Considering a SPIA for my IRA - Does it fit into our post retirement plans - Did not want to De-Rail the other SPIA thread.

[ShokWaveRider]

I applied for mt 10Y Period Certain SPIA today. Estimated Annual Rate of return (Locked in for 14 days) 4.13%. Not the Payout rate, that is a lot higher. I went through BluePrint Income as their quote was $100 a month better than Schwab was offering.

 

[imjustawarrior]

I'm an annuity novice. Please, help me understand what you purchased. I thought a 10y certain SPIA lasted a lifetime. The 10y certain part means if you die before the 10y is up, someone gets some money back. Why does your a SPIA only last 10 years?

 

[ShokWaveRider]

I'm an annuity novice. Please, help me understand what you purchased. I thought a 10y certain SPIA lasted a lifetime. The 10y certain part means if you die before the 10y is up, someone gets some money back. Why does your a SPIA only last 10 years?

As indicated in the last post. There are 2 types of Period Certain Annuities. Here is a screen shot from Immediate Annuities. It is for a $250k Investment. As you will see there are quite a few choices with SPIAs. Once you have chosen one you can calculate their real rate of return by using this Web Site. Just multiply the monthly by 12 and enter it as an annual payment.

I hope this helps.

Annuity Rate of Return Calculator | Annuity Interest Rate Calculator

This annuity rate of return calculator solves the rate of return one might receive from an annuity. Said another way, it solves the interest rate earned from the annuity.

iqcalculators.com

 

[pb4uski]

I'm an annuity novice. Please, help me understand what you purchased. I thought a 10y certain SPIA lasted a lifetime. The 10y certain part means if you die before the 10y is up, someone gets some money back. Why does your a SPIA only last 10 years?

There are many types of annuities and you are referring to two different types.

What you describe is a life contingent annuity with 10 years of payments guarnteed, which is a very common type of life contingent annuity... if you live more than ten years then the monthly payments still keep coming.

A 10-year annuity certain makes payments for 10 years and then stops. You can easily calculate the return inherent in the premium paid and the annuity payments using a spreadsheet formula or online calculator.

 

[ShokWaveRider]

There are many types of annuities and you are referring to two different types.

What you describe is a life contingent annuity with 10 years of payments guarnteed, which is a very common type of life contingent annuity... if you live more than ten years then the monthly payments still keep coming.

A 10-year annuity certain makes payments for 10 years and then stops. You can easily calculate the return inherent in the premium paid and the annuity payments using a spreadsheet formula or online calculator.

Yes, but payments are significantly lower for the first one you listed. My objective here is to draw down on my IRA while taking care of potential RMDs for the 10y period, without any input or effort from me.

 

[pb4uski]

Well of course they are lower. There is a high probability that payments will continue beyond 10 years, but the question was about the two different types of annuities and not at all about the relative payments of each type.

 

[jazz4cash]

I am curious why Life and 5 yrs Certain is higher than Life only. The “cost” of the 10 yr Certain option vs Life only is ~$35/mo seems reasonable.