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Looking for comparative info on annuities
01-27-2017, 07:23 PM
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#1
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Recycles dryer sheets
Join Date: Jan 2017
Posts: 119
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Looking for comparative info on annuities
OK, so after several years of building spreadsheets and using on-line planners to model retirement scenarios...I'm getting closer to pulling the trigger. For a second opinion, I hired a planner on a fee only basis for a review and am happy with the outcome.
In modeling the income plan, I was presented with examples of fixed immediate and fixed index annuities for income the first ten years.
I always like to comparison shop and am looking for the forums input on any good resources to model/explore other sources of annuities for window shopping.
Thx in advance
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01-27-2017, 07:32 PM
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#2
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
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I'm not sure it is worth the bother when you can easily build your own.
According to immediateannuities.com a $100,000 premium in a 10 year certain SPIA would pay $918/month... an internal rate of return of 1.95%.
You can just build an CD ladder that will do just as well and will have access to that money at anytime if for some reason you need it... with the SPIA it is locked up. With a CD ladder, if rates increase you can cash out accepting the early withdrawal penalties and redeposit at higher rates. i would not bother with a SPIA.
And index annuities are worse.. high fees and all sorts of gotchas.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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01-27-2017, 08:02 PM
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#3
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Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,629
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+1
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01-28-2017, 07:25 PM
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#4
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Recycles dryer sheets
Join Date: Jan 2017
Posts: 119
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+1
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01-28-2017, 08:14 PM
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#5
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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+1000
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01-28-2017, 08:31 PM
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#6
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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Yep + as well.
Commercial annuities are a really bad deal right now. You are better off using a CD ladder or a stable value fund if you have one in a 401k.
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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01-29-2017, 05:13 AM
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#7
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Thinks s/he gets paid by the post
Join Date: Dec 2015
Location: Michigan
Posts: 4,962
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You could also do a ladder with investment grade bonds and trade some risk for higher return.
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"The mountains are calling, and I must go." John Muir
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01-29-2017, 01:11 PM
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#8
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Recycles dryer sheets
Join Date: Jun 2010
Location: Southwest Florida
Posts: 470
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OP, don't let the above comments turn you off from a possible immediate annuity. There is no other arrangement that can guarantee you a return for life, and it is impossible to structure a similar arrangement on your own. I spent my career deeply involved in personal finance for clients and I am happily enjoying the returns from a number of immediate annuities.
Gill
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01-29-2017, 02:11 PM
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#9
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2004
Location: South Texas~29N/98W Just West of Woman Hollering Creek
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Another annoying aspect of commercial annuities is the fact that you are never comparing apples with apples since there are so many things that are different in each one.
__________________
Part-Owner of Texas
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. Groucho Marx
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01-29-2017, 03:03 PM
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#10
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Thinks s/he gets paid by the post
Join Date: Apr 2012
Location: Nashville
Posts: 2,504
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Quote:
Originally Posted by Gill
OP, don't let the above comments turn you off from a possible immediate annuity. There is no other arrangement that can guarantee you a return for life, and it is impossible to structure a similar arrangement on your own. I spent my career deeply involved in personal finance for clients and I am happily enjoying the returns from a number of immediate annuities.
Gill
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My reading is that OP was talking about fixed term annuities ("for income the first 10 years").
In that particular instance, I would hesitate to grab a simple immediate annuity over a CD ladder.
OTOH, if a lifetime simple annuity, I generally agree with you (depending upon terms, and age, etc.). We'll be looking closely at that option in a decade or so, when anticipatory mortality credits make the payout more attractive.
Either way--NO to an index annuity, as detailed by pb4uski.
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OMY * 3 2ish Done 7.28.17
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01-29-2017, 03:30 PM
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#11
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: May 2004
Location: SW Ohio
Posts: 14,404
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Quote:
Originally Posted by Gill
I spent my career deeply involved in personal finance for clients and I am happily enjoying the returns from a number of immediate annuities.
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Ones you sold to clients?
There's no getting around the observation that this is, from an historical perspective, a terrible time to buy annuities based on their paltry returns. If I were tempted at all by the allure of an annuity, I'd probably put my funds in something else that is safe and wait for interest rates to return to something near their historically normal level. An immediate annuity with inflation protection can be a good way for a retiree to meet their baseline "must have" monthly spending requirements if the can't get there another way (SS, a secure pension, etc), especially if their portfolio is small relative to these needs (i.e. 4% won't meet them), they have no desire to pass the money on to heirs, and they are okay with the loss of spending flexibility.
Fixed annuity yields tend to mirror those of Treasuries. Those who bought annuities 10-20 years ago are probably quite happy with their returns in today's low fixed-return environment. But those buying annuities today with a fixed return are much less likely to be happy when rates return to historic norms.
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01-29-2017, 03:43 PM
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#12
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Aug 2004
Location: Laurel, MD
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I think maybe the OP is gone but to answer the question directly search for "annuity steakhouse".
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01-29-2017, 04:07 PM
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#13
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
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Quote:
Originally Posted by Gill
OP, don't let the above comments turn you off from a possible immediate annuity. There is no other arrangement that can guarantee you a return for life, and it is impossible to structure a similar arrangement on your own. I spent my career deeply involved in personal finance for clients and I am happily enjoying the returns from a number of immediate annuities.
Gill
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From what the OP wrote it sounds like he is looking for an annuity certain and not a life contingent annuity.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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01-29-2017, 04:19 PM
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#14
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Recycles dryer sheets
Join Date: Jun 2010
Location: Southwest Florida
Posts: 470
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Quote:
Originally Posted by samclem
Ones you sold to clients?
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Funny, but far from it. If you've read my earlier posts you'd know I was EVP Of a major trust institution.
Gill
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01-29-2017, 04:23 PM
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#15
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Thinks s/he gets paid by the post
Join Date: Feb 2006
Posts: 4,872
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I would not buy a fixed term annuity today and my string inclination would be to avoid life time annuities too as it just takes too long for the mortality credits to drag the IRR out of the basement. The insurance aspect of a lifetime annuity will always be a positive, but right now the negatives win......I say that having just rolled a lump sum into an employer pension, but that came with a COLA and a 7% IRR if I live an average lifespan. That's an lifetime annuity worth having.
Sent from my iPhone using Early Retirement Forum
__________________
“So we beat on, boats against the current, borne back ceaselessly into the past.”
Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
Income from pension and rent
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01-29-2017, 05:22 PM
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#16
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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Quote:
Originally Posted by Gill
OP, don't let the above comments turn you off from a possible immediate annuity. There is no other arrangement that can guarantee you a return for life, and it is impossible to structure a similar arrangement on your own. I spent my career deeply involved in personal finance for clients and I am happily enjoying the returns from a number of immediate annuities.
Gill
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Perhaps you are not aware of the new tools and products available and thus you think our advice is bad. There are, however, new tools within companies such as Fido to structure bond and cd ladders to create a check a month, quarter or almost however you want it with liquidity and flexibility that would be impossible with an annuity.
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01-29-2017, 05:56 PM
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#17
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Recycles dryer sheets
Join Date: Jun 2010
Location: Southwest Florida
Posts: 470
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Quote:
Originally Posted by COcheesehead
Perhaps you are not aware of the new tools and products available and thus you think our advice is bad. There are, however, new tools within companies such as Fido to structure bond and cd ladders to create a check a month, quarter or almost however you want it with liquidity and flexibility that would be impossible with an annuity.
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Plain and simple, such vehicles don't offer the guarantee of a SPIA.
Gill
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01-29-2017, 06:00 PM
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#18
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2016
Location: Colorado
Posts: 8,971
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Quote:
Originally Posted by Gill
Plain and simple, such vehicles don't offer the guarantee of a SPIA.
Gill
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Nor the inflexibility or illiquidity and virtually commission free at a $1 bond at Fido.
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01-29-2017, 06:31 PM
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#19
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Recycles dryer sheets
Join Date: Jun 2010
Location: Southwest Florida
Posts: 470
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Quote:
Originally Posted by COcheesehead
Nor the inflexibility or illiquidity and virtually commission free at a $1 bond at Fido.
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Sorry, I don't understand what you're saying.
Gill
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01-29-2017, 07:05 PM
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#20
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Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,266
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Quote:
Originally Posted by Gill
Plain and simple, such vehicles don't offer the guarantee of a SPIA.
Gill
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You do realize the OP seems to be looking for a 10 year period certain annuity and NOT lifetime payments, right? If so, please explain to me the advantages of a period certain annuity over a CD or bond ladder..
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
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