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Old 02-15-2016, 07:39 PM
 
Location: Columbia SC
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Math

Thanks.

I went looking at Vanguard and Fidelity. Found some interesting products. I will investiagte more.
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Old 02-16-2016, 02:54 AM
 
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just don't get involved with anything that has sub accounts and investment choices or offers bonus deals .

there is not one that will operate the way you picture it .

we were pitched one that offered a guaranteed 10% growth rate a year . it sounded great until i understood that was all going in to a separate account that really was not mine . the problem was the fees were based not on my actual cash value but were based on that bonus buck account . in 10 years my fees would have doubled on money that wasn't even mine to take .
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Old 02-16-2016, 07:31 AM
 
Location: Columbia SC
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Math

What is your opinion on Period Certain Income Annuities.

Fidelity has several. One is $250K upfront, $3,145 per month for 7 years, $264,180 minimum payout. If I die before the end, my estate continues to get the monthly payments.

Keep in mind I am 73.

Thanks
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Old 02-16-2016, 07:39 AM
 
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There is no advantage to period certain plans as you get no mortality credits which are what make immediate annuity's such big payouts.

What you are buying is like a cd from an insurance company .

As soon as you see money going back to heirs you know there are no mortality credits where those who die pay towards those who live
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Old 02-16-2016, 09:31 AM
 
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> There is no advantage to period certain plans as you get no mortality credits which are what make immediate annuity's such big payouts.

Not precisely true. If the period certain is less than your life expectancy at purchase then there will be a mortality credit (if the annuity is fairly priced, and most SPIAs are).

In general any additional benefit (inflation protection, period certain) results in a decrease in monthly payment.
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Old 02-16-2016, 12:02 PM
 
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anything that gives you back your money instead of keeping it if you die has very little if any morality credits .

as an example if we take a single life annuity for a 73 year old it pays out 8.36% . take a 25 year period certain where if you die within the 25 years they return your money to heirs and it pays out a whopping 30% less or only 5.96%
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Old 02-16-2016, 06:58 PM
 
Location: Columbia SC
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Quote:
Originally Posted by mathjak107 View Post
anything that gives you back your money instead of keeping it if you die has very little if any morality credits .

as an example if we take a single life annuity for a 73 year old it pays out 8.36% . take a 25 year period certain where if you die within the 25 years they return your money to heirs and it pays out a whopping 30% less or only 5.96%
Math

Your period certain numbers above aside, the plan I mentioned did not return a lump sum to the heirs, it simply continued the monthly payments until the period ended. Am I missing something here?
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Old 02-17-2016, 03:17 AM
 
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yes , you are missing something . with a period certain ,if you die within the the period of payout the money difference between what you put in an what you got out goes to heirs .

unlike a life annuity , it is not forfeited to enhance the payouts of the others . that is why there is a huge difference in payout between period certain and a life annuity .

if you figure out your actual return on a period certain you will see it is only a notch above a CD . THE DRAW RATE IS NOT A RETURN SINCE IT INCLUDES PRINCIPAL .

Last edited by mathjak107; 02-17-2016 at 03:31 AM..
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Old 02-17-2016, 07:51 PM
 
Location: Columbia SC
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Quote:
Originally Posted by mathjak107 View Post
yes , you are missing something . with a period certain ,if you die within the the period of payout the money difference between what you put in an what you got out goes to heirs .

unlike a life annuity , it is not forfeited to enhance the payouts of the others . that is why there is a huge difference in payout between period certain and a life annuity .

if you figure out your actual return on a period certain you will see it is only a notch above a CD . THE DRAW RATE IS NOT A RETURN SINCE IT INCLUDES PRINCIPAL .
I get what you are saying but I never called it a return and that is where we differ. I could take the $250K and do many things with it but how many are guaranteed?

I sound like I am arguing in favor of annuities when I have always been against them. I am far from changing my mind about them but as one ages and one has only himself to look after, ones thinking does and should evolve. When the $250K is less than 1/3 of "ones pot" and one is alone and only concerned about himself, the game changes.

I do value your thinking and thanks.
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Old 02-18-2016, 02:51 AM
 
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you don't have to call it a return but it is . period certain have a start state and an end date like a cd does . that is in contrast to a life annuity where we don't know the ending date .

just add up what you get in payments less what you paid on the scheduled date . you will find it is basically like a cd return . if you bought a brokered long term cd you would find it in the same range . .

there is a chance if you die before all the payments you will just have heirs get you own money back with period certain .


since regular spia's run to death you don't know the return until the day you die and if you die early all the money is forfeited in to the pool .

my feeling is if you want the full benefit of an annuity get a life annuity . that way if you live or your spouse lives you get maximum bang for the buck . if you die , well dead is dead , no money needed .

the period certain pay out so much less as to be no better then a cd with the exception of getting a flow of money yearly instead of all at once .
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