pb4uski
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
If the insurance company goes bankrupt there is no federal guarantees like CDs have. One of the biggest issues with Annuities is that it is considered *fixed* income (does not go up every year with Inflation) for rest of life and you've to pay taxes on it. I believe even Social Security Admin considers it as income which can reduce your SS amount (I think but not sure). 2nd issue is that $1 mil. is gone ! you have no access to your principal b/c it's now with Insurance company.
Maybe put $1 mil in short-term bonds or CDs where you can always get your principal even though you may not have a guaranteed monthly income.
WADR, most of your post is just plain wrong.
If the insurance company goes bankrupt there is no federal guarantees like CDs have. ...
Misleading. Insurance companies don't go bankrupt. To begin with, with today's regulatory surveilance they rarely go into receivership where regulators take over. If they do go into receivership most blocks of business are sold or transferred to another insurer. If the regulator can't sell certain blocks of business then the state guaranty association provides for any shortfall and collects assessments from other annuity carriers. While there is some credit risk associated with annuities, the credit risk is negligible if you buy from a well rated carrier.
The first part is correct but the second part is totally wrong.... One of the biggest issues with Annuities is that it is considered *fixed* income (does not go up every year with Inflation) for rest of life and you've to pay taxes on it. ///
If outside a retirement account then only the portion representing interest is taxable and any return of principal is not taxed. If in a traditional IRA then it generally would be taxable unless the owner had made non-deductble contributions in the past, but if in a Roth IRA it would be tax free (assuming over 59-1/2).
...I believe even Social Security Admin considers it as income which can reduce your SS amount (I think but not sure). ...
Well at least you hedged that response, but it was indeed wrong... SS would not reduce SS for annuity income.
Strike three!
That I can agree with. I agree a good bond ladder is preferable to an annuity retain access to your money, but not for the other false reasons that you claim.... 2nd issue is that $1 mil. is gone ! you have no access to your principal b/c it's now with Insurance company.
Maybe put $1 mil in short-term bonds or CDs where you can always get your principal even though you may not have a guaranteed monthly income.
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