Annuity question

[Johnhw2]

I am clear on the info you provided mathjak.my 'olive does provide a death benefit equal to the theoretical account value as long as the annuity is being deferred. There is no mention of changes in my withdrawal rate over rate. It is a set as 6.5 % of the theoretical account value in my case because I have not taken any cash from the acoount. The finds I put into this contract are invested a 5 different equity funds from a long list of funds available to me, all are uniquely available thru axa I believe.

Since I am invested in equity funds as designed by the annuity I selected, I do not think their is an interest rate built in growing my market value or value remaining in the 'land as I take my cash withdrawls. So I think the annuity which is in my single life for my analysis is somewhat straight line spread over my life expectancy. But am looking for some one to,clarify if that makes sense or is there another way to estimate my annuity amounts. This matches the reason I bought this product, to build in some income protection.

Thanks for your thoughts.

[mathjak107]

aaaaaahhhhhh , key words "as long as the annuity is deferred .

but the flip side is as you see in the chart the longer you defer the smaller the actual roi is .

the guaranteed growth rate stops when you stop deferring so the catch 22 is the more you defer the greater the balance but the smaller the return from it you will see since it takes x-amount of years to actually see your first dollar of roi . in this illustration above your first dollar of their money is 20 years later .

so just to get to break even will take 20 years . delaying to long insures you won't do to well . see the gotcha cycle ?

i am not so sure your heirs get the phantom account even before deferring . usually it is limited to the account balance or premiums you paid but rarely the phantom account .

i would have to see that in the plan for myself because that is rare if even at all. . it makes no sense that the phantom account goes to heirs if you never draw an income . i am not sure you have that correct . that is done only for period certain annuity's where a very specific amount of years are specified .

it is doubtful after fees the invested accounts are going to beat the guaranteed 6.50% .

[Johnhw2]

Originally Posted by mathjak107

aaaaaahhhhhh , key words "as long as the annuity is deferred .

but the flip side is as you see in the chart the longer you defer the smaller the actual roi is .

the guaranteed growth rate stops when you stop deferring so the catch 22 is the more you defer the greater the balance but the smaller the return from it you will see since it takes x-amount of years to actually see your first dollar of roi . in this illustration above your first dollar of their money is 20 years later .

so just to get to break even will take 20 years . delaying to long insures you won't do to well . see the gotcha cycle ?

i am not so sure your heirs get the phantom account even before deferring . usually it is limited to the account balance or premiums you paid but rarely the phantom account .

i would have to see that in the plan for myself because that is rare if even at all. . it makes no sense that the phantom account goes to heirs if you never draw an income . i am not sure you have that correct . that is done only for period certain annuity's where a very specific amount of years are specified .

it is doubtful after fees the invested accounts are going to beat the guaranteed 6.50% .

Of course I see the balance that is part of the nature of these products.

My axa contract has a death benefit in the amount of $713k in my contract, if I start taking income as planned the amount of death benefit does not continue to increase by 6.5 % per year as it has in the past. One additional benefit to my heir is if I die while taking income as planned but before I take the annuity, my heir can inherit the contract and receive any additional cash that is available to pay the income as well as get the death benefit in effect under this product..

I am not trying to convince you of anything about my contract. I am saying it is different from the typical as described by you. This death benefit goes away once I annuitize, its up to me to protect heirs in selection of the type of annuity, single life, joint life, period certain etc. I have no children and my spouse of 45 years benefits from some benefits provided by my employer of 38 years so this feature is not why I bought this product but its nice to have.

My question is simple but apparently difficult to answer. How much is my annuity in say 8 years going to be when I am 77 years old, I select a single life annuity with no period certain and the amount to be converted to an annuity is $713k. My second question is if I wait a year to take an annuity then at age 70, the amount to convert to an annuity has growth to $750k. My life expectancy if I attain age 77 is 9.7 years according to an online source. If I do not start the income stream now, and convert to an annuity at age 70, I am using a life expectancy of 14.1 more years according to the same source. I am seeking an estimate of the two potential annuity amounts to make an informed decision on the route best for me and my spouse.

[leastprime]

Originally Posted by Johnhw2

My question is simple but apparently difficult to answer. How much is my annuity in say 8 years going to be when I am 77 years old, I select a single life annuity with no period certain and the amount to be converted to an annuity is $713k No one knows. Because the Accumulation account is based on your investment performance less the withdrawals. In the absolute, the Accumulation account could either go to 0 or become infinite. If the Accumulation account goes to 0, your Income account remains the at the highest last value, or currently $750k from which you can call on the Income. If the Accumulation account goes to Infinity $, your Income Account follows likewise to Infinity and your Income draw will be again at the highest value of the Income account. You Bought a pseudo Pension. . My second question is if I wait a year to take an annuity then at age 70, the amount to convert to an annuity has growth to $750k No. if you annuitize, the annuitized value is the Accumulation account value whatever that is which may be $0 or $infinity or anything inbetween or the Market value. It is not the Income value. . My life expectancy if I attain age 77 is 9.7 years according to an online source. If I do not start the income stream now, and convert to an annuity at age 70, I am using a life expectancy of 14.1 more years according to the same source. I am seeking an estimate of the two potential annuity amounts to make an informed decision on the route best for me and my spouse If you take the annuitization route rather the the Income draw route, If you die at any time, the annuity is done on a single life unless you took bought an option for period certain at initiation. If you took the Income draw route, the remainder in the Accumulation acct (which may be $0 or $N) will go to designated heirs. .

There is no free lunch here. You pay a 1.0-1.5% option fee for the GLWB option and with Income increase guarantee for Y years. You also pay 0.75%-1.5% for the death benefit option. For these options you transferred some of the Market risk to the Insurance/Annuity company. For early GLWB annuities such as yours, the Annuity companies assumed too much risk.
See Vanguard which AXA is the GLWB annuity provider.
We have a series of this type of annuity. For the original purpose of mimicking a Tier 1 PERS. pension.
See Long Straddle option.
See Moshe Milevsky for GLWB and SPIA annuities. there are other researchers including Nobel Prize economists who have pondered on this. It is not an easy problem.

YMMV. Do your Due Diligence.

[leastprime]

Addendum:
I consider the real value of this type of annuity 1) You get to lock in highs and protect your downside risk; 2) You to select your investments and time the Market without real damage to the Income Account but with a possible big upside to Accumulation account if you are astute and fortunate; 3)You know what the minimum Income you will receive upto the last year of the guarantee period;

There are other strategies with this type of annuity where you can reduce risk and maximize outcomes. It is not for everyone.
YMMV

[Johnhw2]

Thanks to all, made my choice of paths forward with my policy. Glad to know its basic is not that unusual except for some features like the death benefit. Also helped me think through how to calculate annuity values for various options with some reasonable assumption to compare the options.