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-   -   Annuities? Have you been talking to someone who want to sell you something? (https://www.early-retirement.org/forums/f28/annuities-have-you-been-talking-to-someone-who-want-to-sell-you-something-72141.html)

rayinpenn 05-24-2014 06:33 AM

Annuities? Have you been talking to someone who want to sell you something?
 
I am amazed to see the number of people suggesting and hawking annuities. Sure annuities pay a guaranteed fixed return but they also expose the owner to inflation. The results of which could be disastrous for a retiree.

The people who love annuities most are those who sell them as they pay handsome commissions. Ask yourself who is really funding those commissions? Answer: the buyer and at what cost? If that much money is going to the salesperson how can they be efficient. answer: They can't and are not! I don't pay up front fees for mutual funds and I don't fund annuity salespeople's retirements.

I buy low admin fees diversified mutual funds and efts ( emphasis on dividend paying ) and have done exceptionally well. I never sweat the dips corrections because the market always comes matching back. Google transparent investing.

Years ago (too many to count) I bought my first dividend paying stock and I received that first dividend. The sky immediately turned blue and I swear I heard harp music - it was an awakening! The dividends continue to come in and even in the last credit disaster the dividends kept getting posted to the brokerage account. It is hands off investing.

https://www.transparentinvesting.com/...wholestory.pdf

If you buy with the intention of holding forever the price really isn't important - the stream of income is.
Never let anyone sell you anything... Do your homework and cut out the middleman.

REWahoo 05-24-2014 06:42 AM

Ray, you are new here so you may not know that when it comes to annuities you are preaching to the choir. :)

rayinpenn 05-24-2014 06:54 AM

Annuities? Have you been talking to someone who want to sell you something?
 
Ah, that's good to hear.. I have met too many people that have sold.
Then my msg is joining the voices of the choir

Bestwifeever 05-24-2014 07:38 AM

Quote:

Originally Posted by rayinpenn (Post 1452220)
...

I buy low admin fees diversified mutual funds and efts ( emphasis on dividend paying ) and have done exceptionally well. I never sweat the dips corrections because the market always comes matching back. Google transparent investing....


https://www.transparentinvesting.com/...wholestory.pdf

....

Note the link is to a 53-page piece by Patrick Geddes, former CFO of Morningstar. From his introduction:

Quote:

This guide provides both investment insights but also some consumer advocacy. The financial services industry offers a myriad of ways to purchase advice on and management of portfolios for investors. This guide offers some insight into how investors can make smart decisions regarding what services to buy and how much to pay.

rayinpenn 05-24-2014 08:05 AM

Quote:

Originally Posted by Bestwifeever (Post 1452240)
Note the link is to a 53-page piece by Patrick Geddes, former CFO of Morningstar. From his introduction:


And most of it questions do you need an investment advisor? No can you build an efficient low cost portfolio on your own: Yes

pb4uski 05-24-2014 10:01 AM

It's interesting to me that I have not been approached at all about buying annuities. My insurance agent BIL knows better. Just been luck I guess, but I'm quite good at saying no.

braumeister 05-24-2014 10:25 AM

The first and only time I've been directly offered an annuity was a couple of months ago while reviewing my portfolio with my FIDO rep. He brought up whatever instrument they were currently promoting and I replied that I was a confirmed DIY-er.
He just said "Oh, right. Sorry, I forgot." Then he dropped it completely.

OTOH, we get an invitation to somebody's lunch/dinner/whatever financial "presentation" about weekly. Never went to one and probably never will.

athena53 05-24-2014 10:32 AM

Quote:

Originally Posted by braumeister (Post 1452312)
OTOH, we get an invitation to somebody's lunch/dinner/whatever financial "presentation" about weekly. Never went to one and probably never will.

Now that I'm retired I am SO tempted to go to one of these "gourmet dinners" and ask the presenters impertinent questions!

nokkieny 05-24-2014 10:34 AM

What about whole life insurance, I have been pitched this at least 3 times, It sounds to goo to be true. Why do I need life insurance when I have no dependents? Its really just an investment vehicle disguised as life insurance, with a big sales commission? Smells fishy.

jerome len 05-24-2014 10:37 AM

How about charitable annuities, giving some while still here and getting tax break? like most on this blog I'd never consider an annuity but I am looking at a charitable annuity as a way of getting a tax deduction, some income while helping a deserving charity Appreciate everyone's thoughts on this subject. thanks.

brewer12345 05-24-2014 10:52 AM

Quote:

Originally Posted by nokkieny (Post 1452319)
What about whole life insurance, I have been pitched this at least 3 times, It sounds to goo to be true. Why do I need life insurance when I have no dependents? Its really just an investment vehicle disguised as life insurance, with a big sales commission? Smells fishy.

Your instincts are correct: this is all about commissions.

pb4uski 05-24-2014 10:55 AM

Quote:

Originally Posted by jerome len (Post 1452321)
How about charitable annuities, giving some while still here and getting tax break? like most on this blog I'd never consider an annuity but I am looking at a charitable annuity as a way of getting a tax deduction, some income while helping a deserving charity Appreciate everyone's thoughts on this subject. thanks.

What if the charity falls on hard times and is unable to make the annuity payments and you are depending on them? It seems that then you're screwed.

gcgang 05-24-2014 11:21 AM

Quote:

Originally Posted by jerome len (Post 1452321)
How about charitable annuities, giving some while still here and getting tax break? like most on this blog I'd never consider an annuity but I am looking at a charitable annuity as a way of getting a tax deduction, some income while helping a deserving charity Appreciate everyone's thoughts on this subject. thanks.

Charitable Annuities do all that you say. Very tax efficient way of giving while getting an income stream. If you need to rebalance, giving highly appreciated, overly concentrated position that does not produce income to charity works great. We've set up several of these and our state has additional tax benefit for doing in state planned giving.

Know the financial strength of the charity is s good idea. We've often used Community Foundations to carry out the gift annuity.

braumeister 05-24-2014 11:21 AM

Quote:

Originally Posted by jerome len (Post 1452321)
How about charitable annuities, giving some while still here and getting tax break? like most on this blog I'd never consider an annuity but I am looking at a charitable annuity as a way of getting a tax deduction, some income while helping a deserving charity Appreciate everyone's thoughts on this subject. thanks.

I've had similar thoughts, but went about it another way. I didn't like the idea of sending such a large amount of money to just one charity.

I set up a donor-advised fund (Fidelity makes it super easy) and make sizable contributions each year. I get a big tax deduction, the money grows in the fund, and I "advise" distributions of any amount to any charity at any time. Best of both worlds, I think.

We have no kids, so in the end, any remaining assets when DW and I eventually go will be bequeathed to the DAF (which will have instructions for making ongoing gifts in perpetuity) and continue doing good things.

athena53 05-24-2014 11:34 AM

Quote:

Originally Posted by braumeister (Post 1452338)
I set up a donor-advised fund (Fidelity makes it super easy) and make sizable contributions each year. I get a big tax deduction, the money grows in the fund, and I "advise" distributions of any amount to any charity at any time. Best of both worlds, I think.

We have one of those- greatest thing since sliced bread. For me, the big bonus is that you can donate anonymously if you wish. Fidelity will just send them a check and tell them the donor wishes to remain anonymous. That way the charity can't call or mail you and pester your for more.

thefinancebuff 05-24-2014 12:12 PM

Quote:

Annuities? Have you been talking to someone who want to sell you something?
It takes two to have a conversation. If you don't talk, they can't sell.

scrabbler1 05-24-2014 12:14 PM

Rayinpenn, about 2 years ago I had a successful "intervention" (with the help of others here in ER forum) to stop a friend of mine from buying an annuity. If you want to read the story about it, it is in this thread:

https://www.early-retirement.org/foru...ity-60502.html

Ther first 33 posts were in the 3 days surrounding the rep's sales pitch to my friend before I took the thread in a different direction 6 months later after his mother died and he inherited a lot of money. From what you wrote in your first post, I think you would have been happily helping me in my effort. :)

samclem 05-24-2014 12:19 PM

Quote:

Originally Posted by braumeister (Post 1452338)
I set up a donor-advised fund (Fidelity makes it super easy) and make sizable contributions each year. I get a big tax deduction, the money grows in the fund, and I "advise" distributions of any amount to any charity at any time. Best of both worlds, I think.

We set up somethign similar using a local community foundation. We get the tax deduction when we send the money to them, they hold the funds and send them to the charities we direct.
This can be a big help in "bunching" charitable deductions (take the standard deduction one year, bunch all the charitable deductions, and any "movable" itemized deduction in "bunches" every other year). This saved us quite a bit in taxes.

thedaily 05-24-2014 01:42 PM

Not only does the salesperson make a fat commission, the CEOs of these companies make a very large salary. Plus, these annuity companies are usually in the penthouse of the tallest building in your city. All this money comes straight out of your pocket in the way of high fees. Vanguard charges around 0.20 for their annuity and they're making money. The others are charging 2-3% so just think how much they make from your hard earned money. The downside is what you get in return is a poor product for retirement.

target2019 05-24-2014 02:22 PM

Quote:

Originally Posted by athena53 (Post 1452317)

Now that I'm retired I am SO tempted to go to one of these "gourmet dinners" and ask the presenters impertinent questions!

Wife and I have been to more than a dozen. It's quite a learning experience. Some of the meals have been excellent.

There trying to identify fish worth hooking. If you eat some bait and swim away, they don't seem to mind. If they can land one trophy fish, it works for the advisors.


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