Who has/will have annuity?

[gduell]

Annuity Confusion reigns

With all the riders available now, I feel there are very few cases in which a SPIA is the best option. Why give up your principal and immediately shrink your net worth when you can achieve often better outcomes with a GMIB or GWB?
By the way, someone opined that they "hate" EIAs. That's like saying you hate shoes or cars or food. Some are really good, others are terrible. We should never denigrate the power of annuities. Is something sick about an agent who sells a 15% commission, 20 year surrender, forced annuitization product? Absolutely. But there are plenty of excellent indexed products with short- or no -surrender periods, minimal costs and fabulous guarantees. Do your own research.

 

[jIMOh]

I will either get an annuity or use a dividend stream. My understanding was an annuity pays out around 2%, so if I put in $100,000, I get $2000 back. I can do same thing with a dividend fund like PRFDX which invests in dividend paying stocks and yields 2%, plus gives me the upside of the appreciation. Or I could use a fund like RPSIX which pays out 4% and still gives me that upside for appreciation (just less upside).

I want the annuity to cover what I think utilities will be in ER. Much of it depends on terms of annuity (inflation adjustment?, is it taxed?), payout (is it really 2%?) and how early I retire (the earlier I retire, the more likely I want an annuity).

 

[FinanceDude]

I will either get an annuity or use a dividend stream. My understanding was an annuity pays out around 2%, so if I put in $100,000, I get $2000 back. I can do same thing with a dividend fund like PRFDX which invests in dividend paying stocks and yields 2%, plus gives me the upside of the appreciation. Or I could use a fund like RPSIX which pays out 4% and still gives me that upside for appreciation (just less upside).

I want the annuity to cover what I think utilities will be in ER. Much of it depends on terms of annuity (inflation adjustment?, is it taxed?), payout (is it really 2%?) and how early I retire (the earlier I retire, the more likely I want an annuity).

Why would it be only 2%??

 

[gduell]

You're thinking SPIA (single premium immediate annuity) if you're working with only a 2% payout. There are annuities that guarantee a 6-8% payout for life, even if your principal is fully depleted. Try that with dividends.

 

[brewer12345]

With all the riders available now, I feel there are very few cases in which a SPIA is the best option. Why give up your principal and immediately shrink your net worth when you can achieve often better outcomes with a GMIB or GWB?
By the way, someone opined that they "hate" EIAs. That's like saying you hate shoes or cars or food. Some are really good, others are terrible. We should never denigrate the power of annuities. Is something sick about an agent who sells a 15% commission, 20 year surrender, forced annuitization product? Absolutely. But there are plenty of excellent indexed products with short- or no -surrender periods, minimal costs and fabulous guarantees. Do your own research.

Great, just what we need. Another [-]scumbag[/-] [-]shill[/-] annuity salesman. Get the rat poison out...

 

[brewer12345]

Don't have one and don't plan on it, but if I get very old, very rich and want to put a floor on things for myself (and my survivors), I could see buying a joint COLA-indexed SPIA from a strong company. But that's a pretty unlikely outcome that is 30+ years in the future (if it ever happens).

 

[FinanceDude]

You're thinking SPIA (single premium immediate annuity) if you're working with only a 2% payout. There are annuities that guarantee a 6-8% payout for life, even if your principal is fully depleted. Try that with dividends.

Do we know you??

 

[FinanceDude]

Don't have one and don't plan on it, but if I get very old, very rich and want to put a floor on things for myself (and my survivors), I could see buying a joint COLA-indexed SPIA from a strong company. But that's a pretty unlikely outcome that is 30+ years in the future (if it ever happens).

Maybe ING will have a good one by then.........

 

[brewer12345]

Maybe ING will have a good one by then.........

ING? Uh, maybe not even then.

 

[FinanceDude]

ING? Uh, maybe not even then.

I think we've discussed this.......you like Hancock because of Manulife, AIG is "ok", Pacific Life is a "maybe", Prudential is ok unless we have a bunch of hurricanes, and the rest suck......am I right??

 

[brewer12345]

I think we've discussed this.......you like Hancock because of Manulife, AIG is "ok", Pacific Life is a "maybe", Prudential is ok unless we have a bunch of hurricanes, and the rest suck......am I right??

First, what product are we talking about? A VA hung with guarantess is not something I would be thrilled about buying from anyone. Of the players you mention, I suppose I could work up some enthusiasm for Pac Life if I tried hard enough. Pru, Hancock and ING I could hold my nose and deal with (more to do with the product than the credit). AIG I refuse to do business with.

 

[FinanceDude]

First, what product are we talking about? A VA hung with guarantess is not something I would be thrilled about buying from anyone. Of the players you mention, I suppose I could work up some enthusiasm for Pac Life if I tried hard enough. Pru, Hancock and ING I could hold my nose and deal with (more to do with the product than the credit). AIG I refuse to do business with.

I was talking about a SPIA.........

 

[brewer12345]

I was talking about a SPIA.........

Lots of other places I would go first, then, mainly companies that don't do a large volume of guaranteed VA biz or LTC. Start with Berkshire, NWM, MassMutual, TIAA, NY Life, etc. and work my way down.

 

[FinanceDude]

Lots of other places I would go first, then, mainly companies that don't do a large volume of guaranteed VA biz or LTC. Start with Berkshire, NWM, MassMutual, TIAA, NY Life, etc. and work my way down.

NML does a lot of LTC these days, but their VA business is low key and has no income riders...........

 

[brewer12345]

NML does a lot of LTC these days, but their VA business is low key and has no income riders...........

Yeah, I know, but I am willing to overlook the LTC because there is no plausible scenario under which that the LTC block could possible consume all the consolidated entity's value plus the value of the mammoth partcipating whole life block. Hell, even the disability policy that was pitced to me by an NWM agent was participating.

 

[FinanceDude]

Yeah, I know, but I am willing to overlook the LTC because there is no plausible scenario under which that the LTC block could possible consume all the consolidated entity's value plus the value of the mammoth partcipating whole life block. Hell, even the disability policy that was pitced to me by an NWM agent was participating.

Agreed, and I think we know how they can afford to "participation" in every product, they RATE THE HECK out of folks. Their DI underwriting is unbelievably strict.........

 

[brewer12345]

Agreed, and I think we know how they can afford to "participation" in every product, they RATE THE HECK out of folks. Their DI underwriting is unbelievably strict.........

They rate and their premiums are relatively high. Charge more up front and give some of it back if things work out as expected - a good way to reduce risk.

 

[FinanceDude]

They rate and their premiums are relatively high. Charge more up front and give some of it back if things work out as expected - a good way to reduce risk.

Works well in the WL market, not easy to get term business, but they don't want much of that anyway.

My big turnoff when I worked there was the group DI area was pretty weak. It was common to get a group rating increase of 30-35%, and then expect us to close that. Not as easy as it sounds............

 

[Rob]

annuity

Hi all-
I am used to the abuse that annuities receive here, and I suppose if I were a younger man with more options, I'd consider other financial alternatives. However, I joined TIAA-CREF in 1975 when there were no other real choices except the TIAA annuity, and in all my travels, I continued to add to that annuity. Most of my contributions were actually self-remitters. The end result of all of this is that I have 80% of my retirement money in a rather large TIAA after tax annuity which will pay out a "pension" that is enough for me to live comfortably. I know I could have done better if I had been more proactive in where I was putting all this money. The other 20% of my retirement investments I do not plan on touching until I am 70 or so, and that is in mutual funds and the TIAA- Real Estate.

It's been suggested that I take out all of this annuity (over a period of 9 years plus 1 day according to TIAA rules). I actually hesitate to do this. There are so many concerns among the people here about the "risk" associated with insurance companies that might go under. It does weigh on me a bit. However, I've been assured by several colleagues and other people who know a lot more than I do, that I'm ok with TIAA-CREF. Brewer, you probably don't remember your comment to me a year ago when I made a similar post. You mentioned that if TIAA were to not honor its payouts, we'll all be eating squirrels under bridges. I received the same sort of responses from others in your field. I've also been told I am the perfect candidate for an annuity. I am single and all my family members are doing very well. If I croak early, then I guess that is the gamble, isn't it? It sort of makes you want to live a healthy lifestyle even more.

Regards,
Rob

 

[cute fuzzy bunny]

Squirrel is some good eatin!

 

[donheff]

Rob: if the TIAA annuity provides a comfortable retirement you are ahead of 90% of the populace. Stick with the annuity and enjoy yourself. If you pull out the lump sum you will be constantly worrying about whether you will make it.

 

[FinanceDude]

Hi all-
I am used to the abuse that annuities receive here, and I suppose if I were a younger man with more options, I'd consider other financial alternatives. However, I joined TIAA-CREF in 1975 when there were no other real choices except the TIAA annuity, and in all my travels, I continued to add to that annuity. Most of my contributions were actually self-remitters. The end result of all of this is that I have 80% of my retirement money in a rather large TIAA after tax annuity which will pay out a "pension" that is enough for me to live comfortably. I know I could have done better if I had been more proactive in where I was putting all this money. The other 20% of my retirement investments I do not plan on touching until I am 70 or so, and that is in mutual funds and the TIAA- Real Estate.

It's been suggested that I take out all of this annuity (over a period of 9 years plus 1 day according to TIAA rules). I actually hesitate to do this. There are so many concerns among the people here about the "risk" associated with insurance companies that might go under. It does weigh on me a bit. However, I've been assured by several colleagues and other people who know a lot more than I do, that I'm ok with TIAA-CREF. Brewer, you probably don't remember your comment to me a year ago when I made a similar post. You mentioned that if TIAA were to not honor its payouts, we'll all be eating squirrels under bridges. I received the same sort of responses from others in your field. I've also been told I am the perfect candidate for an annuity. I am single and all my family members are doing very well. If I croak early, then I guess that is the gamble, isn't it? It sort of makes you want to live a healthy lifestyle even more.

Regards,
Rob

There's nothing inherently wrong with TIAA-Cref. Their expenses are very low, they have some good funds, and customer service is "ok". I had an issue with them regarding how to deal with my late sister's 403B, and it was kind of a mess because I had to do all the educating about what to do, but that's a rare case...

 

[brewer12345]

Rob, were I in your shoes, I would stick with what you have as long as the income will meet your needs. You are single and therefore don't likely have to worry about anyone other than yourself. The only real worrk is whether inflation will seriously erode the value of your income stream, but hopefully the assets you have besides the pension will offset that (and those assets should be aggresively invested).

As for TIAA-CREF, IMO they are extremely solid. That is who I chose to buy DW and my life insurance policies from, since I have no doubts about them being around if one of the policies pays out and saves the survivors from being in dire straits.

 

[Reelax]

I purchased a fixed annuity from a portion of the pension payout. I liked having a portion of my income coming in as fixed. I keep an IRA as the inflation adjuster and bulk purchase if needed. Not getting SS yet so that will be the rest of my fixed income. My wife still works part time and I do some part time teaching. The fixed income is nice coming in. In the end it was the comfort level it gave to my wife and I knowing we have that income coming in and can live no matter what happens. Everyone tells us it is a bad investment but you gotta do what you gotta do for your own peace of mind.

 

[2B]

Everyone tells us it is a bad investment but you gotta do what you gotta do for your own peace of mind.

Welcome to the forum. I hope it helps your peace of mind to see what others are doing and, more importantly, why.

Sometimes the best thing to do is counter intuitive. When the market is flailing helplessly, mostly down, history says to stay in and keep your asset allocation stable. Market timing doesn't work. Of course, one day the "big one" will hit and those that paniced will look pretty good.

Annuities are one of those things that sounds so good -- "money for life." Here the number crunching is what counts. Some SPIA annuities are not bad and some are rip offs. You probably didn't get too bad a deal doing a pension conversion. It also sounds like you have ample diversification so as inflation makes your annuity payment laughable you can compensate by having let other assets grow and also collecting SS.

I'm planning a similar route but by a very safe self-annuitized payout from CDs and bonds when I finally quit the wage slave routine until SS kicks in.