ERsoonihope
Dryer sheet aficionado
Hi. DW and I are both 60 this year. That's not really such an ER, I know..but that is where we are. I think we have a situation where a SPIA makes sense - but I've been lurking on here quite a while, and I know there are a number of folks with strong feelings about annuities. Thought I'd lay out our situation, and see what I'm missing.
Total invested assets are about $1M. We're both working full time now, and both making good salaries. We also have income from a early retirement I took a few years back - that is a pension of $42 K annually - no COLA - but it does have a 75% survivor benefit.
So on to my SPIA question. DW has worked for same employer her entire career. Her retirement plan is basically a 401K. She has a variety of options on retirement. She needs to pick one of the options (or mix and match among them) at the time she accesses those funds. Her retirement account totals $500K (making up half of our total invested assets). One of the options is to buy a SPIA.
$500K will buy an annuity from the plan with a 2.5% annual COLA and a 70% survivor benefit that pays $35,000 annually. That seems like a good deal to me - better than investing it and planning on a 4% withdrawal. I understand that the money is gone once we buy the annuity ... but we're planning to live to our eighties at least - and think we have a chance at being successful at that.
If we do buy the SPIA with her retirement, we'll have two retirement incomes ($35 K from hers, $42 K from my previous employer). We'll have $500K invested assets still. And eventually we'll have social security.
If I run it through Firecalc, I get like a 90% answer when I go the annuity route. If I don't go the annuity route, and instead add her retirement into our total asset number, Firecalc gives me 49%.
So - am I missing something? I'd appreciate your thoughts and questions.
Thanks.
Total invested assets are about $1M. We're both working full time now, and both making good salaries. We also have income from a early retirement I took a few years back - that is a pension of $42 K annually - no COLA - but it does have a 75% survivor benefit.
So on to my SPIA question. DW has worked for same employer her entire career. Her retirement plan is basically a 401K. She has a variety of options on retirement. She needs to pick one of the options (or mix and match among them) at the time she accesses those funds. Her retirement account totals $500K (making up half of our total invested assets). One of the options is to buy a SPIA.
$500K will buy an annuity from the plan with a 2.5% annual COLA and a 70% survivor benefit that pays $35,000 annually. That seems like a good deal to me - better than investing it and planning on a 4% withdrawal. I understand that the money is gone once we buy the annuity ... but we're planning to live to our eighties at least - and think we have a chance at being successful at that.
If we do buy the SPIA with her retirement, we'll have two retirement incomes ($35 K from hers, $42 K from my previous employer). We'll have $500K invested assets still. And eventually we'll have social security.
If I run it through Firecalc, I get like a 90% answer when I go the annuity route. If I don't go the annuity route, and instead add her retirement into our total asset number, Firecalc gives me 49%.
So - am I missing something? I'd appreciate your thoughts and questions.
Thanks.