Income Annuities Now?

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Topic Author
TBillT
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Income Annuities Now?

Post by TBillT »

I wonder if this might be a good time for 5-yr income annuity before RMD's start in retirement.

My investment premise (perhaps I should say my perception) is that the annuity interest rates lag, so they are still up at 3-4%.
So instead of money market fund you could pay yourself say $5000 a month.
Whereas it seems money market rates are heading lower? Not sure...brave new world out there.
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ResearchMed
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Re: Income Annuities Now?

Post by ResearchMed »

TBillT wrote: Sat Mar 14, 2020 10:24 pm I wonder if this might be a good time for 5-yr income annuity before RMD's start in retirement.

My investment premise (perhaps I should say my perception) is that the annuity interest rates lag, so they are still up at 3-4%.
So instead of money market fund you could pay yourself say $5000 a month.
Whereas it seems money market rates are heading lower? Not sure...brave new world out there.
Why would you want to pay someone else to take your money and parcel it out back again to you?
The only really "good" type of annuity, for most purposes, is an SPIA (Single Payment Immediate Annuity) - a lifetime annuity, so that you have income for as long as you live.

How about a ladder of CD's, so that one matures each year?

RM
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Dale_G
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Location: Central Florida - on the grown up side of 83

Re: Income Annuities Now?

Post by Dale_G »

Who is selling 5 year annuities with a 3-4% APR???

Dale
Volatility is my friend
Bronco Billy
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Re: Income Annuities Now?

Post by Bronco Billy »

Dale_G wrote: Sat Mar 14, 2020 11:03 pm Who is selling 5 year annuities with a 3-4% APR???

Dale
I got one here for 3.92% several months ago but it looks like the 5 year is
down to 3.25 now.

https://sslco.com/content/personal-choice
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Dale_G
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Re: Income Annuities Now?

Post by Dale_G »

I don't see any way to download a copy of the contract, or any actual details. With treasuries yielding less than 1%, I think i'd skip their probably 100 page contract anyway.

If any insurance peddler actually wants me to send in a megabuck or so with a 5 yr APY of 3%, they should pm me with a copy of the contract.

Dale
Volatility is my friend
smectym
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Re: Income Annuities Now?

Post by smectym »

TBillT wrote: Sat Mar 14, 2020 10:24 pm I wonder if this might be a good time for 5-yr income annuity before RMD's start in retirement.

My investment premise (perhaps I should say my perception) is that the annuity interest rates lag, so they are still up at 3-4%.
So instead of money market fund you could pay yourself say $5000 a month.
Whereas it seems money market rates are heading lower? Not sure...brave new world out there.
We did exactly that and we’ve got a five-year contract running that’s paying out $2500 a month until our RMD’s kick in. We are satisfied with it. We used Vanguard’s annuity service when it was still available (I don’t believe it still is) and so got favorable rates; but Fidelity has a similar service, which I believe is still active. But note we did it as a 1035 transfer from a Vanguard Variable Annuity.

The objections term annuities have their validity: sure, potentially you can manage your own withdrawals without engaging an annuity provider. But the “check a month” feature can relieve a lot of stress and there are tax advantages too. In my opinion it’s a viable approach, though perhaps not for everyone. It’s working well enough for us.
capjak
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Re: Income Annuities Now?

Post by capjak »

Dale_G wrote: Sun Mar 15, 2020 1:40 am I don't see any way to download a copy of the contract, or any actual details. With treasuries yielding less than 1%, I think i'd skip their probably 100 page contract anyway.

If any insurance peddler actually wants me to send in a megabuck or so with a 5 yr APY of 3%, they should pm me with a copy of the contract.

Dale
contact here they will send you one..
https://www.immediateannuities.com/deferred-annuities/
Ron
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Re: Income Annuities Now?

Post by Ron »

Bronco Billy wrote: Sat Mar 14, 2020 11:19 pm
Dale_G wrote: Sat Mar 14, 2020 11:03 pm Who is selling 5 year annuities with a 3-4% APR???

Dale
I got one here for 3.92% several months ago but it looks like the 5 year is
down to 3.25 now.

https://sslco.com/content/personal-choice
The quote includes a return of your money (e.g. premium).

To do a proper measurement of return, you should complete an IRR spreadsheet showing the premium, term, and annual payment received.

While our joint life annuity (SPIA) was purchased over a decade ago, our actual return comes out to an annual 4.79%, which does not include the return of "our" money. Yes, I know that return is quite high compared to today's rates, but at the time of purchase one of the concerns we had was that the return would be outdone by future inflation. We lucked out and that was not the case (at least, not yet!).

BTW, that rate is calculated on the joint life forecast for our situation, at time of policy issuance. If one passes before the calculated end date (age 87), payments continue (at 100%) to the survivor. If both pass before the age of 87, payments continue (at 100%) to our estate. If one/both live beyond age 87, payments continue at 100% and our calculated IRR actually rises beyond the initial calculated rate of 4.79%.

Of course, that was then - this is now, with much lower rates overall.

FWIW,

- Ron
Topic Author
TBillT
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Re: Income Annuities Now?

Post by TBillT »

Thanks for the comments above...
Yes we were taught (in our retirement class) to use the ImmediateAnnuities.com calculator (mentioned above), so that's what I am looking at.
Bronco Billy
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Re: Income Annuities Now?

Post by Bronco Billy »

Dale_G wrote: Sun Mar 15, 2020 1:40 am I don't see any way to download a copy of the contract, or any actual details. With treasuries yielding less than 1%, I think i'd skip their probably 100 page contract anyway.
Dale
Your question just asked who was selling them. My first annuities were bought by the FA I had before we parted ways. I don't know if you can just call up and buy one without a salesperson. There are a lot of disclosures The Sentinel contract was only 15 pages but its more like a CD with fixed rates. PLEASE do not buy annuity if you going to need the money before the contract ends. They do have surrender charges. I have been able to annuitize one annuity, take yearly free 10% withdrawals and renew another one since i fired my FA. I was sent contracts that you have to sign and approve. I think you have 30 days to change your mind.

I believe the website below might be your best bet.
https://www.immediateannuities.com/deferred-annuities/
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ResearchMed
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Re: Income Annuities Now?

Post by ResearchMed »

Bronco Billy wrote: Sun Mar 15, 2020 12:19 pm
Dale_G wrote: Sun Mar 15, 2020 1:40 am I don't see any way to download a copy of the contract, or any actual details. With treasuries yielding less than 1%, I think i'd skip their probably 100 page contract anyway.
Dale
Your question just asked who was selling them. My first annuities were bought by the FA I had before we parted ways. I don't know if you can just call up and buy one without a salesperson. There are a lot of disclosures The Sentinel contract was only 15 pages but its more like a CD with fixed rates. PLEASE do not buy annuity if you going to need the money before the contract ends. They do have surrender charges. I have been able to annuitize one annuity, take yearly free 10% withdrawals and renew another one since i fired my FA. I was sent contracts that you have to sign and approve. I think you have 30 days to change your mind.

I believe the website below might be your best bet.
https://www.immediateannuities.com/deferred-annuities/
The basic immediateannuities.com landing site allows one to select a future (deferred) start date if desired.

RM
This signature is a placebo. You are in the control group.
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