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Again just because you fail to understand the product doesn't mean there is anything wrong with it and if you don't understand it you really shouldn't be the one giving advice on what to do with it. Additionally just because you need something simple to understand doesn't make it the best option for your mother
Quote:
Originally Posted by mathjak107
that check in the mail box monthly may be the best product for her mother in the end . why would her mother want to take on market risk and volatility if the income serves her needs . we don't know her mothers needs nor wants .
You've both hit the nail on the head.
I worked for some time as the supervisor of customer complaints for a large independent broker/dealer. We would get complaints on a regular basis regarding the suitability of a variable annuity. Most of these were driven by a situation just like this one where someone found out that an older family member had one and freaked out because he or she had heard Dave Ramsey (just a hypothetical, not ripping on Mr. Ramsey) say something bad about them.
In every situation we found that the variable annuity was completely suitable for the client. I have no reason to believe that this isn't the case here.
Usually there was a new advisor lurking in the background who had a vested interest in getting granny to ditch her VA in favor of something he or she could make money on.
The Guaranteed Withdrawal for Life Benefit Base is $164,897.64
This Base is used to calculate the 7% withdrawal for life which is currently $11,542.83 per year
The Death Benefit is $120,131.04
The Surrender Value is $115,394.91
$100,000 invested 8 years ago...effectively grew at 2% a year and the broker made tens of thousands of dollars...
The purpose of the product was never to have growth on par or better than the market.
For the purposes of guaranteed income, and growth of that possible guarantee your mother's base for annuitized income went from 100 to 164 in 8 years which is close to 6.5% per year. Where else are you going to grow your potnetial income base by nearly 6.5% guaranteed?
No..she doesnt get monthly checks...it was one of those "put in 100K and you're guaranteed 6% a year when you cash out or the returns of the stock market, whichever is greater in 4 years" or something like that
there isnt an annual fee per se..its just one of her investments she has with this broker....
As I said, I've always been dubious of annuities, but since joining this messageboard I have learned or read that some people don't think they are always bad..was just wondering if that was the case with this one...
If this is what she has, then she has a savings product that will give her a six percent return on her initial investment at least, and that she can probably take out fully with no penalties at the end of the term (usually 5 or 7 years).
Annuities are generally very safe and should never be more than one of many vehicles in a retirement or savings plan. But they beat putting money in a mason jar under the bed!
that is because people think an annuity is an investment . at the end of the day you are buying a pension . does your pension have an roi ? not until you are dead it doesn't .
but even if it was zero it did it's job . it fed you income at a level that is likely higher than you can take it from yourself because you need to keep a lot of powder dry for poor market sequencing and market years .
in effect with an annuity you give them 100k and each year they are giving you back your own money . at a 6% draw rate you get no roi until you get all your money back 16.50 years later and first go on their dime .
but you try drawing 6 % from your own money in a poor market or sequencing enviornment , let us know how that worked out for you
When I worked in banking, we had to submit a very detailed report on WHY an annuity would be the best fit for the customer, and it was truly reviewed and not guaranteed to be approved. I know this for a fact because I had a customer once who bought a small annuity. She had very little in the way of assets and she was about 70 years old. She WANTED this money in an annuity, and I can't remember all the details but I know that the brokerage called me back and asked for a lot more detail before they would even approve the sale.
Though that was a hassle, it made me actually feel even better about annuities.
If this is what she has, then she has a savings product that will give her a six percent return on her initial investment at least, and that she can probably take out fully with no penalties at the end of the term (usually 5 or 7 years).
Annuities are generally very safe and should never be more than one of many vehicles in a retirement or savings plan. But they beat putting money in a mason jar under the bed!
no , please read the above posts, it is not what she gets to take out nor how these products work
If this is what she has, then she has a savings product that will give her a six percent return on her initial investment at least, and that she can probably take out fully with no penalties at the end of the term (usually 5 or 7 years).
Annuities are generally very safe and should never be more than one of many vehicles in a retirement or savings plan. But they beat putting money in a mason jar under the bed!
Quote:
Originally Posted by mathjak107
no , please read the above posts, it is not what she gets to take out nor how these products work
She's actually correct, although it's a pretty simplified view. Variable annuities have a surrender period during which they can be cashed in with a penalty and after which they can be cashed in without penalty. The value received is generally the current value of the underlying assets, although some have riders establishing a fixed surrender value, or a floor or a cap.
She's actually correct, although it's a pretty simplified view. Variable annuities have a surrender period during which they can be cashed in with a penalty and after which they can be cashed in without penalty. The value received is generally the current value of the underlying assets, although some have riders establishing a fixed surrender value, or a floor or a cap.
Thank you - yes, my answer was simplistic but precise. Of course, there are varying time frames, options, etc. with different products but my answer was about a basic element of nearly all annuities.
She's actually correct, although it's a pretty simplified view. Variable annuities have a surrender period during which they can be cashed in with a penalty and after which they can be cashed in without penalty. The value received is generally the current value of the underlying assets, although some have riders establishing a fixed surrender value, or a floor or a cap.
Quote:
Originally Posted by KathrynAragon
If this is what she has, then she has a savings product that will give her a six percent return on her initial investment at least, and that she can probably take out fully with no penalties at the end of the term (usually 5 or 7 years).
Annuities are generally very safe and should never be more than one of many vehicles in a retirement or savings plan. But they beat putting money in a mason jar under the bed!
no she was not correct , you are correct but she was not .
you can not ever cash it out for the value of the guaranteed growth amount . that is 100% incorrect . only the actual underlying investment account counts for that purpose . that 6% is only for basing annuitization on -period . she can not touch that account in any other way ..
The purpose of the product was never to have growth on par or better than the market.
For the purposes of guaranteed income, and growth of that possible guarantee your mother's base for annuitized income went from 100 to 164 in 8 years which is close to 6.5% per year. Where else are you going to grow your potnetial income base by nearly 6.5% guaranteed?
how much do you think the broker has been paid?
That $164,000 number means nothing. Yes, she can get a check for 7% or 11K, but that gets reduced from the 120K number
as mathjak said, this investment was basically just a cash proxy which net net yielded to her 15-20 K over an 8 year period.
and I know from people that work in the industry the broker prolly got paid a couple grand each year on this....which just pisses me off...
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