we weren't investing in them back then.
Now I've started to look at them more(but will not make an investment at current rates), because of the tax deferral. No more IRA contributions because we don't have earned income.
I'm aware of all the fees annuities charge and was wondering if the annuity companies interest rates on single premium deferred income products raise proportionally, as intermediate term cd's(5 year) do, if they lag a little, lag a lot etc.. Sorry for such a long sentence.

It seems to me, that for the last several years, FA returns have lagged cd rates and the only thing they had going for them was the tax deferral.

Regards,
jr

 

[OAG]

Take it from someone that is there, tax deferrals will catch up with you.

 

[jrobb45]

Take it from someone that is there, tax deferrals will catch up with you.

In hindsight, is there anything you would have done differently?

Regards and thank you for your service to our country.

jr

 

[OAG]

I do not think so. Even tho they have caught up with us we still get to keep a significant percentage for ourselves. Maybe earlier, when I lived in FL, I should have shifted a lot more to a ROTH (no state income taxes there). I am not comfortable with going the annuity route now (from an issuer security standpoint; and estate considerations). I do have two annuities but they are under the US Government so they are reasonably safe.

 

[jrobb45]

I pretty much feel the same as you about annuities. Even though a very good friend, who is a retired insurance agent, and one of my son in laws who is currently an insurance agent say annuities are good(in the right situation), except for the fees.

regards,
jr

 

[ziggy29]

I pretty much feel the same as you about annuities. Even though a very good friend, who is a retired insurance agent, and one of my son in laws who is currently an insurance agent say annuities are good(in the right situation), except for the fees.

The "right situation" is the key here. High income, high net worth, maxed out qualified retirement plans, want more tax deferral, (in some states) want more asset protection from creditors and lawsuits... an annuity may be the ticket. The *right* kind of annuity for the right person can make sense. Not one with massive fees.

And there are many fixed annuities today which have no fees.

But these are almost never aggressively peddled because there are no salescritters to make a few [-]thousand[/-] bucks off of the sale.

 

[harley]

I really question the value of tax deferral, especially moving forward from now. I don't think most people end up in a significantly lower tax bracket upon retirement, and I especially doubt it in the near future. If tax rates go up you would very likely be in a higher bracket with less spending power. I'm not saying there's no need for pre-tax savings. It's a great place to put tax inefficient investments. But I think you tend to have more of the agility to minimize taxes in retirement working mostly from after-tax savings/investments. I would never knowingly put money in an annuity just to avoid current taxes. Of course, JMHO.

And, of course, a Roth with tax avoidance is the best of both worlds.