I could go on but the champions of SPIAs will not be convinced.
True, but we are still willing to listen ...
BTW:
Money Magazine, Retirement Guide. Income plan - Sep. 12, 2006
- Ron
I could go on but the champions of SPIAs will not be convinced.
Obviously an annuity has a value that can be easily calculated. How else would an insurance company sell them?
ha
CuppaJoe,
I am also the beneficiary of a plethora of small retirement annuities due to multiple employers. Adding them all together, I'll start getting $15,000 per year (paid monthly) at age 60. They isn't any COLA so I consider this to be part of my "traveling money." By the time I'm not interested in doing much traveling, the value will have declined where I won't be able to.
There wasn't an option to take a cash value so I'm stuck with them.
This is what you get with defined benefit plans. Vesting is with a minimum of 5 years company service. You can only get "cash" if the value is below a certain minimum. I think most were $5,000 max to get cash but they said the value was above that. With the value above that there isn't an option. I become the proud owner of a deferred annuity called a "pension." I have 4 of them and as a said before they will start paying about $15,000 per year starting when I'm 60.Why did the various employers ALL have TSAs??
Looks like the guy who hates annuities is immersed in them..........
I am stuck with these like I'm stuck with SS. I certainly won't turn any money down but there certainly isn't any reason to go out and buy one.
I am stuck with these like I'm stuck with SS. I certainly won't turn any money down but there certainly isn't any reason to go out and buy one.
Obviously an annuity has a value that can be easily calculated. How else would an insurance company sell them?
ha
I was responding to the statement that your principle is "now zero".
To every "equation" there is a corresponding "entry". My response was to just note that the comment should be "countered" with a statement that there is a corresponding "effect" for the "cause" stated - nothing more...
- Ron
The income stream has a value........otherwise we wouldn't have so many underfunded pension plans in America..........
The income stream has a value........otherwise we wouldn't have so many underfunded pension plans in America..........
So, is a well paying job an asset or just a means to assets... hmmm, seems like the old rich emans income stream or wealth argument... and, yes, I believe that income streams do have value such that maybe by definition your "principal" is $0, but the value of it should be included when discussing wealth. This is slightly different from home equity, but similar. Since home equity isn't an income stream, I would not consider it, but I digress.
Buying an SPIA is a non-reversible decision. Come down with a serious illness the next week and the insurance company isn't going to give you a lump sum for treatment that is not covered by insurance. Don't expect a lump sum from them to avoid a Medicaid nursing facility but the income will be taken by the Medicaid facility for your care.
I could go on but the champions of SPIAs will not be convinced.
You don't get less income by [-]investing[/-] not buying a SPIA. You can beat the payout from an annuity by investing in readily available alternatives. The only way a SPIA makes true financial sense is if you live for about 10 years past your predicted mortality table lifespan. For most people that won't happen.If you need a contingency fund you should have a smaller annuity. The price you pay for extra flexibility is less income.
I've said before and I'll repeat again that it seems foolish to tie up your money in something that depends on an extended lifespan before you are well on your way to one. If you think that a SPIA is a great way to go, wait until you're 70 and still in absolutely great health. Then run the numbers again. They payout will be much higher.
With your analysis, everyone in America with a pension should be pissed, because ALL pensions are set up the same way you describe, with actuarial tables and insurance companies behind them...........
Have you done the calculation as to how long you and your spouse need to live before you get what you paid into SS? And then think of the opportunity cost of what you LOST trusting Uncle Sam to invest your money for your future benefit. SS makes GM's pension woes look like a walk in the park.........
And for the financially illiterate who dont care to learn, an annuitization of part of their money might be a good idea.
I have some trivial pensions and I'll get SS. Since I never had a choice, I'm stuck with these and I'll certainly cash the checks since I lost the income that went into creating these. That doesn't mean I wanted them rather than extra income. It certainly shouldn't cause anyone to think that since I've been forced to take these versions of annuities that I would want to go out and buy more.With your analysis, everyone in America with a pension should be pissed, because ALL pensions are set up the same way you describe, with actuarial tables and insurance companies behind them...........
Have you done the calculation as to how long you and your spouse need to live before you get what you paid into SS? And then think of the opportunity cost of what you LOST trusting Uncle Sam to invest your money for your future benefit. SS makes GM's pension woes look like a walk in the park.........
This year it's the first $102K. Next year it will go up so stay tuned....Granted, I'm fortunate that they only take their blood from the first $95k, but still...
This year it's the first $102K. Next year it will go up so stay tuned....
I have some trivial pensions and I'll get SS. Since I never had a choice, I'm stuck with these and I'll certainly cash the checks since I lost the income that went into creating these. That doesn't mean I wanted them rather than extra income. It certainly shouldn't cause anyone to think that since I've been forced to take these versions of annuities that I would want to go out and buy more.
Just like those of us under 50 will NOT have the choice when Congress decided to DECREASE our benefits. I for one am not planning to get SS, even though I have been paying into it for over 25 years.........
You could make up the difference by purchasing an annuity.