Annuity planning questions

[jazz4cash]

What is UST and what kind of ladder? I thought ladder mean different terms, like 5, 10, 15 year.



Wellington is down -3.60% the past month, which means I'd be down over $20,000.

Index annuities would be a safer option, you can't lose money because they cap the win.

UST is US Treasuries. They are available in weeks, months, and years to complete the rungs of a ladder.

 

[DrgLrd]

Wait a while and you'll be back up. Worrying about small fluctuations will just wear you out. You are planning a long game here.

That's fine for someone looking for growth, not income.



I was thinking a ten year period certain immediate annuity plus a ten year deferred annuity maybe be better than a SPIA at this time...

 

[oldtimer]

That's fine for someone looking for growth, not income.

I was thinking a ten year period certain immediate annuity plus a ten year deferred annuity maybe be better than a SPIA at this time...

You seem to want certainty about the future. While annuities provide a specific income amount, you are not factoring into your thinking what inflation is doing to your purchasing power. If $100 today will buy 40 loaves of bread, in 20 years at 3% annual inflation the future $100 will only buy 22 loaves of bread.

 

[DrgLrd]

You seem to want certainty about the future. While annuities provide a specific income amount, you are not factoring into your thinking what inflation is doing to your purchasing power. If $100 today will buy 40 loaves of bread, in 20 years at 3% annual inflation the future $100 will only buy 22 loaves of bread.

I'm factoring everything, that's why the question isn't annuity or the market, it's which annuity. There are many options and I'm looking for the plan (or plans) that will protect against inflation best.

 

[finnski1]

I'm factoring everything, that's why the question isn't annuity or the market, it's which annuity. There are many options and I'm looking for the plan (or plans) that will protect against inflation best.

Well here's a secondary market annuity (Structured settlement) with a 3% COLA. Only cost you $277k. Would get you to age 78. Even underwritten by Berkshire Hathaway. Start out at $1078 per month and end up at over $2400/month when done.
https://www.immediateannuities.com/information/sma-rates.html


Throw in an SPIA to get you $1500/month additional at a cost of approx $383k and you still have $340k left over. Stick the $340k in a low cost index fund or something more conservative and good to go.
Start out now at $2578/month end up in 27 years at over $3480/month. with your other $340k following the market.

 

[DrgLrd]

Well here's a secondary market annuity (Structured settlement) with a 3% COLA. Only cost you $277k. Would get you to age 78. Even underwritten by Berkshire Hathaway. Start out at $1078 per month and end up at over $2400/month when done.
https://www.immediateannuities.com/information/sma-rates.html

This one?

 

[finnski1]

This one?

Yeah that 's it

 

[RetiredHappy]

I bought 2 term deferred fixed income annuity when I was 53. One term is for 10 years, which starts end of this year, the other one is for 15 years, which pays after final payment from the 10-year.

Even though we were in very low interest period 7 years ago, I lucked out with pretty decent payouts on the 2. Paid about $215K on the 10-year one and it pays $2820 per month for 10 years. I paid about $210K for the 15-year term, and it pays out $3786 per month for 15 years. We bought from Lincoln Financial and they are a solid company.

We see it as a basket of different investments, or another leg of a stool that supports our retirement. At that point, the annuities formed about 10% of our investments, so it was not something that we lost sleep over. We have no pension but have decent SS benefits.

I would suggest that you only use a portion of your savings towards annuities, as a hedge, while you invest your other money more aggressively in equiities (stock market).

 

[DrgLrd]

I would suggest that you only use a portion of your savings towards annuities, as a hedge, while you invest your other money more aggressively in equiities (stock market).

It will be a much larger portion than yours because my SS is nil.

I bought 2 term deferred fixed income annuity when I was 53. One term is for 10 years, which starts end of this year, the other one is for 15 years, which pays after final payment from the 10-year.

Even though we were in very low interest period 7 years ago, I lucked out with pretty decent payouts on the 2. Paid about $215K on the 10-year one and it pays $2820 per month for 10 years. I paid about $210K for the 15-year term, and it pays out $3786 per month for 15 years. We bought from Lincoln Financial and they are a solid company.

Very helpful, thanks. So your first deferred until 60, pays until 70, and then the next one starts and pays until 85. If I did that I'll need another one to get to 60...maybe after 85 too.



Did you have a planner or how did you select those two?

 

[pb4uski]

What is UST and what kind of ladder? I thought ladder mean different terms, like 5, 10, 15 year.



Wellington is down -3.60% the past month, which means I'd be down over $20,000.

Index annuities would be a safer option, you can't lose money because they cap the win.

Well, since you obviously know-it-all I don't see much that I can help you with. Good luck to you.

 

[DrgLrd]

Well, since you obviously know-it-all I don't see much that I can help you with. Good luck to you.

I know I need guaranteed income, if you can help with that it'd be appreciated.

 

[travelover]

I know I need guaranteed income, if you can help with that it'd be appreciated.

Just go to Ameriprise or Edward Jones and tell them you want their best annuity. They'll give you what you want.

 

[DrgLrd]

Just go to Ameriprise or Edward Jones and tell them you want their best annuity. They'll give you what you want.

Not Stan the Annuity Man? Actually he seems to know his stuff too, but before I contact the pros I'd like to hear what the customers say.

 

[RetiredHappy]

It will be a much larger portion than yours because my SS is nil.

Very helpful, thanks. So your first deferred until 60, pays until 70, and then the next one starts and pays until 85. If I did that I'll need another one to get to 60...maybe after 85 too.

Did you have a planner or how did you select those two?

Correct - bought at 53, first one starts at 60, second one starts at 70 when the first one ends. The 2nd one runs until I am 85. I was using immediateannuities.com site to track payout scenarios for several months before deciding when it was "time". I had asked my Financial Advisor to sell me the specific ones and he was slow. As rates change day to day, I said forget it and I called immediateannuities directly to buy from them. I think it was the owner or the son who answered the phone (Hersh Stern).

One more note, my policies have survivor benefits in that if I die before the payout begins, my beneficiary gets back the lump sum. If I die during payout period, my beneficiary will continue to get the same monthly payment for the rest of the term.

 

[jazz4cash]

What is UST and what kind of ladder? I thought ladder mean different terms, like 5, 10, 15 year.



Wellington is down -3.60% the past month, which means I'd be down over $20,000.

Index annuities would be a safer option, you can't lose money because they cap the win.

Many here would say you have lost as soon as the win is capped, even before the market has dropped. In such a low rate environment even a deferred annuity doesn’t seem very helpful vs inflation. Have you actually figured out how much income you need? You could be the 1 in 10,000 that is an ideal annuity candidate but not many here view them favorably. The cost for the inflation protection seems too high to me. Considering a product that was purchased many years ago when rates were higher does not seem helpful. I’d want a healthy chunk of equities to hedge against inflation but it starts with your minimum requirements. Another source for annuity quotes is Blueprint Income.

 

[DrgLrd]

The cost for the inflation protection seems too high to me.

Which cost, are you referring to a specific annuity?

 

[jazz4cash]

No, not a specific annuity. A cola’d annuity generally has a lower payout in the early years. The reduction is a component of the cost for the cola benefit. It’s like the same pot of money, only doled out in a graduated fashion. Yeah, it earns a bit more since it stays in the pot a bit longer, but rates are super low these days. At least that’s my take away from a cursory investigation but I am not nearly as concerned with inflation as many others. In your case (no SS), it’s definitely a significant consideration.

 

[DrgLrd]

Yeah that 's it

How did you calculate this part?

end up at over $2400/month when done.

I'm not sure how they got the total payout either.

 

[OldShooter]

I'm factoring everything ...

Man plans. God laughs.

 

[ShokWaveRider]

SPIAs for the most part simply return your own money back to you, with the caveat that if you (or you and your joint applicant) Kark it you lose it. Especially now in a low interest rate environment.

We are considering some laddered MYGAs with a 10% rider that you can take out annually. You can check them out below. In Florida there is an annuity guarantee fund that sort of insures them to a $250k cap PER annuity. you can check rates below, but we are waiting a few months for rates to go up. Our Credit Union financial guy recommend that is what we do based on our requirements.

https://www.immediateannuities.com/deferred-annuities/

 

[aja8888]

With interest rates where they are today, this is probably the worst time in 50 years to buy a long term annuity. Just buy ten year treasuries and ladder them. At least you will have control of your investment.

 

[TheWizard]

I know I need guaranteed income, if you can help with that it'd be appreciated.

We retirees need a certain amount of income, but my feeling is that not all of it needs to be a guaranteed (fixed) amount.

In my case, for example, I probably NEED $5000 to $6000 per month to carry on decently.
But my actual retirement income is more than double that, so I can tolerate monthly fluctuations in the variable income streams tied to the stock market and commercial real estate.

As usual, YMMV...

 

[finnski1]

How did you calculate this part?


I used the TMV (Time value of money ) equation but you can simulate like this: 1078 *1.03^27 which actually comes out to $2395/month



I'm not sure how they got the total payout either.

1078 *12 + 1078(1.03) x 12 + 1078(1.03^2)*12+... all the way out to 27 years. Minus a tiny amount for fees or when interest is posted etc.

 

[DrgLrd]

SPIAs for the most part simply return your own money back to you

After they return it, the money doesn't stop though.

1078 *12 + 1078(1.03) x 12 + 1078(1.03^2)*12+... all the way out to 27 years. Minus a tiny amount for fees or when interest is posted etc.

Thanks, there should be a online calculator for that.

 

[ShokWaveRider]

After they return it, the money doesn't stop though.

Unless you Kark it then your heirs lose it.