Originally Posted by Midpack
I am still grappling with annuitization so this if of interest to me, if you care to elaborate. PM if you'd prefer...TIA
Here's a thread on the topic of Wellesley vs an annuity that might interest you.
There are many threads on the forum on these topics, so you might want to do a search on them.
Depending on your age, an annuity may pay better than Wellesley. When my ER nestegg was just borderline and I was fighting with my spreadsheet, trying to figure out how to get my goal income, the only way I could seem to get that figure for ER was to work until 62 and take an fixed immediate lifetime annuity with inflation protection. I only have one child and so I wasn't worried about leaving a huge estate.
However, since my recent windfall I will have no problem reaching my goal ER income at all, even without an annuity. I think that for me, an annuity is something that I would have needed with a nestegg that was borderline sufficient, but that I no longer need. (If my investments do badly one year, so what - - I will no longer need a 4% SWR, and in the long run they will probably gain).
For me, the idea of giving up the money to an insurance company and never seeing it again is not a problem. However, what happens if the insurance company goes belly up? I'm not sure. Can they sell the annuity agreement to a less reliable company? I'm not sure. I happen to distrust insurance companies in general and I would find some answers to these questions if I were still to purchase an annuity.
Since you cannot change your mind after buying an annuity, it is worth thinking about how it fits into your overall financial plan's asset allocation and diversification.