Variable annuity payout ?

[BobMW]

Couple years away from having to select a payout option. Annuity is with Talcott, was Hartford 30 years ago when purchased. Been lurking here for several months now, only wish I knew then what I know now.

Apologize if the question lacks details. Will have a pension from work, have military pension from my Guard days, this VA is about 20% my retirement savings

 

[jazz4cash]

What’s the question?
Sometimes people post the exact name of the annuity product and the experts here can look up the details.

 

[BobMW]

Director Series 6 is the annuity I have

 

[pb4uski]

Most likely there are option in the contract. Go back and review the contract documents. Your agent or the issuing insurer can explain what your options are.

 

[BobMW]

Options are large in number. Full payout, life annuity, payout for x # of years (5-39), 3 versions of Life (period certain, cash or unit refund), joint & last survivor (period certain option). After reading numerous posts on SS timing, seriously considering payout in 5 years so I can delay SS until 68. Not counting this annuity, I've roughly made my number. 3% withdrawal retirement savings + pensions + SS (at 63) would equal my current income. Plan to work until 63, year & half away. Thanks

 

[BobMW]

Let me rephrase question another way. What would be the least expensive method of payout options for this annuity?
Talcott Director Series 6 annuity payout options: full payout, life annuity, payout for x # of years (5-39), 3 versions of Life (period certain, cash or unit refund), joint & last survivor (period certain option).

 

[pb4uski]

I'm guessing that all the options are actuarially neutral... so whichever fits your needs best.

 

[RetireeRobert]

Options are large in number. Full payout, life annuity, payout for x # of years (5-39), 3 versions of Life (period certain, cash or unit refund), joint & last survivor (period certain option). After reading numerous posts on SS timing, seriously considering payout in 5 years so I can delay SS until 68. Not counting this annuity, I've roughly made my number. 3% withdrawal retirement savings + pensions + SS (at 63) would equal my current income. Plan to work until 63, year & half away. Thanks

And are you married, have kids? Would you have a spouse who would need to rely on some survivor benefit with this annuity? Or kids whom you might want to benefit from some remainder value?

With all those options, you have a lot of flexibility to tailor things to best fit your exact needs and situation. If you want decent advice here, you need to provide a lot more situational detail, and what your desires are for this VA to achieve for you.

You seem unhappy with your purchase of the VA product, BUT it is giving you a lot of options and flexibility.

 

[RetireeRobert]

I'm guessing that all the options are actuarially neutral... so whichever fits your needs best.

^ ^ ^


Yes, I agree "actuarially neutral", so determine your needs/desires of what you wish to achieve. Perhaps talk to an experienced agent to get educated on the options and what they do.

 

[BobMW]

Thanks, appreciate the input. The payouts being actuarially neutral is a little surprising. Will be following up with an agent.

 

[Z3Dreamer]

Bob - I have a Talcott, formerly Hartford, annuity also. Don't annuitize as it gives Talcott another opportunity to make money off of you. You don't need the money so just let it grow. Mine requires that payouts begin by age 95 or so. Eventually take the money out over a few years without annuitizing.

 

[pb4uski]

Thanks, appreciate the input. The payouts being actuarially neutral is a little surprising. Will be following up with an agent.

I'm not sure why it is surprising. Typically the company prices these options with the same return on required capital assumptions so the company doesn't particularly care which option you chose... they make the same return on required capital no matter which option that you chose (other than surrendering when after the surrender period).... or at least that is the way my former mutual company employer did it back in the 1990s but I don't think it has changed.

 

[sengsational]

Eventually take the money out over a few years without annuitizing.

If this is an option, it might be something to consider. They might have designed it to get their profit even with this option, through fees or something, but worth a look. All gains come out first, so every dollar is regular income. Eventually you unbury your original investment basis, and that comes out as non taxable.

 

[OldShooter]

Re "actuarilly neutral," this is a statistical concept and obviously the way to run an insurance company's P&L.

But an individual is not a statistic. For an individual the choices are IMO not likely to be financially neutral. The individual's predicted lifetime is probably not that same as the statistical predictions. Good health, long-lived family, poor health, etc. are all relevant. Inflation expectations are also relevant, as is total portfolio value. If total portfolio is large relative to the annuity, then making the wrong decision may not be all that risky in terms of impact. At 20% of retirement savings, that is probably the case here. Not that one does not want to optimize every penny, but it is less important than it would be if the annuity were 80% of the stash and there were no pensions.

[rant[] This idea that I am not a statistic is something I often have to remind doctors about. I am a sample of one. I cannot be, for example, 80% dead. When dealing with a sample of one, statistical information may not be totally irrelevant, but it is also not gospel. The devil is in the individual's details. [/rant]

 

[Z3Dreamer]

If this is an option, it might be something to consider. They might have designed it to get their profit even with this option, through fees or something, but worth a look. All gains come out first, so every dollar is regular income. Eventually you unbury your original investment basis, and that comes out as non taxable.

I have a Talcott, formerly Hartford, Annuity. Mine has such an option.

 

[DektolMan]

Eventually take the money out over a few years without annuitizing.

This is what I'm doing with my Vanguard Annuity (now TransAmerica). Instead of handing a lump sum over to the insurance company I am taking a monthly systematic withdrawal from my annuity. I can stop it at any time or adjust the monthly draw. This gives me more control of my asset.

 

[Miarocks]

You should be able to ask the company for quotes on a few options you’re considering. Run the numbers to judge how they will work for you. I have 4 different annuities (I know, I got them before I wised up... the teaching profession is a prime target market for these things). Smh ����*
My payout options run the gamut from one with a 10 year period and a couple with 10 and 20 year Life/period certain payouts. I figured this way I covered my bases better for cash flow and longevity considerations. I timed them to begin when some other short-term annuity payouts were ending. Allows me to let my other investments continue to grow before drawing on them.

 

[pb4uski]

Re "actuarilly neutral," this is a statistical concept and obviously the way to run an insurance company's P&L.

But an individual is not a statistic. For an individual the choices are IMO not likely to be financially neutral. The individual's predicted lifetime is probably not that same as the statistical predictions. Good health, long-lived family, poor health, etc. are all relevant. Inflation expectations are also relevant, as is total portfolio value. If total portfolio is large relative to the annuity, then making the wrong decision may not be all that risky in terms of impact. At 20% of retirement savings, that is probably the case here. Not that one does not want to optimize every penny, but it is less important than it would be if the annuity were 80% of the stash and there were no pensions.

[rant[] This idea that I am not a statistic is something I often have to remind doctors about. I am a sample of one. I cannot be, for example, 80% dead. When dealing with a sample of one, statistical information may not be totally irrelevant, but it is also not gospel. The devil is in the individual's details. [/rant]

That is why insurance works... since the company insures thousands of lives they get the benefit of the law of large numbers... an individual doesn't get that benefit. Elementary.

 

[OldShooter]

That is why insurance works... since the company insures thousands of lives they get the benefit of the law of large numbers... an individual doesn't get that benefit. Elementary.

Of course. My point was not about the insurance company side; it was to emphasize the OP's side of the decision, where the actuarial numbers may be completely irrelevant. The OP's financial situation and expectations should drive the decision, ignoring the fact that the decision is a don't-care to the insurance company.

 

[BobMW]

Bob - I have a Talcott, formerly Hartford, annuity also. Don't annuitize as it gives Talcott another opportunity to make money off of you. You don't need the money so just let it grow. Mine requires that payouts begin by age 95 or so. Eventually take the money out over a few years without annuitizing.

Great tip, thanks! Turns out I do have that option and that gives me more flexibility than I thought I had

 

[teej1985]

I would think that a 30 year old VA would have much better embeddded rates than a SPIA you could buy today. If you want guaranteed income, take a serious look at the rates.

 

[Trooper]

Great tip, thanks! Turns out I do have that option and that gives me more flexibility than I thought I had

As part of your decision making process, you will need to know the basis of your annuity, and whether it is a non-qualified one. If non-qualified, and if you withdraw prior to annuitizing, the funds up to your basis are taxable as ordinary income. If you annuitize, a portion of each payment is taxable as ordinary income.

If your annuity is a qualified one, 100% of withdrawals and/or annuity payments are taxable as ordinary income.

 

[Bruno]

I had a MYGA and was able to send in for a couple of quotes using different dates what the monthly amont would be. If i recall by waiting a 4 months the difference was about $200 monthly over 60 months.