Annuity vs 4% rule

[Chuckanut]

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Originally Posted by Wu_wu I just plugged in the information on a couple aged 65 putting in $400,000 and annuitizing at age 70. They received $2556.19/m for their entire life guaranteed. If they live to 100, that's $950,903 in benefits! That's not including X years certain, where if both annuitants die, the beneficiaries receive the remaining amount left for x years which could be as high as $710,000.

Ummm.... If they can average 6% a year, they should be able to do better than that over 30 years. Personally, I think that averaging 6% a year is far more likely than one or both living to 100. My 2 cents.

That's not to say I am anti annuity. This theoretical couple may have other reasons for buying an annuity. They must do what works for them.

[Wu_wu]

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Originally Posted by brewer12345 So are you on a really good commission plan?

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Originally Posted by travelover One look at the previous posts answers that.

Haha, I am on commission yes. No one I know works for free, but that's besides the point. I am on this forum to learn and offer insight, experience and tools on what is available to me. If it came off as sales-y I apologize, it was more of seeing why the numbers were lower.

Quote:

Originally Posted by Chuckanut Ummm.... If they can average 6% a year, they should be able to do better than that over 30 years. Personally, I think that averaging 6% a year is far more likely than one or both living to 100. My 2 cents. That's not to say I am anti annuity. This theoretical couple may have other reasons for buying an annuity. They must do what works for them.

They most definitely could I'm sure, as the annuity I mentioned wasn't a part of the market, as it's a Guarantee Income Annuity, which I only brought up because OP was talking about annuities.

The only reason I think the type of annuity mentioned has merit, is because of the stock market drop in 2000 and 2008, which, if you were retiring during that time, your investments would've seen a scary dive like a few of my clients saw. Some people just don't have high risk tolerances. One retired client saw her retirement fund drop from $1m to $500,000 during those times and pulled out of the market and started working again to make up for the loss of income.

But I digress, most investors in here seem to have a very good grasp on securities that perform well for them, which I have little knowledge on and am still learning.

[Chuckanut]

Quote:

Originally Posted by Wu_wu Some people just don't have high risk tolerances. One retired client saw her retirement fund drop from $1m to $500,000 during those times and pulled out of the market and started working again to make up for the loss of income.

Yes, this is the kind of person who may be better off with an annuity than an investment whose value may vary. It's a bit sad really. Had this person waited she would be well ahead today.

I remember a friend who put his aunt into several annuities. The reason? She was a soft touch for her rather irresponsible children. In three years she had gone through $500,000 dollars of her net worth (about 2 million total) helping her children pay debts, and invest in 'sure fire, can't miss' investment schemes. By annuitizing about 2/3 her remaining assets the bulk of her estate became untouchable by his aunt and therefore unavailable to his financially idiotic cousins. Interestingly, his aunt asked him for some way to lock-up her money because she knew she could not constantly say NO to he children. Sad, but with a reasonably happy ending for the aunt. I am not sure what became of the children.

[LongPrime]

Quote:

Originally Posted by Wu_wu I just plugged in the information on a couple aged 65 putting in $400,000 and annuitizing at age 70. They received $2556.19/m for their entire life guaranteed. If they live to 100, that's $950,903 in benefits! That's not including X years certain, where if both annuitants die, the beneficiaries receive the remaining amount left for x years which could be as high as $710,000.

The old traditional annuities. be it SS, or Defined Benefit-Pension, minimizes the risk to the annuity company, hence reduces the return to the purchaser. This is OK and correct because the annuity company must all times be solvent and fulfill their obligation to the annuitant. BUT Suppose you can limit the longterm risk to the annuity company in exchange for higher fees and risk sharing? Could you get a higher rate of return? [rhetorical]

We bought 2012 fixed index, $100,000. Guaranteed ROR $8295/yr ($33,183/yr equivalent to $400,000 initial deposit, $995482 to age 100) , single life, without annuiitization, for life, and any remainder of account balance on death of owner goes to heirs. Guaranteed Income Withdrawal, fixed-Indexed, deferred, single premium.

Look before you show your goodies.

[brewer12345]

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Originally Posted by LongPrime The old traditional annuities. be it SS, or Defined Benefit-Pension, minimizes the risk to the annuity company, hence reduces the return to the purchaser. This is OK and correct because the annuity company must all times be solvent and fulfill their obligation to the annuitant. BUT Suppose you can limit the longterm risk to the annuity company in exchange for higher fees and risk sharing? Could you get a higher rate of return? [rhetorical] We bought 2012 fixed index, $100,000. Guaranteed ROR $8295/yr ($33,183/yr equivalent to $400,000 initial deposit, $995482 to age 100) , single life, without annuiitization, for life, and any remainder of account balance on death of owner goes to heirs. Guaranteed Income Withdrawal, fixed-Indexed, deferred, single premium. Look before you show your goodies.

I hope you not only got kissed, but also got dinner and flowers prior to doing this deed deal.

[travelover]

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Originally Posted by Chuckanut ....... I am not sure what became of the children.

The parasites probably now just beg for money monthly, in smaller increments.

[LongPrime]

Brewer#s="I hope you not only got kissed, but also got dinner and flowers prior to doing this deed deal."
I wish. I think we got a travel mug from the agent. And blank look from the wife-it was her 401k rollover. My only reward is being able to brag about it here on this forum. And maybe I can find another one like it in 6 months.

[brewer12345]

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Originally Posted by LongPrime Brewer#s="I hope you not only got kissed, but also got dinner and flowers prior to doing this deed deal." I wish. I think we got a travel mug from the agent. And blank look from the wife-it was her 401k rollover. My only reward is being able to brag about it here on this forum. And maybe I can find another one like it in 6 months.

Oh, brag all you like about this stuff. We will try hard not to laugh.

[steelyman]

I'm not going to laugh. But I also won't buy an annuity!

[bmcgonig]

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Originally Posted by brewer12345 Oh, brag all you like about this stuff. We will try hard not to laugh.

I'd love to see an analysis as to why someone thinks that this is a good or bad deal. Just for my education. I don't know enough about these kind of annuities to know one way or the other. Thanks.

[REWahoo]

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Originally Posted by bmcgonig I'd love to see an analysis as to why someone thinks that this is a good or bad deal. Just for my education. I don't know enough about these kind of annuities to know one way or the other. Thanks.

Read the short articles listed here: post #33

[LongPrime]

Our VA's in a basket of non-Vanguard MF 2013, returned 24-27%, The "income account" reset at this higher level, till 2014 where upon it resets more than 5% or stepsup if the MF do not gain 5%.

@bmcfonig: Do not read the articles in #33. Why? because you need to know all of the options available to you. I chose to layoff some of my retirement risk to an annuity company. I also did not give all my risk or did the annuity company want all my risk in the annuity.

[Bestwifeever]

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Originally Posted by LongPrime Our VA's in a basket of non-Vanguard MF 2013, returned 24-27%, The "income account" reset at this higher level, till 2014 where upon it resets more than 5% or stepsup if the MF do not gain 5%. @bmcfonig: Do not read the articles in #33. Why? because you need to know all of the options available to you. I chose to layoff some of my retirement risk to an annuity company. I also did not give all my risk or did the annuity company want all my risk in the annuity.

Yet reading the Forbes' series as cited in post #33 will provide much information on the options that are available. How could reading this series be harmful to bmcfonig? The more education, the better before locking into something that likely would be expensive to back out of if one needs to.

[LongPrime]

^ But the writer didn't write the "whole truth" and that is what you are missing. Which is why I encourage everyone to always look independently to what others say or believe. I make my own investigations and decisions. Do you?

Bestwiveever wrote in the preceeding post, "Yet reading the Forbes' series as cited in post #33 will provide much information on the options that are available. How could reading this series be harmful to bmcfonig? The more education, the better before locking into something that likely would be expensive to back out of if one needs to."

So, rhetorically, Bestwiveever, How "much information on the options" is the reader getting? Is the reader getting ALL of the options, some of the options, selected options for his artlcle, Or if the writer is even writing the truth, but we assume he is. But you will never know, unless you see for your self.

I have said previously that I have seen dozens of presentations for annuities. I see so many because there are so many annuities and no representatives sell them all. I want to see the difference good or bad to what we have, pension, SS, MF, managed accounts, unmanaged account, brokerage.

[REWahoo]

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Originally Posted by LongPrime Which is why I encourage everyone to always look independently to what others say or believe. I make my own investigations and decisions. Do you?

Yet in the same breath you caution the OP not to read an article because you disagree with the author's conclusions?

I'm calling Bravo Sierra on this one.

[Gumby]

It would seem LongPrime is suggesting that one read "presentations for annuities" rather than third party discussions such as the articles cited by REWahoo. Given that these "presentations" are in all likelihood written by the company selling the annuities for the express purpose of selling the annuities, I am not convinced that one would receive more accurate or more complete information by doing so.



P.S. -- You are free to debate the merits of annuities, LongPrime, but the minute you try to sell one here, you'll be gone. Just so you know.

[pb4uski]

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Originally Posted by LongPrime ...I have said previously that I have seen dozens of presentations for annuities. ...

WADR, you need to get a life... or a hobby... or something.

[Bestwifeever]

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Originally Posted by LongPrime ^ But the writer didn't write the "whole truth" and that is what you are missing. Which is why I encourage everyone to always look independently to what others say or believe. I make my own investigations and decisions. Do you? Bestwiveever wrote in the preceeding post, "Yet reading the Forbes' series as cited in post #33 will provide much information on the options that are available. How could reading this series be harmful to bmcfonig? The more education, the better before locking into something that likely would be expensive to back out of if one needs to." So, rhetorically, Bestwiveever, How "much information on the options" is the reader getting? Is the reader getting ALL of the options, some of the options, selected options for his artlcle, Or if the writer is even writing the truth, but we assume he is. But you will never know, unless you see for your self. I have said previously that I have seen dozens of presentations for annuities. I see so many because there are so many annuities and no representatives sell them all. I want to see the difference good or bad to what we have, pension, SS, MF, managed accounts, unmanaged account, brokerage.

Hmm, don't see anyone said bmcfonig should read ONLY the articles cited in post #33. Where do you see that?

I always research major hard-to-get-out-of decisions from many sources, not just the salescritters who stand to gain from them (probably the dozens of presentations they put on are like asking the Honda car salesperson if the Civic is a good car). Most people on these boards probably do even more research than I do, not asking the same questions I do (like, "Does it come in hot pink?").

[JPatrick]

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Originally Posted by Wu_wu Haha, I am on commission yes. The only reason I think the type of annuity mentioned has merit, is because of the stock market drop in 2000 and 2008, which, if you were retiring during that time, your investments would've seen a scary dive like a few of my clients saw. Some people just don't have high risk tolerances. One retired client saw her retirement fund drop from $1m to $500,000 during those times and pulled out of the market and started working again to make up for the loss of income. .

The market drops in 2000 and 2008 were God's gift to annuity sales peeps.
But when those portfolios got chopped in half, there were some advivors who correctly stated--STOP!!! DON'T SELL AT THE BOTTOM..STAY THE COURSE AND BUY MORE LIKE THE BIG KIDS DO.
I'm sure many who took that advice could tell some sweet stories today. I know I could.
But, I admit, the commisions that follow that kind of advice are on the meager side.

[LongPrime]

It is not that I don't disagree with Forbes writer in what he said, I do disagree to what the conclusions that he wants us to buy into, because he didn't give the entire range of options and reasons pros/cons.

In our situation, some annuities fit well into our risk and asset management. You can make your own decisions.