RetiredHappy
Thinks s/he gets paid by the post
- Joined
- Jun 27, 2021
- Messages
- 2,337
It is not a taxable event, as the funds remain treated as IRA.But divorce is an allowable reason to appeal, correct? I need to check on that immediately.
It is not a taxable event, as the funds remain treated as IRA.But divorce is an allowable reason to appeal, correct? I need to check on that immediately.
What you are missing is your investment diversity. You've found a way to secure a guaranteed income plus around $2K disposable income monthly with some money left over to use for growth. FXAIX or other equity index funds are a roller coaster. I can gain and lose 100's of thousands of dollars in a very short period of time. It's not an investment for income. But according to the historical growth of FXAIX or any S&P index fund, you should be able to count on the outcome from a drawdown calculator with some assurance it will provide. Have you ever played with a drawdown calculator? Just google the term and look at a few. Plug in your numbers; money available to invest, expected growth annually, expected inflation, and if the drawdown is adjusted for inflation. The ones I tried, I used 7% growth and 3% inflation with the inflation built into the draws and came up with those numbers I posted.Skipro33, so are you saying that if I put the majority of the $610K left in the IRA after the annuity into FXAIX (or similar), I can IMMEDIATELY start taking out ANOTHER $3600/month (on top of my SS and the annuity income) and the money will still last until I'm 86? Wow. If I can do that, seems I don't even need the annuity. What am I missing? (And what drawdown calculators are your using, please? I haven't seen one of those.)
Not terrible, but like many others here, I don't have an annuity (other than a prior employer pension where I had no other choice and SS which I am deferring until 70). With an annuity you lose control over that money once it is paid to the insurance company.... So you're saying this isn't a terrible move for me, to buy this annuity?
+1IMO, the "best" annuity that you can buy is simply defer SS but it sounds like you have already started SS (though I guess technically you could suspend and then reclaim at 70).
That’s not smart financial advice.
My opinion:
1. Don’t the annuity. Inflation will eat away at your fixed payments over your life, and the broker probably earns a huge commission.
2. Diversify you stock holdings. I’m a small time investor in NVDA and realize there’s a good chance the stock price could drop 50% over the next 3 years. Instead of investing solely in NVDA, consider buying Fidelity Select Semiconductor fund FSELX, which holds 41 semiconductor stocks, of which NVDA is the largest holding at 25%.
3. Consider investing a portion of your cash in a SP500 index fund such as FXAIX. The SP500 returns over the past 30 years have averaged 10%.
4. Consider investing some of your cash in brokered CD’s and build a CD ladder. I think it takes 3 mouse clicks to buy a CD at Fidelity. Make sure you stay under the FDIC limit $250K per bank and only buy call protected CD’s.
Good luck.
Thank you for acknowledging that, Gravity. Between my mom & best friend being killed by a botched colonoscopy last year, and then having my husband ditch me after 27 years for A POLITICAL CULT, I'm lucky I'm still sane, to be honest. Then having the idiot walk away with half of my hard-earned, carefully-managed & planned money on top of everything--yeah. Lucky to still be here.Reading your posts it looks like you’ve been through a lot this year.
This might not be the best time to make an irreversible decision of this magnitude. Maybe take some time to breath.
Best of luck with whatever you decide.
Thank you very much for this detailed suggestion. It helps immensely to see details of how I could do this on my own.Not terrible, but like many others here, I don't have an annuity (other than a prior employer pension where I had no other choice and SS which I am deferring until 70). With an annuity you lose control over that money once it is paid to the insurance company.
IMO, the "best" annuity that you can buy is simply defer SS but it sounds like you have already started SS (though I guess technically you could suspend and then reclaim at 70).
I would suggest that you consider a DIY annuity using a money market fund and Treasury ladder. You could put $24k in a money market fund and buy 10 $24k Treasuries maturing each year over the next 10 years... aka 10 rung Treasury ladder. That will use $264k of your $890k (rather than $335k for an annuity).
Then pull $2k a month from the $24k money market fund over the next year. When the first Treasury matures put the proceeds and interest in the money market fund and increase your monthly withdrawal to the new balance divided by 12 and buy a new 10 year Treasury from your other funds and add that to the end of the ladder. Repeat each year.
The benefit is that you can prudently increase your "pension" due to interest on the ladder. Also, if you ever need those funds, then you can just sell the Treasuries if you have to... you can't do that with an annuity. Downside is that you don't have the longevity protection of the annuity but your retirement is so well funded that isn't a concern.
That's exactly what I did with my IRA. When we sold our business, I was only 53. I decided to build my 3rd leg of retirement income by creating an income stream through purchase of deferred fixed income annuities. It gave me peace of mind that I could stop working. Between SS, annuities, dividend income from my taxable accounts and my husband's RMD, we have the income to support our retirement. After purchasing the annuities, we still have 7 digits investment to grow with the stock market.Buying an SPIA (immediate annuity) MAY make sense for peace of mind, allow you to spend/enjoy the money while living and not worry as much about the ups/downs of the market thus allowing you to stick to your asset allocation. The 355K would come from your fixed income allocation and not your stock/risk allocation thus increasing your %stock.
A fiduciary should definitely bring SPIA, MYGA and a FIA with income rider options into possible income planning when someone is looking for guaranteed income. Most people have annuity and like them, Social Security is an annuity, Pensions are annuities. Now there are other annuities that are not good for most people.
AUM financial planners will make more in commission from the 355K@ the usual 1% in perpetuity than a onetime 2% commission on the sale of a SPIA or MYGA (6-8% on FIA with income rider).
I have an annuity in the form of a Pension and will also have Social Security at 70 and if I didn't I would purchase one as it makes sleeping at night so much easier and you don't fret as much over spending an annuity when you know next month it will be replenish for rest of your life. In regards to inflation that are not too many investments that guarantee to keep up with inflation (TIPS) but all others may or may not. I can not predict what the investment future will be with certainty so it's nice to have one's basic expenses paid for with investments to help if an increase is needed down the road.