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Old 03-01-2016, 12:10 PM
 
71,604 posts, read 71,751,865 times
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Single spia's for a 65 year old are paying out about 6% in cash flow.

How long can you draw 6% from your cash at 1% and bonds at 3% before they hit zero and are gone ? The answer is pretty damn quick or else you need to liquidate equity's sooner to refill.

Your cash and bonds are gone!

That is where your lack of understanding of integrated strategy's shows its ignorance.

Utilizing equity's and spia's has been proven over and over to out perform your own investing even just living until average life expectancy under all but the best possible outcomes. Both in income draw and balance at the end.

The more conservative the portfolio the better it works

Last edited by mathjak107; 03-01-2016 at 12:18 PM..
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Old 03-01-2016, 02:15 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,932,507 times
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Quote:
Originally Posted by Big-Bucks View Post
The problem with that 5% is that it has stayed fixed since the day he started taking payments. And what happens to his original principal after he dies? It's gone! POOF!
Did the markets do bad in the 2000's????? Nope. http://yourinvestmentadvise.com/images/28-72-year.jpg
Like I've said - I am not a big fan of SPIAs. Especially for everyone. But think they can work out ok as part of a portfolio for some people.

In my father's case - his "cash flow" - as opposed to his "return on principal" - has been a lot higher than 5%. About 9%. Because he was 80 when he bought the annuities - and interest rates were much higher back then.

Also - like I mentioned - he wasn't a particularly astute investor. And - like many people his age - he really never learned anything about investment vehicles like ETFs or trading/investing on line. I doubt the kind of full service brokers he was used to dealing with could have done better for him than the annuities. At least in equities. Also - if left to his own devices - he (like a lot of old people) probably would have kept a lot of money in short term CDs - which would be earning zero now.

As far as his annuities going poof when he dies - who cares? He doesn't owe me or my brothers an inheritance. And - as it turns out - we will get a fair amount anyway. Because he sold his house for a lot of money after my mother died.

On my part - I am a pretty astute investor. But the thing I fear is "losing it" (or at least losing part of it) if/when I get older (like 80 or so). Note that my husband - like my father - really doesn't have much of a knack for investing either. So I could see him investing part of our portfolio in SPIAs - perhaps of the charitable flavor - down the road. Especially if I predecease him.

BTW - the kind of historical data you link really doesn't speak to the current interest rate environment. Which is basically unprecedented. Robyn
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Old 03-01-2016, 02:52 PM
 
71,604 posts, read 71,751,865 times
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one thing you will learn about mr big bucks is just about everything he posts as data is not relevant
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Old 03-02-2016, 03:00 AM
 
71,604 posts, read 71,751,865 times
Reputation: 49222
Quote:
Originally Posted by mathjak107 View Post
Single spia's for a 65 year old are paying out about 6% in cash flow.

How long can you draw 6% from your cash at 1% and bonds at 3% before they hit zero and are gone ? The answer is pretty damn quick or else you need to liquidate equity's sooner to refill.

Your cash and bonds are gone!

That is where your lack of understanding of integrated strategy's shows its ignorance.

Utilizing equity's and spia's has been proven over and over to out perform your own investing even just living until average life expectancy under all but the best possible outcomes. Both in income draw and balance at the end.

The more conservative the portfolio the better it works
even if you don't want that 6% cash flow you can always feed 2% of it back in to stocks for growth .

remember too , when living off your cash and bonds you are spending down the interest and principal today trying to even draw 4% . that means each year you get less and less interest as the principal reduces more and more towards eventually zero , so each year more principal has to be liquidated as your balance shrinks .

spia's have a constant high rate of cash flow in comparison that does not reduce . it does not need inflation adjusting either since not only do the equity's handle that but the 40-50% greater cash flow provides quite an extra cushion .
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Old 03-02-2016, 04:29 AM
 
71,604 posts, read 71,751,865 times
Reputation: 49222
Quote:
Originally Posted by flyonpa View Post
Here is a question for your "Planner" ask him/her how much commission they get on this product. My guess is its big..

Q: Is your Planner a Pru Agent? or some other "sales" person? Or you paying them a fee to advice you.

I might suggest you look for a Fee Only Where you pay someone X dollars to advise you. So your interest is aligned with theirs, Whats Best for you, Not there Commission..
if they are not single premium immediate annuity's then there will be commissions .

but that does not make some of the others bad products .

as moshe milevsky said at one point he could not understand how some of the guarantees were being offered because they were so good . he advised that if you could get these products jump on them .

well moshe was right . they were to good and both hartford and prudential stopped taking new money on them .

so today with all the new twists added to them every so often a gem comes to light i would gladely pay that commission to get but i usually hear about it after the fact .

you really have to monitor some of the review sites like annuity gator to catch the gems when they happen .
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