Poll: Annuities and retirement

[W2R]

We are talking about annuities after all. Not religion. Not politics.

LOL!! That is so true. We are each so focused on our own "Master Plan" and personal goals that sometimes our discussions get pretty intense, perhaps overly intense.

As for annuities, I have had the leader of a government sponsored retirement seminar jump my case for even asking her whether the MetLife TSP annuity offered to federal retirees has any fees (it doesn't). Without finding out my circumstances, she chewed me out for thinking about one (in front of my fellow employees). No intelligent person can manage to NOT hear the arguments against them. Still, when I run the numbers, a small annuity comes out as the better option for me every time. I am still undecided since so many people apparently see reality so differently from me.

A problem in discussing annuities is that often we are comparing apples and oranges. If a person:

• has no heirs or relatives
• has no pension
• expects little or no social security
• is over 62 or so
• is in excellent health with a family history of living past 95 or 100
• has no particular desire for much money beyond the basics, but
• needs some stable income for minimal expenses during bear markets and other times, and
• realizes that insurance companies fail and has a backup plan

then I am really not so sure that spending 25-30% of one's nestegg on a fixed lifetime immediate annuity (possibly with inflation adjustment) is such a terrible idea.

But most people here are not in such circumstances and for whatever reasons they don't see it that way.

 

[donheff]

Still, when I run the numbers, a small annuity comes out as the better option for me every time. I am still undecided since so many people apparently see reality so differently from me.

But most people here are not in such circumstances and for whatever reasons they don't see it that way.

I have a nice Federal pension. I have run the Vanguard calculator to see how much of a lump sum I would need to purchase an equivalent SPIA. I would not even consider trading the pension for that lump sum. So I am in the same camp as you - having the pension is equivalent to dumping a third of the otherwise total portfolio into an inflation protected SPIA with a very trustworthy company.

I am not a moron, I am not a moron...

 

[W2R]

I have a nice Federal pension. I have run the Vanguard calculator to see how much of a lump sum I would need to purchase an equivalent SPIA. I would not even consider trading the pension for that lump sum. So I am in the same camp as you - having the pension is equivalent to dumping a third of the otherwise total portfolio into an inflation protected SPIA with a very trustworthy company.

I am not a moron, I am not a moron...

Exactly - - I think many people who perhaps are more limited in vision tend to see the world from our own little vantage point and find it impossible to take a broader view and see that our circumstances are not identical to everyone else's.

No federal employee would claim that all federal employees have a large pension, especially those stuck in the newer FERS retirement system where the bulk of retirement is intended to be funded by the 401K (TSP). Yet it is sometimes difficult for those who do, to see beyond their own circumstances and realize that others may need to supplement their pensions. In my case, even with a 3.5% SWR I would receive more from my TSP than from my measly pension.

When I run the numbers, I come out ahead using part of my TSP for a MetLife annuity, every time.

 

[cute fuzzy bunny]

Let us keep the discussion polite please everyone. We are talking about annuities after all. Not religion. Not politics.

And yes, moderators wear two hats. We participate in discussions as well as occasionally moderate them. We have even had to moderate each other on rare occasions. Heck, I edited Nords once and banned myself for a couple of days.

You're correct Martha.

I'll accept C-T's apology for trolling me, claiming he didnt say something to facilitate criticizing my opinion, claiming I fabricated a post he made, and then pulling the moderator bit on me when he started to look like an idiot.

I'll also accept the apology from the other poster in the thread who seems to persistently create rancor by regularly implying that there are people calling others morons and not respecting their opinions when thats simply not the case.

Leaving out those two activities would have made the thread a lot more polite.

Aside from the comments made regarding those two posters, I felt my commentary and discussion in this thread were quite reasonable.