U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Retirement
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 01-18-2018, 11:06 AM
 
1,111 posts, read 731,618 times
Reputation: 1944

Advertisements

I'm looking to protect some of the gains in my IRA portfolio. My financial advisor is pointing my toward a Single Premium Deferred Annuity. Is there any compelling reason to choose this over a CD? The rated seem to be comparable for them both. Are there other options to consider besides these two?

The plan is to put $100K into a 3-5 year fixed interest instrument. It's money I won't need for the time being, and I can live with a lower rate of return in exchange for some peace of mind.

Any thoughts, advice or opinions are welcome.
Reply With Quote Quick reply to this message

 
Old 01-18-2018, 11:10 AM
 
71,463 posts, read 71,652,652 times
Reputation: 49027
they are close. the annuity is really not an annuity in the sense of what we think , it is similar to a cd from an insurer . you have better terms with the annuity if you want money each year to spend . you have better terms with the cd if you want to let it ride
Reply With Quote Quick reply to this message
 
Old 01-18-2018, 11:19 AM
 
Location: VT; previously MD & NJ
2,183 posts, read 1,338,732 times
Reputation: 6286
Whichever way you go, be sure the money is still under your IRA. Wouldn't want to pay taxes on that amount of money.
Reply With Quote Quick reply to this message
 
Old 01-18-2018, 01:58 PM
 
6,875 posts, read 7,267,992 times
Reputation: 9785
Thanks OP I asked in another thread about what to do with 75K to 100K. I was thinking of taxable mutual funds.

I can't get the money INTO an IRA.
Reply With Quote Quick reply to this message
 
Old 01-18-2018, 02:34 PM
Status: "Re-edit status" (set 13 days ago)
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
4,134 posts, read 1,883,639 times
Reputation: 3154
JMO,
following Mathjak's opinion,
In a rising rate environment. A CD ladder would work better than locking funds up in SPIA forever.
In a falling rate environment, A SPIA would be better.
In both cases be sure that you do some laddering,

We did GLWB VA and GLWB Fixed-Indexed 2008-2012. I would not recommend GLWB fixed indexed unless, ... I really can't think of a good reason for a purchase for FIA's, today. I can make an argument for GLWB VAs.
Be aware that a SPIA is a determinate and terminal decision. There's no backing out.
SPIA is also a Risk management decision NOT an Investment decision
Reply With Quote Quick reply to this message
 
Old 01-18-2018, 02:39 PM
Status: "Re-edit status" (set 13 days ago)
 
Location: Was Midvalley Oregon; Now Eastside Seattle area
4,134 posts, read 1,883,639 times
Reputation: 3154
In a deferred SPIA, You are paying a premium for that delay. The Annuity co. is not going to carry that risk.
In a deferred SPIA-IRA, you die, the heirs loss the SPIA. You can buy a death benefit for about 1% of balance, but that reduces the SPIA returns significantly.
Reply With Quote Quick reply to this message
 
Old 01-18-2018, 06:41 PM
 
Location: Somewhere in deep in Maine
3,658 posts, read 2,807,585 times
Reputation: 4436
I had someone recently try to talk me into it. They are not for most people. If you need your money, forget it; penalties can take away half of the principle. The prizes the people get who sell them are enormous, and so you can get locked in with no recourse.

A CD ladder is way better. And many are stock market based, and retired people should be in the market with anything they cannot afford to lose.
Reply With Quote Quick reply to this message
 
Old 01-20-2018, 09:58 AM
 
71,463 posts, read 71,652,652 times
Reputation: 49027
Quote:
Originally Posted by leastprime View Post
JMO,
following Mathjak's opinion,
In a rising rate environment. A CD ladder would work better than locking funds up in SPIA forever.
In a falling rate environment, A SPIA would be better.
In both cases be sure that you do some laddering,

We did GLWB VA and GLWB Fixed-Indexed 2008-2012. I would not recommend GLWB fixed indexed unless, ... I really can't think of a good reason for a purchase for FIA's, today. I can make an argument for GLWB VAs.
Be aware that a SPIA is a determinate and terminal decision. There's no backing out.
SPIA is also a Risk management decision NOT an Investment decision
op was only talking about these short term annuity products .

these 3 to 5 year contracts are basically just like cd's with a slightly different twist
Reply With Quote Quick reply to this message
 
Old 01-20-2018, 10:12 AM
 
Location: Sylmar, a part of Los Angeles
3,972 posts, read 2,533,474 times
Reputation: 8487
Sounds like your financial advisor is not a for fee advisor. Get a for fee advisor, expensive but very much worth it.
Reply With Quote Quick reply to this message
 
Old 01-22-2018, 04:17 AM
 
71,463 posts, read 71,652,652 times
Reputation: 49027
you can't assume that anymore than you can assume it if they told the op to use cd's . these short term contracts are used by every planner and they are nothing special nor have the qualities and expenses of a lifetime annuity .

as i remind everyone , fee only advisers were the least educated in the batch i interviewed . it seemed they were fee only because they lacked the knowledge , credentials and certification to get involved with more comprehensive planning , or they likely would not be fee only .

there is this myth that circulates about only use fee only but the reality is that could be a pitfall .
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Retirement
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2019, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top