What am I missing in my understanding of the annuities mentioned in this CNBC article? Here is the example from the article:
If a 65-year-old male were to use $100,000 to purchase a fixed annuity to start paying out immediately, he would get about $487 per month for the rest of his life, or $5,844 per year, according to Schwab’s annuity calculator.
However, the article says in an earlier paragraph that a man reaching age 65 today can expect to live, on average, until age 84, according to the Social Security Administration.
That is 19 years x $5,844 per year = $111,036.
So over 19 years you will only be paid a $11,036 premium over your initial $100,000 investment. Plus, don't annuities expire when you die, meaning your heirs get $0.
Unless I am missing something, or unless you are that one French lady who lived to be 122 years old, this product seems heavily skewed in favor of the party selling you the product.
https://www.cnbc.com/2021/10/15/annuities-might-be-coming-to-your-401k-plan-heres-what-to-know.html
If a 65-year-old male were to use $100,000 to purchase a fixed annuity to start paying out immediately, he would get about $487 per month for the rest of his life, or $5,844 per year, according to Schwab’s annuity calculator.
However, the article says in an earlier paragraph that a man reaching age 65 today can expect to live, on average, until age 84, according to the Social Security Administration.
That is 19 years x $5,844 per year = $111,036.
So over 19 years you will only be paid a $11,036 premium over your initial $100,000 investment. Plus, don't annuities expire when you die, meaning your heirs get $0.
Unless I am missing something, or unless you are that one French lady who lived to be 122 years old, this product seems heavily skewed in favor of the party selling you the product.
https://www.cnbc.com/2021/10/15/annuities-might-be-coming-to-your-401k-plan-heres-what-to-know.html