Join Early Retirement Today
Thread Tools Search this Thread Display Modes
Old 03-02-2015, 05:03 PM   #81
Thinks s/he gets paid by the post
nun's Avatar
Join Date: Feb 2006
Posts: 4,867
Some calculation that gives you an interest rate assuming a particular life expectancy can be instructive, it can teach you how SPIAs work. But if you are considering an SPIA you are trading risk for guaranteed income and you wouldn't expect it to compete with equities or anything with any risk for long term return. What you get is a guarantee, morality credits and the ability to get more than 4% withdrawal from your lump sum. That might be important to you in the years between ER and taking SS, but if the SPIA doesn't have a COLA you need to plan for that. Just like other products you must shop around and see what your money can buy. Basic Googling will get you an idea of the prevailing rates. This is also why you should stick to SPIAs or simple fixed deferred annuities...... you have a chance of understanding those. If you go to a big respected companies you will quickly get an idea of what your money will buy. I did all that before buying into my pension/annuity plan.

FYI Principal via the vanguard annuity quote service came up with the following for my situation. If I purchase an SPIA now at age 54 with $263k A single life annuity pays $1206 per month, witha 2% COLA that goes down to $904/ month in the first year. Compare that to my state DB plan that pays $1650/ month with a 2% COLA.
“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
nun is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-03-2015, 09:17 AM   #82
Thinks s/he gets paid by the post
Join Date: Oct 2006
Posts: 4,628
Originally Posted by Big_Hitter View Post
ripped off means that the price of the policy is based on something much lower than prevailing interest rates and/or outdated mortality
In the deferred annuity world, a company using outdated mortality or interest rates is probably charging the lowest prices. That would be good for me.

I don't do a calculation to determine if I'm getting "ripped off" when I buy auto insurance, or homeowners insurance, or term life insurance.
I can comparison shop to get a good market price. Then I can see if the result fits my financial needs.

Yes, I understand that in the early years of a traditional SPIA I'm basically trading dollars with the insurance company for high probability events. In that case, an IRR calculation can be a good filter.

But, this thread is about "longevity insurance", so my comments are tilted toward that product. Note that I tried to separate them back in post #7.
Independent is offline   Reply With Quote
Old 03-03-2015, 09:21 AM   #83
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Big_Hitter's Avatar
Join Date: May 2013
Location: Les Bois
Posts: 5,687
regarding longevity insurance, I would independently confirm the (net of loads) interest and mortality assumptions before buying, that's all

I doubt the LIC selling the product would give a buyer that data.
You can't be a retirement plan actuary without a retirement plan, otherwise you lose all credibility...
Big_Hitter is offline   Reply With Quote

Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
Annuities & Longevity Insurance Onward FIRE and Money 3 02-28-2011 07:11 AM
Has anybody researched longevity annuities? tipster FIRE and Money 5 10-31-2008 08:19 AM
Scott Burns -- Longevity Risk intercst FIRE and Money 12 01-09-2005 11:54 AM
longevity insurance ats5g FIRE and Money 17 02-06-2004 08:28 AM

» Quick Links

All times are GMT -6. The time now is 07:18 AM.
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2021, vBulletin Solutions, Inc.