haha
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Why are you so scared of annuities? - By Tim Harford - Slate Magazine
The ubiquitous "framing" strikes again.
Ha
The ubiquitous "framing" strikes again.
Ha
Are threads with "the A* word" in the title less likely to be shut down than those that veer into "the A* word"? So little time, so many experiments. Am I "the T* word"?
it is NOT THE WORST THING YOU COULD DO...
I'm a strong opponent of annuities in general except for the ones we are forced to take (company pensions, SS, etc). Even with these, I'd prefer a choice for a cash payout.
I have a choice of pension or cash payout at 55. Assuming I take it then and want the cash flow I don't see that I have much option but to take the "pension annuity", Rolling the cash payout into an IRA subjects it to the withdrawal rules pre 59 1/2 or a penalty.
I am sure I will get pounded for this.... but I am not 'against' annuities for most people...
Most people are not that good with investing (and some are downright bad)... so for THEM a fixed annuity (or one that accounts for inflation) MIGHT be the better way to go with a decent percent of their money...
But the pitfalls are still there... and in todays low interest environment it is an even worse investment, but it is NOT THE WORST THING YOU COULD DO...
However, what I would think is the 'better' to 'insure' some sort of income going forward.... not an investment vehicle to get there....
I'm a strong opponent of annuities in general except for the ones we are forced to take (company pensions, SS, etc). Even with these, I'd prefer a choice for a cash payout.
I have a choice of pension or cash payout at 55. Assuming I take it then and want the cash flow I don't see that I have much option but to take the "pension annuity", Rolling the cash payout into an IRA subjects it to the withdrawal rules pre 59 1/2 or a penalty.
If you are fortunate enough to have a choice, do the math. Some company cash outs are pretty good. Others make it obvious that you should take the annuitized payments. With payments, look into the stability of the company and how the payments would be impacted if the company defaulted and you depend on the federal "insurance" for your continued benefits. I'm sure a lot of airline pilots would rather have taken a lump sum rather than seeing their once lofty pensions decimated no matter what effective interest rate was used in the annuitization calculation.
I don't understand your "T* word" but it sounds like this subject is frequently shutdown....
I'm a strong opponent of annuities in general except for the ones we are forced to take (company pensions, SS, etc). Even with these, I'd prefer a choice for a cash payout.
I have a choice of pension or cash payout at 55. Assuming I take it then and want the cash flow I don't see that I have much option but to take the "pension annuity", Rolling the cash payout into an IRA subjects it to the withdrawal rules pre 59 1/2 or a penalty.
Would you consider a SEPP (aka 72t)?
resource:
Welcome to 72t on the Net
I sort of meant: is it troll behavior to mention that "the A* word" might incite a riot?
Tough to compare since the "cost" of the gov pension annuity is never given in dollars. If the recipents were given dollars instead of the pension followed by the opportunity to buy the pension, their propensity to do so would be determined by the cost. But that's just hypothetical, since no dollar cost equivalent is ever provided that I know of.This is most interesting to me, as the largest and perhaps the most confident group of ERs on this board are possessors of the mother of all inflation adjusted SPAs, governement and military pensions.
We all agree that these are wonderful.
Are private commercially purchased annuities so much worse that there is literally no way to compare these two?
Agreed. As an example of how large the impact of inflation adjusted vs not inflated adjusted is, go to FireCalc and run a trial with your pension each way. Big difference!BTW, I think a non-inflation adjusted annuity whether purchased or accepted from a company is a bad idea, if there are any alternatives.
I guess the closest estimate would be the companies who "buy" military pensions for lump sums.Tough to compare since the "cost" of the gov pension annuity is never given in dollars. If the recipents were given dollars instead of the pension followed by the opportunity to buy the pension, their propensity to do so would be determined by the cost. But that's just hypothetical, since no dollar cost equivalent is ever provided that I know of.
If an inflation adjusted annuity is too expensive for your tastes, maybe one of the Target retirement type mutual funds would work for her. It wouldn't require much maintenance.I am considering purchasing a Joint Survivor fixed annuity at age 65. Still thinking it over. If we do purchase one, we would only use a small amount of the portfolio.
DW cares nothing about managing finances. She is conservative with money but does not have any interest in managing investments... therefore she would not.
I am thinking it may help as part of a risk mitigation strategy for building a basic income stream just in case and for DW if something happens to me. The main challenge seems to be inflation. I will also move some of our assets to MFs that do not require much maintenance or management around the same time.
The problem with SPIAs is inflation. Inflation adjusted annuities are even more expensive.
There will be a bunch of new annuity product lines to hit the market over the next few years for boomers. I will be interested in seeing what emerges.
They are expensive largely because they are very hard to reserve for. If you are not a government that can rob the taxpayer, offering an inflation adjusted annuity is difficult task.The problem with SPIAs is inflation. Inflation adjusted annuities are even more expensive.