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i would bet most of those who own any kind of variable annuity or got some form of bonus dollars either as a guaranteed growth rate or a sign on bonus has the wrong idea as to how that plan functions .
just about every variable annuity i looked at that someone asked me to look at has worked differently then they thought and not in their favor .
usually the gotcha on the variable side is it can almost never do better then the minimum or guaranteed rates .
the guaranteed rates are almost always inclusive of expenses , the variable sub accounts with the investments are not . a balanced mix historically gave you about 7% .
if you figure the almost 3% total fees and a 5% pay out rate coming out of the annuity that is more then you are likely to get so you never hit a new high water mark in balance to get an increase above the min or guaranteed rate .
stick to simple immediate annuity's or deferred income annuity's . they are no different then buying a cd . if you like the pay out rate that is your deal . there is nothing else to know .
Last edited by mathjak107; 01-04-2016 at 10:35 AM..
Well, you thought you were replying to "the last post", which was by Mathjak, but while you were typing your post someone else posted and that post is now between yours and Mathjak's. That happens a lot, which is why it is better to either quote the post (or part of it, as I have done) to which you're responding, or to state the user name of the poster to whom you're responding. If I had not quoted you, I would have begun, "Golfingduo, ........" or I would have begun, "To Golfingduo:...." It adds clarity and removes guesswork.
Actually I was addressing HopHiller so it even go more convoluted but I believe he got my meaning. If not he can ask.
Honestly HopHiller I still do not see the issue with either of the two products you mention (annuities and LTCi). They are not for everyone but they fill a need and cross a gap that some folks feel more comfortable with. In the case of annuities I see less use but some folks are deathly afraid of risk and though the product cost more it does provide an income stream that is regular and if the insurance company is making money they will continue to be able to pay out that annuity. On LTCi I see more of a need possibly because I see it in my circumstances. Yes I have a pot of money that I could use to self insure but in order to do that properly I would set that pot of money into some vehicle that makes little or no money and is flexible enough to get to in a pinch and that money woud not be for use for anything else. It would be actually left over if I never use it because I would need to keep that coverage until both of us passed away. Or I can leverage my portion of my pension income into premiums that will buy me a peace of mind that at least a good chunk of the long term care is covered by insurance money to a tune higher than I paid in. If I never need it well, that is the way it goes. I hope I never need homeowners insurance to pay out but that does not mean it is money not spent wisely. The same goes for LTCi. It is not for everyone. If you have a boat load of money than you can self insure. If you don't have a nest egg of any size than you would be eligible for medicare coverage. If you are in between like me they want you to spend your money first so it makes sense to cover it. If that does not fall into your circumstances than by all means don't buy LTCi. Even if I were an agent I would walk away from your door as soon as you said you were not interested. Here though there are people that can benefit from the information I just put out even in my own circumstance.
Actually I was addressing HopHiller so it even go more convoluted but I believe he got my meaning. If not he can ask.
Honestly HopHiller I still do not see the issue with either of the two products you mention (annuities and LTCi). They are not for everyone but they fill a need and cross a gap that some folks feel more comfortable with. In the case of annuities I see less use but some folks are deathly afraid of risk and though the product cost more it does provide an income stream that is regular and if the insurance company is making money they will continue to be able to pay out that annuity. On LTCi I see more of a need possibly because I see it in my circumstances. Yes I have a pot of money that I could use to self insure but in order to do that properly I would set that pot of money into some vehicle that makes little or no money and is flexible enough to get to in a pinch and that money woud not be for use for anything else. It would be actually left over if I never use it because I would need to keep that coverage until both of us passed away. Or I can leverage my portion of my pension income into premiums that will buy me a peace of mind that at least a good chunk of the long term care is covered by insurance money to a tune higher than I paid in. If I never need it well, that is the way it goes. I hope I never need homeowners insurance to pay out but that does not mean it is money not spent wisely. The same goes for LTCi. It is not for everyone. If you have a boat load of money than you can self insure. If you don't have a nest egg of any size than you would be eligible for medicare coverage. If you are in between like me they want you to spend your money first so it makes sense to cover it. If that does not fall into your circumstances than by all means don't buy LTCi. Even if I were an agent I would walk away from your door as soon as you said you were not interested. Here though there are people that can benefit from the information I just put out even in my own circumstance.
I wish you the best in determining what's right for you and your family. Only you can make that judgment after evaluating all the available information.
Planning for healthcare in retirement is vital regardless of having children or not. We made the decision to purchase long term care insurance in our 50's so it will be there later in life. We have a Son, but wouldn't not want to burden him with our care.
Staying healthy is even more important, after all what good is all the time in the world to do things if you cant due to a poor physical condition. This is why I largely gave up alcohol (not all, but infrequently), fast foods, and other unhealthy stuff to put into my body. I have to make it last another 40 years or so.
In a few years, we will both be at the point where we can qualify for a reverse mortgage (62 y.o.), and that will be a major part of our retirement planning. Not paying a mortgage out of social security will open up some opportunities financially.
Planning for some sort of work in retirement is important as well. I have seen family members retire, then sit on the couch all day watching TV and in a few years, they developed Alzheimer's. You need to stay active to some degree mentally or else you mind will go to mush. Ours is to go back to work seasonally in the National Parks, work 4-5 months out of the year and travel the rest.
My two best friends and I are single and childless. We turn 40 this year. We are talking about going into business together and making joint retirement plans. I will have to move back to my home state eventually because of such plans, probably. Not looking forward to that, but I expect by then I will want to be near family.
ASPCA or a local animal shelter; the animals need it and will appreciate it more than any human would, trust me! Also more deserving than most... I've already left instructions, if I don't spend it all first...
ASPCA or a local animal shelter; the animals need it and will appreciate it more than any human would, trust me! Also more deserving than most... I've already left instructions, if I don't spend it all first...
I agree. This is where mine will go also. My family, except my mother, won't be receiving anything, too greedy as it is.
I agree with you on homeowners, auto and umbrella liability insurance. I should have been clearer. My bad.
I was referring to products like annuities and LTCi. I agree with you that these products are incomprehensibly complex which I believe is by design so as to disguise the poor underlying economics. This is one of the behaviors I find so reprehensible.
I also agree with your KISS thinking.
FWIW - I wonder whether all the people who obsess about the cost of long term care/preserving assets if they need long term care have a simple product like an umbrella policy to protect assets if they get involved in something like an auto accident? When it comes to another simple product like flood insurance - it's obvious (after the fact of a flood) that the (vast) majority of people who need it haven't bought it.
In terms of annuities - I think it's important to distinguish between single premium immediate and deferred annuities - and variable annuities. I am not fond of either - but think the former may be appropriate for some people. While the latter are basically inappropriate for almost everyone. I have read articles that say that some people like doctors use the latter for asset protection (in the event of malpractice suits). I don't know how that works out in real life (if it works at all) - but we're not talking about that aspect of the product here (this is after all the Retirement Forum).
When it comes to long term care insurance - my biggest objection is a lot of people are paying fairly large amounts for a relatively small amount of limited benefits (the actuarial worth of which can be determined with a fair degree of precision). In terms of an insurance product - I think most people would be better off paying less (or even the same amount) for policies with larger deductibles (in terms of dollars or days or both) - but more in the way of catastrophic coverage to be used if - for example - they wound up in a SNF 3+ years and depleted a fairly modest amount of personal assets. Perhaps policies like this exist (I don't know). A policy like this would be especially useful for a single person - who doesn't have to worry about a spouse at home - and doesn't want to spend the end of his/her life in a total toilet Medicaid facility after running out of both assets and insurance coverage.
BTW - I think professional workshops/lectures - like those sponsored by the Florida Bar - may be open to members of the general public without cost assuming they're not seeking CLE credit. Doesn't hurt to ask. And - even if you have to pay a fee on the order of $200 or so - well it would be a good place to get objective information - and not simply sales pitches from people who are trying to sell you something. I must get 100 "free" lunch/dinner invitations a year from people trying to sell me various "retirement" insurance products. Never was the phrase TANSTAAFL more appropriate. Robyn
Well I'm not one of those obsessing about long term care and I don't have a LTC policy but yes I do have an umbrella liability policy and I agree with you. I do have a good disability income policy that is very specific to my profession. I understand these policies are hard to come by these days.
I've bumped up deductibles on auto policies and home properties (both residence and rentals) to achieve lower premium costs because I'm willing to assume the risk. Ditto for health insurance policy. I have a high-deductible one because I'm willing to assume the risk in exchange for a lower premium which is still a lot of money at age 60.
And for the record, I don't buy extended warranties on major purchases. That's worthy of a separate topic discussion here.
...and I consider mathjack107 to be an extremely useful source of information...
OTOH - a lot of his information is very state specific - especially WRT the long term care insurance stuff. Note that I have taken his word that it works the way he says it works in New York. Since I live in Florida - I don't care how things work in New York - or have any interest in doing a lot of research and trying to show anyone any possible errors of his ways when it comes to a state specific program. Ain't got no dog in that fight . It's sufficient for me to know that things don't work in Florida like he says they do in New York. And who knows how they work in the other 48 states?
The one area where I think I disagree with him most in this area is the undesirability of being on Medicaid (for anything). I have only had 2 close relatives on Medicaid or similar for long term care. A late aunt in Pennsylvania and a late uncle in California. Never saw the place where my late aunt was. But another aunt who visited the aunt in Pennsylvania frequently (and who now lives in a nice independent living facility in Westchester County in New York - she moved from an apartment in Queens - I don't think she found any nice independent living places in Queens - don't know - will have to ask her next time I talk to her - and those in Manhattan had nosebleed prices) - painted a pretty grim picture of the place in Pennsylvania. I did visit my uncle in one of the 2 places where he spent the last years of his life - in San Diego. And it was beyond awful. These are the kind of places people talk about when they say they'd rather shoot themselves than go into a SNF.
Mathjak's thinking is if you can pay for 2-3 years in a nicer place - it won't kick you out if you go on Medicaid (even if you have assets). Perhaps he is right. I certainly wouldn't count on it. At least not where I live. And especially down the road. I have advised him to keep some money in reserve in case I'm right - never hurts to hedge your bets . Robyn
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I've already left instructions, if I don't spend it all first...
My family, except my mother, won't be receiving anything, too greedy as it is.
