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I know "An*#$ties" are bad words in some circles, and many ARE. But I am looking for CD replacements for Non-qualified Moneys in December when my 3% PenFed CDS run out.
Enter the "Fixed" annuity. Currently Returning 3.7% for 5 Years (A+ Rated Co. Including any fees which are low), No penalty 10% Withdrawals per Annum, deferred interest and the Big one; Guaranteed up to $250k per contract in the state of Florida. and added benefit they are protected from unscrupulous grabbing Lawyers hands.
Thoughts. Thinking of putting about $500k in 2 contracts when the time comes.
BEFORE you purchase any annuity ask the annuity company what the annual fees are including sub account fees, M&E expenses, any riders. Also ask if there are surrender penalties
the annuity you are looking it is not really an annuity, it is basically a cd from an insurer for 5 years . insurers do not offer cd's so they offer "period certain annuity contracts " like immediate annuities there are no other fees unless you use a middleman . the rate is all inclusive . if you like it that is the deal .
there are no mortality credits like annuities benefit from and those who die don't contribute to those who live . it is just like a 5 year cd with some different twists tax wise .
so these are really proxies for a cd and not an actual annuity product as we think of them .
but when considering actual annuity products ,it would be poor financial sense to ever buy any annuity before delaying taking ss first .
there is no commercial annuity you can buy that would pay as much , be cola adjusted and pass to a spouse that would be as good as what you would get from ss for the cost of laying out the ss amount you are not collecting from 62 to 70.
it is the best value in an annuity you can buy . annuities should only be considered after you delay taking ss . it is a terrible deal in comparison taking early ss and then buying an annuity product.
cola adjusted annuities are the worst deals out there and the main reason you never want to use annuities in isolation . keep in mind your personal cost of living is very different from the adjustments the cpi gives you . there is little in common between your cost of living and a price index which has most of the items not applying to you or the way you buy or even your location .
you want your inflation protection in growth vehicles .
Last edited by mathjak107; 05-18-2018 at 06:40 AM..
I am looking for CD replacements for Non-qualified Moneys
I decided on a different route. Because I need to constrain my taxable income starting this year, I decided to put some otherwise taxable monies in national muni bond funds to generate federal tax-free income. You can find yields over 4%. There is, of course, risk involved since they are subject to changes in interest rates, but it's something to look into and consider as part of your portfolio.
i looked in to fidelity muni income fhigx . they pay a bit over 3% but so far it is down 1.77% ytd including interest so they are proxies for bond funds but certainly not cd's .
I think annuities fit in when you are retired and worried about running out of money in retirement. The bet is you live a long life and others who bought the annuities live a short life and you get to spend their money.
You might look into buying individual corporate or municipal bonds with a maturity date that meats your needs. This gives you a credit risk but you will not lose principal if you hold the bonds to maturity.
like i say , annuities have a place in the bond/cash portion of a diversified portfolio , not in place of that portfolio or good retirement portfolio construction . it should merely replace some bonds and cash , never the equities portion or real estate portion as growth is still needed . . .
Location: Was Midvalley Oregon; Now Eastside Seattle area
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Mathjak107, gives good advice here.
We have fixed-indexed (deferred GLWB, 2012, age 65) annuities with IRA. Not one of my better financial decisions but they are doing as designed. I did not buy straight fixed annuities because I didn't want to be "fixed". I saw a lot of presentations (coffee and donuts only). My advice is to thoroughly understand the product, know the possible alternatives, and how the product fits into your over all plan. Suggest that if you purchase, do so in staggered times, smaller quantities, laddered amounts. There shouldn't be any discounts for a quantity purchase)
{We also have GLWB variable annuities 2008-2012, (all equity funds, no blends or bond funds), rentals, pension, and equity discretionary $ . We have No bonds and keep a low total cash balance (<6 mns) mostly for the rentals}
Since this is non qualified $, your total yield is less taxes and you own the rate and inflation risk.
Last edited by leastprime; 05-18-2018 at 08:59 AM..
the annuity you are looking it is not really an annuity, it is basically a cd from an insurer for 5 years . insurers do not offer cd's so they offer "period certain annuity contracts " like immediate annuities there are no other fees unless you use a middleman . the rate is all inclusive . if you like it that is the deal .
there are no mortality credits like annuities benefit from and those who die don't contribute to those who live . it is just like a 5 year cd with some different twists tax wise .
so these are really proxies for a cd and not an actual annuity product as we think of them .
but when considering actual annuity products ,it would be poor financial sense to ever buy any annuity before delaying taking ss first .
there is no commercial annuity you can buy that would pay as much , be cola adjusted and pass to a spouse that would be as good as what you would get from ss for the cost of laying out the ss amount you are not collecting from 62 to 70.
it is the best value in an annuity you can buy . annuities should only be considered after you delay taking ss . it is a terrible deal in comparison taking early ss and then buying an annuity product.
cola adjusted annuities are the worst deals out there and the main reason you never want to use annuities in isolation . keep in mind your personal cost of living is very different from the adjustments the cpi gives you . there is little in common between your cost of living and a price index which has most of the items not applying to you or the way you buy or even your location .
you want your inflation protection in growth vehicles .
These sound a lot like the GICs (guaranteed insurance contracts) of the past. I purchased some of those many years ago when interest rates were in the double digits.
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