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Old 02-05-2017, 07:24 AM
 
106,236 posts, read 108,237,907 times
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i am a fan of immediate annuity's. they are bought and not sold since there is little money in them for salesmen .

they are like buying a cd , if you like the draw rate that is your deal . there is nothing else to know or any other expenses .

while you may be safely limited to drawing 4% or so from your own money the insurer can give a draw of 6% or more for a single .

while they should not be used in isolation they become an excellent source of pensionized income to go along with your own investing .

a popular use is to lock in your non discretionary spending with a single premium immediate annuity and then use your own investing for growth , heirs and inflation proofing .

it adds a good margin of protection to your own investing . so not all annuity's are bad . just the ones that are sold by salesmen .

you actually have to go looking for immediate annuity's . fidelity and vanguard offer them as well as immediateannuity.com .

it is good diversification since they can invest in things you can't-dead body's . those who die pay for those who live so the insurer can give yoy a bigger draw rate than you can take from yourself . dead body's can be pretty predictible unlike markets . each year insurers can tell us how many will die , they just can't tell us who .

that higher cash flow keeps you from depleting your cash and bond buckets sooner and having to sell equity's sooner to refill .

don't forget to draw 4% today from cash and bonds you will eventually spend them to zero . each year you spend the balance generates less and less . eventually your cash and bond buckets are empty and have to be refilled from stocks typically .

the spia spins off the same income each year even while you spend down so it offers a big advantage to just doing it with your own money .

the sweet spot for them is about 70 so we have time before i look in to creating a more pensionized income for us .

the less dependency on markets and rates we are the better we like it . delaying social security is the best way to decrease dependency . when the 69% bigger check kicks in our draw rate from our own money falls off a cliff it drops so low .

if you get anything out of this thread it is this :

NO ONE SHOULD EVER BUY ANY ANNUITY WITHOUT DELAYING SOCIAL SECURITY FIRST .

FOR THE AMOUNT OF MONEY YOU GIVE UP FROM 62 TO 70 THERE IS NO AVAILABLE ANNUITY THAT YOU CAN BUY FOR THAT PRICE THAT WILL PAY YOU AS MUCH , TRANSFER TO A SPOUSE AND BE COLA ADJUSTED . IT IS THE BEST ANNUITY IN EXISTENCE .

Last edited by mathjak107; 02-05-2017 at 07:39 AM..
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Old 02-05-2017, 08:09 AM
 
106,236 posts, read 108,237,907 times
Reputation: 79776
one other point i will add is this:

an integrated strategy using an immediate annuity , your own investing and permanent life insurance actually beat buy term and invest the rest in 67% of the scenario's run by dr wade pfau .

up to retirement age the balance was always bigger buying term and investing on your own .

but once you went in to the spending down stage that is where it ended .

in almost 70% of the 10,000 different scenario's run , the integrated strategy gave you a bigger safe withdrawal rate 100% of the time and a bigger balance at death 67% of the time .

the fact the life insurance is tax free , has no rmds , and no sequence risk was a giant plus for the integrated plan .
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