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Old 09-21-2010, 02:59 PM   #61
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Before interest rates dropped quite so much I was thinking of buying the annuity with part of my TSP. However, all the input from my co-workers, plus input from our agency sponsored retirement training seminars, told me to avoid the annuity. I don't recall anybody from work who planned to take the annuity option, whether FERS or CSRS.
Agreed. In some situations buying an SPIA for additional retirement income you can't outlive makes sense. It's just a horrible time to buy one in today's low interest rate environment; the amount you have to pay for one dollar of monthly income has probably never been higher.
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Old 09-21-2010, 03:08 PM   #62
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I happened to read the Vanguard written testimony just out of curiosity. I discovered that they are now offering a link to an online annuity quoting service. You have to register to get in, but you do not need to provide real name or email to get quotes. I expect this means that Vanguard no longer offers annuities through AIG, but I didn't look hard to be sure of that.

At any rate, it is one more source of quotes.
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Old 09-21-2010, 04:03 PM   #63
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I happened to read the Vanguard written testimony just out of curiosity. I discovered that they are now offering a link to an online annuity quoting service. You have to register to get in, but you do not need to provide real name or email to get quotes. I expect this means that Vanguard no longer offers annuities through AIG, but I didn't look hard to be sure of that.

At any rate, it is one more source of quotes.
They still do offer annuities through AIG/American General. But it's now only one of their 5 or 6 offerings.
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Old 09-21-2010, 04:42 PM   #64
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My concern would be a form of "adverse selection" where someone is more likely to take the annuity option when their parents and grandparents all lived to be at least (say) 85, and their payout is based on average life expectancy. In other words, I would expect an annuity to be more attractive to folks with a family history of longevity, and if the payout is based on overall life expectancy this could be a bad deal for the taxpayers.
I think insurance companies are pretty familiar with adverse selection in the longevity tables:
The high cost of a no-fee, no-commission Single Premium Immediate Annuity (SPIA).

IIRC Vanguard used to provide online annuity quotes but stopped doing so when AIG started spiraling down the drain... 2007? 2008?
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