Good post. I'm not against annuitizing part of our nest egg one day, but I hope people realize this is one of the worst possible times to do so with interest rates at historic lows. And all else being equal (interest rates), generally the longer you wait the less it will cost (actuarially you will have fewer years to fund).
Good post. I'm not against annuitizing part of our nest egg one day, but I hope people realize this is one of the worst possible times to do so with interest rates at historic lows. And all else being equal (interest rates), generally the longer you wait the less it will cost (actuarially you will have fewer years to fund).
I often hear that folks will not consider purchasing an SPIA until rates go up, or they have achieved an age that insures a higher payment (which is really not anything but a return of your own money due to a shorter payout period, due to age, and has nothing to do with current interest rates).
However, may I suggest that there are reasons why you may want to consider a portion of your portfolio being converted, even when it is a low interest (and low inflation rate) period?
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I would agree.It can make sense... but I would use a ladder approach for a nominal SPIA given the feds actions and the historically low interest rate level.
And how do you draw current income to cover your expenses in retirement from this CD (including return of principal)?I'm very happy with my 5% CD from Pen Fed which I set up for 10 years this January. If I'm dead or alive at the end DW or my kids will get the money.
And how do you draw current income to cover your expenses in retirement from this CD (including return of principal)?
CD's have their place (as well as SPIA's ); that's why I commented on "interest rates are not everything", when considering an SPIA.
One is not interchangable with the other, in the same manner of use.
Do any of you have any thoughts on when the rates will start going up? And upon what do you base your premise?
According to Harold Camping's calculations, rates will rise by 1.25% every six months, beginning Nov 14, 2011.
that's why I commented on "interest rates are not everything", when considering an SPIA.
Here is a quote engine for several insurance companies.
Immediate Annuities - Instant Annuity Quote Calculator.
But since it does not specify the company... I am not sure which one it is based on.??
They used to provide a comparative report with rates from the different companies... but that is no longer available. They show an average and the highest for a few ages.
The insurance industry probably told them to cease and desist... they do not like transparency. It drives competition!
+1Good post. I'm not against annuitizing part of our nest egg one day, but I hope people realize this is one of the worst possible times to do so with interest rates at historic lows. And all else being equal (interest rates), generally the longer you wait the less it will cost (actuarially you will have fewer years to fund).
Is this a recent change? I requested a quote from them about a year ago and they mailed me a nice package with real time quotes from about a dozen different insurance companies. It included quotes for different options like inflation riders, etc.