Heading For Retirement and Decisions to Make

[Gandalara]

Matt, I'm not going to scan my whole 10 year old contract. Like I said, the specific contract/rider is no longer available. I see right off the bat that the link says .85% for the Step-up. Not mine. Mine's also not a B Share.

And anything to do with death benefits or estate enhancement charges - I don't give a flying fig about. Single, remember?

You're in permanent couple mode.
I'm in permanent single mode.
Which is just a reminder that everyone's priorities are different.
I'm not gonna stress over it. We all know you don't like variables

[mathjak107]

not sure what you have , what if any guarantees ,death benefit etc but a variable annuity will always be 3-4% of its yearly average value when you add the popular trimmings.

some with those guarantees like the 10% minimum return count that as part of your daily average balance and fund fees and annuity fees all apply . the expenses can be very high.


the problem with variable annuities is the guarantees are everything ,especially if a couple.

you have all the standard fund fees and mortality charges as well as administration costs but then you have the guarantee charges .

want that 10% minimum guaranteed ? its a charge. want that annuity to pass to your spouse if you die before you collect ? charge. want that guaranteed 10% or 5% return passed ? charge

what if you are collecting and die ? that is different from dying before you collect . want the payments to continue? thats another charge.

there are options every where and each one gurantees more but cost you more.

it is funny but folks go annuities with guarantees are expensive... they may be very risky just because they may be priced to cheapley for all these guarantees..

time will tell but many insurers had to change their deals midstream because they realized down the road they were to cheap for what you were guaranteed.

you cannot compare investing on your own where fees only get you access to an investment with variable annuities you not only have access to the investment but guarantees of performance and income in many cases and that is costly to provide.

[RiverBird]

Originally Posted by mathjak107

Researchers today say in the lab the old 4% is now about 2.80%. how you structure your own spending will make that number better or worse but the important thing is there is no such thing anymore as "simply take 4%

I came to this conclusion long ago.

[mathjak107]

Originally Posted by RandomRetirementAdviceGuy

No that sounds exactly how an annuity should be working in terms of fees like I said. You are just sadly misinformed on current annuities. Look more into companies like Prudential, Voya, or Transamerica.

well post us an example , lets see what you got. i bet it is 2-3 % total expenses for the fund fees ,expenses ,death benefits , guaranted min returns.etc.

cheapest plan going is a vanguard variable annuity and that comes in at about 2% with death benefits and glwb depending on fund selection, that is about 2k on 100k investment first year only , the industry average is about 2.50% .

but those do not include guaranteed minimum returns like the popular ones pitched today like we had thrown at us. throw on another 3/4 to 1% for that ,plus the expenses on that guaranteed return as part of your average daily balance ,which can only be annuitized to get , you can't take it out and you got quite an expense bill.

the one we saw hit 4% for those guarantees.

but having said that ,with those guarantees that policy may actually be priced to low and the risk is you may not get what you expect.

the problem with annuities is you CANNOT just compare them to investing on your own. all your fees get you on your own is admission to the fund . there are no guarantees at all as to what you will get as far as returns or income.

moshe milevsky called it right about many plans when he said he didn't understand how they could offer the guarantees they did at those price.

well a few months later he was rght.

prudential locked the doors an annuity holders of certain annuities and they could no longer add any new money.

hartford sent out letters offering contract buyouts .

a host of others just changed the offered deals.

actuaries got a lot smarter about pricing these things so it is harder to find a great deal as in the past.

if you are going to buy one it is best annuitized when you reach the bottom of an age band since your income will be dependant on age .

59-64 single , with vanguard gets you 4.5 % guaranteed but wait until 65 and it is 5% as an example. age 70 gets you 5.5%

[mathjak107]

it really amounts to how secure you feel your income will be left to the whims of the markets in the new norm of low interest rates and high stock valuations, an uncharted combo.

the more guarantees you throw on the more costly the annuity ,plain and simple.

but without the guarantees such as glwb guaranteed life withdrawal benefit very few need an annuity product .

i would never consider a deferred annuity unless i maxed out my 401k and ira options first . very few are doing that right off the bat.

taxes on that annuity when withdrawn can be pretty harsh , those stock gains will be taxed at full income rates compared to zero in a roth or 0-20% in a taxable account. the price of admission in after tax dollars is the same in all 3 cases.

there is a price to pay for that protection.

[Robyn55]

We seem to have lost the OP quite a few pages ago <LOL>

I'm not an annuity person. MEGO when I read the terms of the variable kind (and I have a great tolerance for boredom). And - to the extent I understand them - I don't like them. When it comes to immediate fixed annuities - they're a lot easier to understand - but don't generate a ton of income if you buy them when you're relatively young (like in your early 60's).

The OP hasn't given us a complete picture. Like how big is the 401k? What is it invested in? When does he plan to retire? What does his COL look like now? Will it go up or down or stay the same when he retires (and why)? Is he in a state with an income tax? What will his medical insurance situation (possibly big ticket item) look like when he retires? What is his risk tolerance? How much investment experience does he have? What about his wife?

In evaluating investments - I tend to start with what I can get from a 99+% safe plain vanilla investment. Today - although this is a low interest rate environment - you can still get about 3.35% on a ten year brokered CD. When you get into somewhat riskier investments - you can get 3-4% on very high quality intermediate to long term municipal bonds. About 3% in dividend ETFs (HDV and DVY). So the issue becomes how much risk is the OP willing to take to try to make more than that? (Also - how much confusion is the OP willing to endure when it comes to something like a variable annuity?)

FWIW - I'm mostly a fixed income person and use Zionsdirect - E*Trade and Fidelity for fixed income. I do everything on line. No FA. No mutual funds. ETFs only for things like junk bonds (so I can diversify). I handle the equities I own/trade (all ETFs) through Fidelity (it's a very easy trading platform and suits my needs).

BTW - I'm not fond of FAs because most tend to have a one size fits all cookie cutter approach. And we're all very different in terms of our investing profiles. Robyn

[PylesFord]

STOP! You should consider seeing an "independent" financial planner NOT associated with either an insurance or brokerage pushing products of said firms. Your post states some very high positives in your favor. Good luck!

[mathjak107]

more and more i like the idea of deferred fixed annuities as longevity insurance.