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Old 05-10-2016, 10:56 PM
 
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Quote:
Originally Posted by DaveinMtAiry View Post
I wasn't looking for Santa Clause, I was looking at a monthly check at 5.65% (which the annuity would pay) vs 4% (the withdrawl rate most recommend).
The annuity pays a higher rate because people who die young subsidize people who live a long time. That is the whole point of an annuity.
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Old 05-11-2016, 03:09 AM
 
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as well as money from all the riders and options they sell go in to a reserve fund which is also used to help pay for those who live along with those mortality credits .
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Old 05-11-2016, 07:11 AM
 
1,728 posts, read 615,696 times
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Agree, but in this case pyramidal scheme is actually fair and makes most sense to me. I am from a long-living family, and if I end up living long, I'll benefit from huge cumulative annuity payout over time (which I could not achieve by myself, since I am not well versed in, or interested in, managing investments); if I end up being a family outlier who does not live long, I am nevertheless already benefiting from the peace of mind that comes with annuities, even if I don't fully benefit financially.
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Old 05-11-2016, 08:50 AM
JRR
 
Location: Middle Tennessee
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Quote:
Originally Posted by elnrgby View Post
if I end up being a family outlier who does not live long, I am nevertheless already benefiting from the peace of mind that comes with annuities, even if I don't fully benefit financially.
That is exactly why my brother-in-law bought an annuity. He is not a risk taker; he wanted the comfort of knowing that every month he would have $ coming in from Social Security and the annuity. Having that security of part of his retirement funds is more important to him than the return on his investment.
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Old 05-11-2016, 09:05 AM
 
Location: Columbia SC
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Speaking of living long. I am the only male in my family that has lived past age 72. My wife died at age 76 and was one of the youngest deaths in her family. Her mother just turned 98.

We bet on the odds with some of our financial decisions (no survivor benefits on a state retirement package she had) and not that we lost, but we could have done better.

One can never predict the odds but overall the odds work and with enough people in a "plan" the odds will work out. The catch is having enough people in the plan.

I have a reasonable amount set aside to be able to live a comfortable life but nothing is ever assured. My present leaning (at age 74) is to consider an annuity to hedge for living long and to start spending down some. I have no heirs to consider.
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Old 05-11-2016, 12:57 PM
 
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Having no heirs is I think an important factor...
We do and I just think their retirement options are much less/lower than ours were...
I want to leave as much of an estate to them and what looks like our only grandchild...
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Old 05-12-2016, 12:06 AM
 
Location: Los Angeles
2,919 posts, read 1,962,321 times
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Quote:
Originally Posted by Larry Siegel View Post
If you are looking for Santa Claus you should not be investing. A fair deal is all I want or expect. As far as I know, Vanguard offers fair deals.
Well sitting on cash is going to send you to the poor house. Investing in a low risk mix of stock and bond index funds is more "Santa Claus" than an annuity will ever be. That's for sure.
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Old 05-12-2016, 02:54 AM
 
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santa clause does not always bring everyone the right gift either
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Old 05-12-2016, 09:28 AM
 
Location: Ohio
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One of the attractions of an annuity for us is freedom from reinvesting/rebalancing. Yes the higher payout is due to getting back our very own money but it is automatic cash flow, no-brainer.

As we get older keeping all our investments up to date becomes harder. We do not trust any single brokerage to have it all and some is in multiple banks CD's. Wah-wah, i know, crybabies with money. But we worked very hard and don't want to make stupid decisions or be at the mercy of charlatans when we get older.

All the financial projections say don't start buying annuities until you are 70 and neither of us are yet. And the cash-flow compared to 10 years ago sucks right now. Will it get better in the next 5 years? probably not.So it's a waiting game for us.

Here's what I wish was available: a Treasury annuity, purchasable in our Treasury Direct account. No brokers fees and insured by the Fed and deposited into our bank account every month.
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Old 05-12-2016, 09:31 AM
 
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the danger is an annuity will be eaten by inflation all by itself . i would never recommend an annuity without your own investing too . you need the growth for inflation protection and emergency expenses that grow over time
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