Annuities? Have you been talking to someone who want to sell you something?

[Kimo]

For every 100K in my account my quarterly payment to them is 237.50. So 1% would be 1000.00, right? My 237.50 x 4 is 950.00.

[Kimo]

As much as I appreciate owning these, I did say earlier I would never put all my money into these. I consider these annuities as a small portion of my total portfolio. I believe in this regard they fill a need for my wife and I. I, like all others here, I believe, have certain amounts allocated to different products of their total assets.

[Walt34]

My response to annuity salesguys:

Get off my lawn - YouTube

[Kimo]

Me to....I would never buy an annuity from a sales person!

[REWahoo]

Quote:

Originally Posted by Kimo For every 100K in my account my quarterly payment to them is 237.50. So 1% would be 1000.00, right? My 237.50 x 4 is 950.00.

Right, but that appears to be only the fee for the GLWB rider. You are also paying an expense ratio for the investments in your annuity.

If you read both the Kiplinger article and the fine print at the bottom of the Vanguard page you linked, you'll see the expense ratio for the Wellington-like fund is currently 0.6%. That expense is in addition to the charges you quote above and are quietly and invisibly taken from your funds during the year - as is the case for all mutual funds.

[Kimo]

You are absolutely correct!

[aja8888]

0.6 fee + 1.2 fee (new one) = 1.8% which when subtracted from the payout of that annuity of 4.5% is 2.7%. Am I correct here? if so, not bad, but not as good as the PenFed 3% CD's sold earlier this year.

[Kimo]

Okay aja, now I have to go find my paperwork!!!!!!!!!!!

But I believe it is better than that and the other thing is the value of the investment went up 14% last year and yes, it could go down any year also, but just using these two as an example in this particular year you and I would rather have the annuity I believe.....back later!

[Kimo]

And the 14% is after taking my monthly payments, not including them....

[aja8888]

I'm only comparing the guaranteed payout amount to a 3% CD. Not any increase or decrease in principal in the annuity.

[Kimo]

aja: Found it! Okay, to manage the fund the expense is 0.26%. (Like you said, the part we never actually see) The death benefit is 0.19% (also never seen) and, like you said, 0.95% for the GWLB. I didn't think it was quite as bad as the earlier numbers. Having said all that I also own Jumbo CD's as I like a very diversified portfolio.

Having the opportunity to have the annuity value go up which increases the monthly payment (and the expense) is why I decided to purchase them as well as the fact you can get out any time, just like selling a mutual fund at the end of the closing day any time I want. I also feel like I am in the market with less risk than with my regular mutual funds because I won't lose the monthly income. I know, thinking there is less risk is kind of strange but it is how I feel. I guess it is because regardless of the market I am set.

I like to have the money scattered around....

[athena53]

I just heard a new one from the enterprising young man DH let in the door once (he's from Edward Jones and that's how they seek clients). We've been buying the occasional local bond from him and I think he's hell-bent on getting all our money $5K at a time.

I told him I'd retired and, after asking if I'd rolled over my 401(k) yet (yes, to Fidelity), he said he could sell me an annuity that would provide income between now (age 61) and my FRA for SS (66) or till age 70, so I could let my SS benefit grow.

Umm, no, but thanks for playing.

[Kimo]

Quote:

Originally Posted by athena53 I just heard a new one from the enterprising young man DH let in the door once (he's from Edward Jones and that's how they seek clients). We've been buying the occasional local bond from him and I think he's hell-bent on getting all our money $5K at a time. I told him I'd retired and, after asking if I'd rolled over my 401(k) yet (yes, to Fidelity), he said he could sell me an annuity that would provide income between now (age 61) and my FRA for SS (66) or till age 70, so I could let my SS benefit grow. Umm, no, but thanks for playing.

Yep, the LAST place I would buy an annuity from is a sales person....

[rayvt]

The payout is 4% and the GLWB costs 0.95% (now 1.20% BTW) --- That's almost one-fourth of your payment. Sounds pretty expensive to me.

At the bottom of Vanguard's annuity page:
"Vanguard Annuity Access is offered in collaboration with Hueler Investment Services, Inc."
and
"Fixed annuities purchased through Vanguard Annuity Access are subject to a one-time transaction fee. The fee is equal to 2% of the purchase amount."
and
"The Vanguard Variable Annuity with the optional GLWB rider is issued by Monumental Life Insurance Company"

[Kimo]

Quote:

Originally Posted by rayvt The payout is 4% and the GLWB costs 0.95% (now 1.20% BTW) --- That's almost one-fourth of your payment. Sounds pretty expensive to me. At the bottom of Vanguard's annuity page: "Vanguard Annuity Access is offered in collaboration with Hueler Investment Services, Inc." and "Fixed annuities purchased through Vanguard Annuity Access are subject to a one-time transaction fee. The fee is equal to 2% of the purchase amount." and "The Vanguard Variable Annuity with the optional GLWB rider is issued by Monumental Life Insurance Company"

My payout is 4.5%, not 4%. There was no fee at all regarding my purchase and no mention of Hueler anywhere in my paperwork. Maybe what this refers to is annuities purchased though their outside link which I didn't do. What you are describing though isn't what I bought...

[Kimo]

PS. when they raised the fee they also lowered the payout to 4.0 at the earlier age when you apply. I am glad I did it when I did or I would have had to wait years to age to get this return.

[RetireAge50]

I can't see how getting a 4.5% payout on a fund that averages 8% is a good deal. That is unsettling to me and would cause me to lose sleep. You are giving away not only almost half the return but also your original investment.

I hope I'm wrong on this for your sake.

[Kimo]

Actually, it makes me sleep easier....Okay, deep breath, here goes... When I decided to retire I wanted a failsafe in place so that no matter what the bond, stock and real estate market did, I would have something guaranteed. After looking around I found that SS (I know, nothing guaranteed but go with me for the sake of the conversation) and the Annuity would provide me enough income to live and not eat dog food. Why does it makes me sleep easier? If the markets fall 50% my income stays the same. I will not be up at night thinking, should I sell now...should I wait to see if it comes back....I no longer need to have the thought in the back of my head, what am I going to do if there is another 08-09 because this time I will not be working to replenish the portfolio. I do know what I give up by holding Wellington this way, it is why I also hold it in my taxable account. It doesn't matter, the peace of mind having my failsafe is worth it.

[REWahoo]

Everyone is wired a little differently. As long as you understand the full costs, there is nothing wrong with giving up some returns and paying a third party for income insurance if that's what it takes to help you sleep. As we discuss ad nauseam on this forum, it is that underlined part that usually creates the problem with annuities.

[aja8888]

Quote:

Originally Posted by Kimo Actually, it makes me sleep easier....Okay, deep breath, here goes... When I decided to retire I wanted a failsafe in place so that no matter what the bond, stock and real estate market did, I would have something guaranteed. After looking around I found that SS (I know, nothing guaranteed but go with me for the sake of the conversation) and the Annuity would provide me enough income to live and not eat dog food. Why does it makes me sleep easier? If the markets fall 50% my income stays the same. I will not be up at night thinking, should I sell now...should I wait to see if it comes back....I no longer need to have the thought in the back of my head, what am I going to do if there is another 08-09 because this time I will not be working to replenish the portfolio. I do know what I give up by holding Wellington this way, it is why I also hold it in my taxable account. It doesn't matter, the peace of mind having my failsafe is worth it.

Not to beat this to death, but if you wanted security and a reasonable payout
of less than potential market gains, you could have just bought a ladder of CD's and slept just as well (and not paid the fees (annually BTW)).