Annuity options

[RetiredHappy]

I think pb4uski calculated my 2 term annuities real return which I bought in 2016 and they were > 5% returns each. Granted that they are deferred income annuities, but I am in payout mode with the first 10-year one now and happy that I did that.

 

[friar1610]

If you are a podcast fan, subscribe to “Fun with Annuities” hosted by Stan, the Annuity Man. Stan runs a large annuity sales company, much like Immediate Annuities (mentioned upthread). His podcasts have a marketing slant (after all, he sells annuities for a living) but his podcasts are also highly educational about annuity types, situations in which annuities make sense and when they don’t, annuity sales techniques to watch out for, etc. I aperiodically listen to his podcasts and find them both entertaining and worthwhile. My take is that he is a straight shooter.

Disclosure: I own a deferred annuity that I have not yet annuitized. I did not buy it through Stan. I have no connection to Stan other than as a podcast listener.

 

[Yoheadden]

Do some annuities limit the amount you can purchase if you are using funds from an IRA?

I thought I had read some people use annuities to help lower their RMDs.

 

[brett]

Looked at buying an immediate annuity a few months ago.

I am 71 and in good health.

I passed. I will revisit at age 75 if I am still around at that time.

 

[RetiredHappy]

There is no limit on the amount to buy using IRA funds. QLAC does have a limit.

We used deferred income annuities as part of our retirement strategy. We don't have pension but have SS. When we retired, I was only 53 and I needed assurance that we would have various income streams to fund our retirement. I turned all my IRA funds to start paying at age 60. To get larger payments, I bought 2 term deferred fixed income annuities, one from age 60 to 70 and the other 60 to 85. I do have a large taxable brokerage account which we withdraw dividends each year. If I live beyond 85, there should be plenty left in my brokerage account to fund our expenses. My husband has an IRA which is subject to RMD.

2 SS, 1 (2) annuities, RMD and Brokerage dividends essentially fund our retirement expenses.

 

[brett]

I have a DB pension.

In the absence of this I may have spent more time on the annuity decision. The numbers did not make sense me at this time.

The annuity decision is not just a financial decision. Some people want the security of some guaranteed income coming every month. It is a feel good thing and suspect that they are more likely to spend some of their savings on extras, travel, etc.

I was surprised at how pleased I am when I see that DB pension deposit go into our current account each month.

 

[Running_Man]

Thank you for this and the schedule.

I figure if I give someone a lump of money upfront and they give me an offered interest rate I can agree to over the period of 20 years, giving up my freedom of use and possible earnings they can make however much they want off it, so long as I'm satisfied.

I'll consider 5-6% for 20 years, but not paying commission etc.

I might be dreaming, but it seems fair. Maybe they used to do things that made more sense idk.

This is the calc I used.

Obviously very simple and inaccurate. Also exactly what I'd be looking for.

https://www.calculator.net/annuity-...ly&ctype=fixlength&x=Calculate#annuity-result

I just entered your data into Fidelity Annuity Estimator based on you being 45 and your wife 12 years older and you can get a lifetime annuity with a 5.4% payout for life and 20 years certain. The advantage of annuities is you lock in the interest rate for life. If one believes interest rates will drop back to the 1-3% range this is a deal as 3 years ago this would have paid under 3 percent annually.

Last November you could have gotten 5.3% on a 20 Year Treasury Bond which is a much better deal as you get your original investment back and the interest coupon. I strongly urge you to not take individual bond risk, I can tell from reading your posts that you do not have the experience for that and could be taken advantage of in market turmoil. Stick to US Bonds or an annuity.

https://digital.fidelity.com/prgw/digital/gie/

 

[Chuckanut]

I made my own pseudo annuity by doing two things.

1. I took SS at 70. This is fully COLA’d.
2. I purchased five more years of service on my pension. This is COLA-lite since there is a cap on the yearly COLA amount. That cap has been exceeded since 2021. Not so good. Still it’s better than fixed.

Today I figure I am getting about $700 more every month due to the above. Both were expensive. Both come with a good night‘s sleep. And the ability to be well invested in common stocks which after a decade plus of retirement has paid off.