Thinking about annuitizing part of my 401k

[Big_Hitter]

Anyone else looked at payout rates lately?

For yucks yesterday, I looked at immediateannuities.com and the payout rate for a 59 yo male is over 7% for a SLA.

I don't have any actuarial software but it looks like that quote uses about a 4% interest rate.

The 4% return will be locked in via the annuity, so I'm thinking about annuitizing 25% of my tax-qualified stash.

 

[ShokWaveRider]

Anyone else looked at payout rates lately?

For yucks yesterday, I looked at immediateannuities.com and the payout rate for a 59 yo male is over 7% for a SLA.

I don't have any actuarial software but it looks like that quote uses about a 4% interest rate.

The 4% return will be locked in via the annuity, so I'm thinking about annuitizing 25% of my tax-qualified stash.

Use this to calculate the ACTUAL Return rate which is important, payout rate include YOUR money + Return. It is best to use the 20 or 30 year certain to do this, not perfect for a lifetime annuity but it does give one an idea.

https://iqcalculators.com/calculator/annuity-rate-of-return-calculator/

 

[Big_Hitter]

^^ You have to know the life expectancy at current age from the mortality table used by the insurance company to make that approximation. Life annuity factors aren't certain, they assume a little piece of you dies each year until you are 100% dead, so using a certain annuity with a life expectancy is a rough estimate.

Individual annuitant mortality tables are more conservative due to adverse selection.

I used a current life expectancy for a 59 yo male and a 4% interest rate to back into the annuity factor.

I just asked my FA what they thought about it LOL - I've been very protective of my 401k $$$, including leaving it right where it is, at my old Mega

 

[Big_Hitter]

https://iqcalculators.com/calculator/annuity-rate-of-return-calculator/

thanks - that actually matches my estimate!

 

[pb4uski]

Anyone else looked at payout rates lately?

For yucks yesterday, I looked at immediateannuities.com and the payout rate for a 59 yo male is over 7% for a SLA.

I don't have any actuarial software but it looks like that quote uses about a 4% interest rate.

The 4% return will be locked in via the annuity, so I'm thinking about annuitizing 25% of my tax-qualified stash.

Yeah, that looks about right, actually I get 4.6% at age 82:

Lump Sum		100,000
Monthly benefit		583
Payout rate		7.00%
Age	n	IRR
59	0
60	1	-97.9%
61	2	-78.5%
62	3	-57.1%
63	4	-41.4%
64	5	-30.3%
65	6	-22.4%
66	7	-16.7%
67	8	-12.4%
68	9	-9.1%
69	10	-6.5%
70	11	-4.4%
71	12	-2.8%
72	13	-1.4%
73	14	-0.3%
74	15	0.7%
75	16	1.4%
76	17	2.1%
77	18	2.7%
78	19	3.2%
79	20	3.6%
80	21	4.0%
81	22	4.3%
82	23	4.6%
83	24	4.9%
84	25	5.1%
85	26	5.3%
86	27	5.5%
87	28	5.6%
88	29	5.8%
89	30	5.9%
90	31	6.0%
91	32	6.1%
92	33	6.2%
93	34	6.3%
94	35	6.4%
95	36	6.4%
96	37	6.5%
97	38	6.6%
98	39	6.6%
99	40	6.7%
100	41	6.7%

 

[Big_Hitter]

Yeah, that looks about right, actually I get 4.6% at age 82:

that's (literally) money!