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defeered can also take in variable and index linked...you go through an accumulation stage , then at some point off in the future you annuitize it .... if you like i can repost the detailed look at one so you can see why what you think you are getting is not the case .
this one is the prudential fixed income , bond index annuity .
defeered can also take in variable and index linked...you go through an accumulation stage , then at some point off in the future you annuitize it .... if you like i can repost the detailed look at one so you can see why what you think you are getting is not the case .
this one is the prudential fixed income , bond index annuity .
you will never see a spread sheet like this from your annuity provider . THIS IS THE REAL DEAL .
they would never let you see the bottom line growth rate you get on their guaranteed minimums and bonus bucks they give you .
here is an example of how these guaranteed minimums work and why what you think you are getting is not what you get .
this is actually not a bad products and as a proxy for cash it is actually pretty good. this 5.50% was at a time rates on cd's were 1%.
it is called prudentials variable fixed income deferred annuity . it gives you a guaranteed 5-1/2% increases a year minimum or whatever your bond index that is linked got as a high water mark , which ever is higher .
in reality there is no way a bond index today with more then 2-1/2 % in fees being charged is going to beat 5-1/2% so your guarantee is going to be your deal .
you will never see spread sheets like this from the annuity issuer . this is your real deal once the curtain is pulled back .
so here is a deferred annuity for a single , you start at age 55 putting money in and delay until age 65 when you annuitize your money .
the fees are 2.55% and you are linked to the ast bond index , similiar to AGG .
the guaranteed min of 5.50% includes the fees , the bond index does not , so right off the bat you know the link to the index is there because it sounds good but it will not beat the min with those fees .
so below you see the yearly compounding of the promised 5.50% . that is taking part in a sub account which you can never take out or pass to heirs . the balance is only used to compute your draw when you annuitize . your actual account value is the one linked to the bond index with all the fees .
that is what you get if you want your money or pass to heirs .
so you see if you give them 100k and take the annuity after year 1 ,you get 4% of 105k or 4200.00 bucks.
for every year you delay your balance grows by 5.50% and your draw if you annuitize goes up 1/10% so finally 10 years later you get 5% of 180k or 9k .
that is a nice jump in income so it isn't a bad product but if you thought that 180k was yours to take you were wrong . your actual balance is what is linked to the bond index net of all those fees .
you can see it takes until age 75 before you get all your money back and see dollar 1 on their dime .
NOTE , YOUR ACTUAL GROWTH RATE BY AGE 90 IS NOT THE 5.50% YOU THOUGHT , BUT ONLY 4.55%
not bad by todays standards but not what you expected .
Never been a fan but do have a small annuity. Most of my money is in the market and I find it hard to switch over at this point. But:
Two things that may be a benefit as a retiree if you select a good annuity for you
1. you get a % that is known. basically it isn't a gamble. while may be less than equities you know going in. it is steady and known for good or bad. it is safe from decline and not subject to Fed interest rates or stock market changes. It is what it is, no more no less.
2. it is like an emergency account there for you if the roof or car need replaced. As a retiree without wide-ranging means, it gives you some cash $ that you can take care of emergencies quickly. and I don't think it increases your tax situation if you do withdraw money for an emergency like an IRA (?? Could be wrong here)
I am not the expert some of you are but annuities do seem to serve a purpose if chosen well.
Never been a fan but do have a small annuity. Most of my money is in the market and I find it hard to switch over at this point. But:
Two things that may be a benefit as a retiree if you select a good annuity for you
1. you get a % that is known. basically it isn't a gamble. while may be less than equities you know going in. it is steady and known for good or bad. it is safe from decline and not subject to Fed interest rates or stock market changes. It is what it is, no more no less.
2. it is like an emergency account there for you if the roof or car need replaced. As a retiree without wide-ranging means, it gives you some cash $ that you can take care of emergencies quickly. and I don't think it increases your tax situation if you do withdraw money for an emergency like an IRA (?? Could be wrong here)
I am not the expert some of you are but annuities do seem to serve a purpose if chosen well.
just the opposite ... most annuities without expensive riders limit you to just the draw rate . if you need more for an emergency you are out of luck ...
spia's work well with your own investing as part of the bond /cash budget but not instead of it .
just the opposite ... most annuities without expensive riders limit you to just the draw rate . if you need more for an emergency you are out of luck ...
spia's work well with your own investing as part of the bond /cash budget but not instead of it .
Right, annuities are for ongoing regular expenses - basically, to give yourself a guaranteed paycheck every month without working. You can't withdraw anything from an annuity account without enormous penalty, except the automatic, scheduled (usually people set it as monthly), recurrent equal payments for a set number of years, or for life.
I plan annuities for ongoing income. For emergencies I keep enough (I think) cash and an IRA which I plan to convert to Roth over the next 3 years (I'm 59 now, semi-retired). The IRA is in mutual funds, and that is my only market exposure. While this is a super conservative approach and one can obviously make far more money in stocks if one enters the market young enough, I realized when I was young enough that I hated dealing with money, my job was too involved leaving me no time and energy to deal with anything else with any kind of focused attention, and I better focused on earning money by working than by investing.... which is what I did. Fixed annuities are basically good for covering daily expenses for people who don't want to think about money, who have enough money and do not need to increase it but only to preserve its purchasing power to some reasonable extent, who do not need to leave a large inheritance, and who may be genetically programmed to live long (I happen to be in all these categories, so for me annuities are a total financial blessing). Variable annuities are not good for anybody at all (except for the company that sells them).
After I got the quote online, I requested the information packet which is substantial and worth reading if you're serious about buying an immediate or deferred annuity. He (his name is Hersh Stern) sends it one time, followed by about six emails with further useful information. Then no further followup (I haven't purchased one yet; am still in the deciding phase because I wrongly thought interest rates were going up.)
Once a year, Barron's has a cover story on Annuities with their roundup of which they think are best. But I've found the immediateannuities.com website to be more helpful, especially with the instant quote feature -- you can change the Start Date to see how much more you'd get per month by waiting another X months or years, for example.
I'm tending toward a certain amount in an immediate annuity, and then another smaller amount in a deferred annuity that starts at 80 or 85 (also called 'longevity insurance') just to be sure I have a buffer for care when I'm old. I'm not buying long term care insurance. If I don't need the annuity money for care, I'll have it for extra living expenses.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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We got 10 GLWB VA and Fixed Index. 2008-2017, laddered also in amounts. Currently 4 annuities are in decumulation mode, not annuitized. Age 69/72. Plan to start decumulation on 1-2 more this fall at anniversaries, and 1-2 annuities in 2020 every year beyond. The older GLWB VAs had variable growth rate of ave +9% (doubled in liquidation value in 8 yrs, net fees). The Fixed Index annuities, suck; However, these F I annuities were bought for their 5% Income account GLWB growth and up to 7% Income withrawal (not annuitized).
Seven of the annuities are IRAs; One is Roth; and two are nonqualified. Our current Income from SS, small pension (non COLA), rentals, and the 4 Income annuities. Present Income is enough. We have LTCi purchased in our early 50s. Reserve/discretionary funds is likewise enough as long as I don't blow it in the speculative-equity markets.
I have looked into the SPIA market this past year but have postponed the decision. We don't need the extra Income from SPIA s and our health have much deteriorated in 2018-2019 to the point where we may not make it to age 85. We have a legacy motive so GLWB annuities fit well and SPIA s do not fit as well. I may add a SPIA later for the higher Income and save the GLWB for inheritance.
Our retirement Income is flexible, comprehensive, and not entirely dependent on any one component or economic future. There is a RMD consideration in GLWB annuities, to the owner 's advantage. Our GLWB also have an LTC kicker.
Your planning may vary. Do you planning. Expect the Markets to go Up and Down.
Good Luck.
i am not a fan of anything but life annuities ... period certain annuities like these 5 or 10 year carry no mortality credits since everyone gets their money back ..they really are just like cd's from an insurance company and do not get annuities biggest benefit ...those who die add to the returns of those who live ...
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