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Maybe you don't understand fixed annuities. The payout rate is based on the initial amount of money you give them. It does not change. They take all the money, you can't get it back, and they give monthly payments. It is like buying a pension.
The payout rate and the payout monthly amount are the same thing, said two different ways.
I understand the first part.
Not sure I agree with the second part. And, others here who have fixed annuities have said their payout rate changed so.........
Not saying you are wrong, but how can they be if the total amount you paid in is reduced by the amount you collect each year? How does that work mathematically?
The only way that could work is if TIAA made up the difference. Is that what they are doing? Doesn't make sense to me they could stay in business that way.
Lots of insurance companies sell fixed annuities. They can make a lot of money that way because some of their customers die way before they have collected the amount they initially put in.
Let's say you give TIAA $100k and they agree to pay you $500/month for the rest of your life. Then you die 6 months later -- they just made a pile of money.
On the other hand, if you live to 110, they could lose some money. But overall, they win. It's a good deal for the insurance company, but it's also a good deal for the customers, since the rates are so high. The only problem is the inflation-adjusted ones start out very low, and have a cap, so they are no good. So you can't put too much of your money in a fixed annuity, because of inflation.
Lots of insurance companies sell fixed annuities. They can make a lot of money that way because some of their customers die way before they have collected the amount they initially put in.
Let's say you give TIAA $100k and they agree to pay you $500/month for the rest of your life. Then you die 6 months later -- they just made a pile of money.
On the other hand, if you live to 110, they could lose some money. But overall, they win. It's a good deal for the insurance company, but it's also a good deal for the customers, since the rates are so high. The only problem is the inflation-adjusted ones start out very low, and have a cap, so they are no good. So you can't put too much of your money in a fixed annuity, because of inflation.
Yah.....I understand all that. Think I told you the same thing.
Anyway, from what I understand, you will be getting x amount each month for life. All that matters is if that works for you.
So, in your case, if you are resolved to taking an annuity, knowing that generally your monthly payout is larger the older you are, the only question is the amount to annuitize at what age. In other words, you don't have to annuitize it all at the same time and you should consider whether or not you want to do that or to annuitize some of it every few years. Kind of like laddering CD's so you don't get locked into a rate you don't want to be locked into.
Not sure I agree with the second part. And, others here who have fixed annuities have said their payout rate changed so.........
It is not possible for the payout rate to change if the monthly payment does not change. The payout rate is a percentage of the initial amount, and the initial amount obviously cannot change.
All that money is taken by the insurance company. Whatever they are getting on their investments of the money is of no relevance to the customer, if it is a fixed annuity. It does not matter if their investments do well or not, the customer gets the same amount, and the same payout rate. That is the meaning of a fixed annuity.
You can't take all the money out of a TIAA traditional account, and you can't roll it over to a different company. That is exactly the reason I planned on annuitizing it. The only alternative is to leave it in the traditional account, and withdraw in certain restricted increments. Then at about age 70 there are forced withdrawals.
I had planned on the guaranteed fixed lifetime income when I decided to get this account, and it was pretty horrifying to be told, the other day and yesterday, that the "fixed" annuity is not fixed at all.
But of course the guy had no idea what he was talking about.
So I wonder -- if a phone representative does not know the answer to a question, why isn't there anyone knowledgeable around they can ask?
I don't trust that company. This experience finalized my decision to not put any additional money into TIAA. I probably wasn't going to anyway, but now forget it.
Didn't notice the phone stuff before. Have you checked whether or not there is someone you can have a sit down meeting with? Ususally, if you live in the area of a university, there's an office within reasonable distance and also with enough assets up for grabs which I think you qualify they will even come to your house. My sister met with them at the local university and later they came to her house to present their pretty plan lol.
Didn't notice the phone stuff before. Have you checked whether or not there is someone you can have a sit down meeting with? Ususally, if you live in the area of a university, there's an office within reasonable distance and also with enough assets up for grabs which I think you qualify they will even come to your house. My sister met with them at the local university and later they came to her house to present their pretty plan lol.
I already had 2 meetings with a TIAA adviser and he gave me a report that ignored what I told him, and that I did not like at all.
I called the phone number the other day just to ask what I thought was a quick and simple question. It wound up wasting hours of my time and confusing the daylights out of me. The people who answer the phones there are sometimes very inexperienced. Even worse, they don't know enough to get someone knowledgeable to answer a question if they don't know.
Meanwhile, I had sent an email to my TIAA adviser, but he is away until Monday. So I would have stressed and worried for days. That is why I called 3 times, until I got a sensible answer.
Still, the sensible answer could be wrong, I have no trust in that company. Maybe all the big insurance companies are just as bad. But I sure don't want all my money in that one. The TIAA adviser expected me to hand over all my money to be managed by TIAA. For thousands of dollars every year.
It is not possible for the payout rate to change if the monthly payment does not change. The payout rate is a percentage of the initial amount, and the initial amount obviously cannot change.
All that money is taken by the insurance company. Whatever they are getting on their investments of the money is of no relevance to the customer, if it is a fixed annuity. It does not matter if their investments do well or not, the customer gets the same amount, and the same payout rate. That is the meaning of a fixed annuity.
Sorry that doesn't make sense and if its correct, why did someone previous state that their fixed annuity payout was higher than when they bought the annuity?
Agreed if it is a fixed annuity the customer gets the same monthly payment each month, but that is not the same as the getting the same withdrawal rate of assets. It cant be mathematically.
In order for it to be the same withdrawal rate, the earning rate each year would have to be a precise amount as well as the number of people dying each year and abandoning assets. That's just not possible.
I already had 2 meetings with a TIAA adviser and he gave me a report that ignored what I told him, and that I did not like at all.
I called the phone number the other day just to ask what I thought was a quick and simple question. It wound up wasting hours of my time and confusing the daylights out of me. The people who answer the phones there are sometimes very inexperienced. Even worse, they don't know enough to get someone knowledgeable to answer a question if they don't know.
Meanwhile, I had sent an email to my TIAA adviser, but he is away until Monday. So I would have stressed and worried for days. That is why I called 3 times, until I got a sensible answer.
Still, the sensible answer could be wrong, I have no trust in that company. Maybe all the big insurance companies are just as bad. But I sure don't want all my money in that one. The TIAA adviser expected me to hand over all my money to be managed by TIAA. For thousands of dollars every year.
No that will not happen.
Yeah, like I said, I didn't see a lot of value in paying them extra for management of all assets.
I would stick with talking to whomever you met with in person and grilling that person.
Our experience was that the person they sent out to meet with us in person was the best and she was a supervisor. Some gaps, but at least she was more responsive when we pushed back. Still, slow to respond. When its free you get what you pay for, which is again why I am pushing my sister and advise you to get a second opinion from a fee only financial planner.
Sorry that doesn't make sense and if its correct, why did someone previous state that their fixed annuity payout was higher than when they bought the annuity?
Agreed if it is a fixed annuity the customer gets the same monthly payment each month, but that is not the same as the getting the same withdrawal rate of assets. It cant be mathematically.
In order for it to be the same withdrawal rate, the earning rate each year would have to be a precise amount as well as the number of people dying each year and abandoning assets. That's just not possible.
The customer gets the same monthly payment, and that amount was arrived at by a percentage of the initial amount. That percentage of the initial amount cannot change.
Fixed annuity payments do not increase unless it is inflation-adjusted. As I said, those are not a good deal because they start low and have a cap.
The amount of money decreases but that is of no relevance to the customer, since they have surrendered the money to the insurance company. There is no percentage of the remainder that the customer would have any reason to care about.
Somehow you are not getting what I keep saying.
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