Just Bought an Annuity

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Greenman72
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Re: Just Bought an Annuity

Post by Greenman72 »

tj wrote: Mon Jul 20, 2020 10:16 pm If I understand correctly, you are saying someone can buy this annuity and when it comes time to annuitize it, the contractholder will receive either 6% of their premium they've invested or 6% of the premium + growth to that point? Or does the 6% change as time goes on?
You do not understand correctly. For the third time, I am not talking about annutization. I'm talking about taking guaranteed income from the product without annuitizing it. Two totally different things.
tj
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Re: Just Bought an Annuity

Post by tj »

Greenman72 wrote: Tue Jul 21, 2020 9:02 am
tj wrote: Mon Jul 20, 2020 10:16 pm If I understand correctly, you are saying someone can buy this annuity and when it comes time to annuitize it, the contractholder will receive either 6% of their premium they've invested or 6% of the premium + growth to that point? Or does the 6% change as time goes on?
You do not understand correctly. For the third time, I am not talking about annutization. I'm talking about taking guaranteed income from the product without annuitizing it. Two totally different things.
So it is more like the Vanguard VA that has a GLWB? I was looking at the wrong product. I thought it was elite rather than Perspective. What's the difference between Perspective iI and Perspective II advisory?

I still have the same questions though, how does the insurance company make $$ when it seems to offer such a favorable contract? What are investors giving up by using such a product? The bells and whistles must have a cost, so when you said the income base is the premium, that must be the net premiums after the expenses get deducted?

I suppose the big risk is that you are getting less growth vs a similar portfolio outside of the annuity because your asset has to pay for all the riders.
Last edited by tj on Tue Jul 21, 2020 9:49 am, edited 2 times in total.
FBN2014
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Re: Just Bought an Annuity

Post by FBN2014 »

Greenman72 wrote: Tue Jul 21, 2020 8:59 am ^Nationwide Monument Advisor is an IOVA, or Investment Only Variable Annuity. It is nothing at all like the Jackson Perspective II, which is the one I was discussing. It has absolutely no additional bells or whistles, like a GMWB or enhanced death benefit. Plus, considering that is designed to be sold as an advisory product, then it will also have an advisory fee added to it (if sold through an FA).

Not a good comparison.
Point taken but I don't think paying extra for the riders is worth the cost. With an IOVA I just use Vanguard index funds with the proper allocation. Then you can just adjust the withdrawals based on market conditions. Some years you take out 3-4%, others less so you don't deplete account. At least that's what I've been doing with mine.
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Greenman72
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Re: Just Bought an Annuity

Post by Greenman72 »

FBN2014 wrote: Tue Jul 21, 2020 9:32 am
Greenman72 wrote: Tue Jul 21, 2020 8:59 am ^Nationwide Monument Advisor is an IOVA, or Investment Only Variable Annuity. It is nothing at all like the Jackson Perspective II, which is the one I was discussing. It has absolutely no additional bells or whistles, like a GMWB or enhanced death benefit. Plus, considering that is designed to be sold as an advisory product, then it will also have an advisory fee added to it (if sold through an FA).

Not a good comparison.
Point taken but I don't think paying extra for the riders is worth the cost. With an IOVA I just use Vanguard index funds with the proper allocation. Then you can just adjust the withdrawals based on market conditions. Some years you take out 3-4%, others less so you don't deplete account. At least that's what I've been doing with mine.
If you don't want to pay for guarantees, then don't buy them. Capitalism at its best!!!
But with a "traditional" VA with a guaranteed income floor has...a guarantee--which an IOVA does not. That's why advisors sell them--because some people want guarantees, and don't mind paying for them.
Greenman72
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Re: Just Bought an Annuity

Post by Greenman72 »

tj wrote: Tue Jul 21, 2020 9:26 am
Greenman72 wrote: Tue Jul 21, 2020 9:02 am
tj wrote: Mon Jul 20, 2020 10:16 pm If I understand correctly, you are saying someone can buy this annuity and when it comes time to annuitize it, the contractholder will receive either 6% of their premium they've invested or 6% of the premium + growth to that point? Or does the 6% change as time goes on?
You do not understand correctly. For the third time, I am not talking about annutization. I'm talking about taking guaranteed income from the product without annuitizing it. Two totally different things.
So it is more like the Vanguard VA that has a GLWB? I was looking at the wrong product. I thought it was elite rather than Perspective. What's the difference between Perspective iI and Perspective II advisory?

I still have the same questions though, how does the insurance company make $$ when it seems to offer such a favorable contract? What are investors giving up by using such a product? The bells and whistles must have a cost, so when you said the income base is the premium, that must be the net premiums after the expenses get deducted?

I suppose the big risk is that you are getting less growth vs a similar portfolio outside of the annuity because your asset has to pay for all the riders.
P2 has a 1% trailing commission and P2 Advisory has a 1% advisory fee.

The insurance company charges an arm and a leg for these guarantees. Not only is there M&E, but the death benefit costs X%, the GMWB costs X%, etc. Plus, I'm pretty sure they have some sweetheart deals with the funds that are in their lineup.

And yes--that is exactly the risk with annuities. They will, by design and by definition, grow more slowly than a similar non-annuity investment. But again--they have guarantees, which is good for some people.
JackoC
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Re: Just Bought an Annuity

Post by JackoC »

FoolStreet wrote: Sun Jun 30, 2019 11:04 am
If the backtested safe withdrawal rate is 4%, which is calculated on then-current dollars, which effectively makes it keep up with inflation, then it seems to me like you are giving up a lot of money for the guarantee of an annuity. Not worth it to me and I’d rather self insure.
But there's a big apples v oranges aspect to that. 4% SWR 'safe' is based on *past* returns. The annuity you buy now is price on *today's* yield curve (it probably mainly references the yields of bonds the ins co can invest in).

Without getting sidetracked on a discussion of stock expected returns now v past realized returns, since stocks and SPIA are also apples v. oranges (SPIA's are a substitute for bonds, obviously both SPIA and bonds give up the upside potential and much of the downside risk of stocks), you could easily demonstrate this by setting up one of the popular retirement calculators like Firecalc, which work on past returns, at 100% bond portfolio. The distribution of returns would tell you today's bonds (as well as SPIA's) are 'terrible investments'. If only we could get in a time machine and get past bond yields, that would be relevant.

The question is whether SPIA is a good deal now relative to a bond ladder now and self insure the longevity aspect. Again, whether to have some stocks is really a different question, nobody is prohibited from having some bonds and some stocks, or some SPIA and some stocks. The apples-apples of bonds v SPIA depends what bonds yield now, not what the returned in the past.
tj
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Re: Just Bought an Annuity

Post by tj »

Greenman72 wrote: Tue Jul 21, 2020 10:05 am
tj wrote: Tue Jul 21, 2020 9:26 am
Greenman72 wrote: Tue Jul 21, 2020 9:02 am
tj wrote: Mon Jul 20, 2020 10:16 pm If I understand correctly, you are saying someone can buy this annuity and when it comes time to annuitize it, the contractholder will receive either 6% of their premium they've invested or 6% of the premium + growth to that point? Or does the 6% change as time goes on?
You do not understand correctly. For the third time, I am not talking about annutization. I'm talking about taking guaranteed income from the product without annuitizing it. Two totally different things.
So it is more like the Vanguard VA that has a GLWB? I was looking at the wrong product. I thought it was elite rather than Perspective. What's the difference between Perspective iI and Perspective II advisory?

I still have the same questions though, how does the insurance company make $$ when it seems to offer such a favorable contract? What are investors giving up by using such a product? The bells and whistles must have a cost, so when you said the income base is the premium, that must be the net premiums after the expenses get deducted?

I suppose the big risk is that you are getting less growth vs a similar portfolio outside of the annuity because your asset has to pay for all the riders.
P2 has a 1% trailing commission and P2 Advisory has a 1% advisory fee.

The insurance company charges an arm and a leg for these guarantees. Not only is there M&E, but the death benefit costs X%, the GMWB costs X%, etc. Plus, I'm pretty sure they have some sweetheart deals with the funds that are in their lineup.

And yes--that is exactly the risk with annuities. They will, by design and by definition, grow more slowly than a similar non-annuity investment. But again--they have guarantees, which is good for some people.
So essentially your point is that when comparing the VA and the SPIA,there's a point where the difference between the guaranteed income rate on the VA and the income rate on the SPIA is negligible that you might as well use the VA, but if someone has an extremely long longevity, it probalby won't make much of a difference because the cost of the riders will drain the contract value. It sounds like more than anything it's a hedge against dying soon after starting the income stream. SPIAs have riders too though.
Greenman72
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Re: Just Bought an Annuity

Post by Greenman72 »

tj wrote: Tue Jul 21, 2020 11:35 am So essentially your point is that when comparing the VA and the SPIA,there's a point where the difference between the guaranteed income rate on the VA and the income rate on the SPIA is negligible that you might as well use the VA, but if someone has an extremely long longevity, it probalby won't make much of a difference because the cost of the riders will drain the contract value. It sounds like more than anything it's a hedge against dying soon after starting the income stream. SPIAs have riders too though.
Yeah, that's a pretty fair way to put it.

The way I see it (and most VA wholesalers hate it when I say this), over the ultra-long term, we expect the contract value to ultimately fall to zero. Even in a bull market, eventually those 2-3-4% fees will eventually overwhelm the contract value and drain all the money from the account, because the charges are based on the benefit that they are "paying for", which are almost always greater than the contract value.

And yes--once you get to the point where you're taking income, but the contract value is zero, it has basically become a de-facto SPIA.
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Re: Just Bought an Annuity

Post by megabad »

Greenman72 wrote: Tue Jul 21, 2020 12:17 pm Yeah, that's a pretty fair way to put it.

The way I see it (and most VA wholesalers hate it when I say this), over the ultra-long term, we expect the contract value to ultimately fall to zero. Even in a bull market, eventually those 2-3-4% fees will eventually overwhelm the contract value and drain all the money from the account, because the charges are based on the benefit that they are "paying for", which are almost always greater than the contract value.

And yes--once you get to the point where you're taking income, but the contract value is zero, it has basically become a de-facto SPIA.
This is a decent explanation. Basically, if your goal is longevity insurance, there is never a good reason to buy a variable annuity over a SPIA. The only reason I could ever think of using a VA would be tax deferral, but even then I am not sure the temporary tax benefits would outweigh the outrageous fees. I am in the firm camp of 99.9% of people don’t need them ever. And the benefit to 0.1% that could use them is minuscule net of commissions and fees.
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Re: Just Bought an Annuity

Post by Broken Man 1999 »

megabad wrote: Tue Jul 21, 2020 12:35 pm
Greenman72 wrote: Tue Jul 21, 2020 12:17 pm Yeah, that's a pretty fair way to put it.

The way I see it (and most VA wholesalers hate it when I say this), over the ultra-long term, we expect the contract value to ultimately fall to zero. Even in a bull market, eventually those 2-3-4% fees will eventually overwhelm the contract value and drain all the money from the account, because the charges are based on the benefit that they are "paying for", which are almost always greater than the contract value.

And yes--once you get to the point where you're taking income, but the contract value is zero, it has basically become a de-facto SPIA.
This is a decent explanation. Basically, if your goal is longevity insurance, there is never a good reason to buy a variable annuity over a SPIA. The only reason I could ever think of using a VA would be tax deferral, but even then I am not sure the temporary tax benefits would outweigh the outrageous fees. I am in the firm camp of 99.9% of people don’t need them ever. And the benefit to 0.1% that could use them is minuscule net of commissions and fees.
I am that .1%.

I was cut off from my 401k as I had no earned income, starting in 1999. I had a bunch of money, none in the "earned income" classification. Everything but my SSDI was tax-free.

From 1999-2003 I maxed spousal IRAs, and for two years maxed out I-bonds. The problem with both spousal IRAs and I-Bonds is the very low cap on TIRA contributions, and relative low purchase limits on I-bonds. One year I exceeded my I-Bond purchase limit, but all that happened was I received a letter from Treasury Direct advising me of the yearly limit. TD graciously allowed me to keep all the bonds, including the ones I shouldn't have bought.

Around 2003-4 I started getting my life insurance benefits, so I decided to get a Vanguard VA, as I wanted something tax-deferred. And, since the State of Florida has some protection for annuities, I felt comfortable buying one. When you no longer have personal capital, preserving and growing your investments are very important. Also, when you get money from someone, you immediately think: I got money from someone, so I better think of a way to ensure that money can't be pulled away easily.

My total VA expenses amount to .48%. I contributed $65,500 to my VA. It is worth around $250,000, depending which way the market goes in daily gyration.

My $65,500 will be returned tax-free, but I will pay taxes on the VA's growth. And honestly, I am happy to do so.

The VA requires no RMDs, and can grow until we are age 85.

I have one regret concerning my purchase of our VA: I should have purchased much larger VA. :oops:

greenman72: Thank you for identifying the product I considered to be a unicorn. A VA is a different beast than a IOVA. That old apples to oranges thingy.

However, when you identified an IOVA, made sense. I knew I didn't have that VA.

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megabad
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Re: Just Bought an Annuity

Post by megabad »

Broken Man 1999 wrote: Tue Jul 21, 2020 2:28 pm
I was cut off from my 401k as I had no earned income, starting in 1999. I had a bunch of money, none in the "earned income" classification. Everything but my SSDI was tax-free.

I wanted something tax-deferred.
Just out of curiosity, why did you want tax deferral with a presumably zero tax rate? Seems like the variable annuity would result in significantly more tax due in this type of situation for most investors?
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Re: Just Bought an Annuity

Post by sschullo »

Taylor Larimore wrote: Tue Apr 02, 2019 5:06 pm
Greenman72 wrote: Tue Apr 02, 2019 1:42 pm Out of curiosity....it seems that you intentionally did NOT choose to go with a variable annuity. May I ask why not?
Greenman72:

This is why I would never buy a Variable Annuity:

ONE FAULTY INVESTMENT

Best wishes.
Taylor
Thank you Taylor for the link to VAs and why they are terrible plans. Too many public k12 teachers are STILL getting sold VAs, fixed, indexed annuities by the boatloads with no end in sight.
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Stinky
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Re: Just Bought an Annuity

Post by Stinky »

Taylor Larimore wrote: Tue Apr 02, 2019 5:06 pm
Greenman72 wrote: Tue Apr 02, 2019 1:42 pm Out of curiosity....it seems that you intentionally did NOT choose to go with a variable annuity. May I ask why not?
Greenman72:

This is why I would never buy a Variable Annuity:

ONE FAULTY INVESTMENT

Best wishes.
Taylor
The article is 16 years old.

The advice is timeless.
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Re: Just Bought an Annuity

Post by Broken Man 1999 »

megabad wrote: Tue Jul 21, 2020 3:37 pm
Broken Man 1999 wrote: Tue Jul 21, 2020 2:28 pm
I was cut off from my 401k as I had no earned income, starting in 1999. I had a bunch of money, none in the "earned income" classification. Everything but my SSDI was tax-free.

I wanted something tax-deferred.
Just out of curiosity, why did you want tax deferral with a presumably zero tax rate? Seems like the variable annuity would result in significantly more tax due in this type of situation for most investors?
Same reason people want TIRAs, tax-deferral for their investments, and, for me asset protection.

Our income after I retired and no longer received LTD, insurance payments, and settlements is no longer tax-free. And we immediately went into a higher tax bracket.
If I had used a taxable account, I wouldn't have been able to be as aggressive as I can be in my VA. I used my VA to rebalance with no issues of having to worry about capital gains.

I like the idea of another 18 years of tax-deferral, along with asset protection.

My total investment in my VA was only $65,500, it has grown nicely for us. It was funded via OPM (other people's money). Our VA is just another leg for our retirement stool. I probably won't need to actually remove any funds from the VA until we are 85. So it grows tax-deferred and protected by the State of Florida. I like that.

Taxable accounts might have subjected me to giving money to someone else. I don't like that. I mean taking someone else's money is OK. :D

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Oicuryy
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Re: Just Bought an Annuity

Post by Oicuryy »

Greenman72 wrote: Wed Apr 03, 2019 8:21 am Had he bought a $250k VA, he could have gotten $14,000 per year, still be 100% invested in the market, still maintain reasonable control over his money, have the ability to take additional withdrawals, and still have a death benefit at his death.
Can you provide a link to a brochure that shows a withdrawal rate of 5.6% for a 63-year-old? This brochure for the Jackson National Perspective II riders shows withdrawal rates in the 4% range depending on the rider.

https://www.jackson.com/static/jwp/pdf/jmv8859.pdf

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Re: Just Bought an Annuity

Post by SlowMovingInvestor »

I was thinking of buying an annuity through Schwab and was told the first available phone appointment with the annuity team was in 8-9 days.

This might push my purchase into next month, and I presume rates typically change at the end of the month ? I would prefer to buy through Schwab, but I don't want to get a lower rate simply because of this delay.

If I were to buy through Blueprint, I assume I get a rate lock immediately ? Or do I have to wait for someone to call back ?

[ I wonder if Barron's article last Saturday has led to a lot of calls to the annuity desk. And annuity salespersons don't make much money off deferred fixed annuities, so may be slow to respond to clients who want to purchase those annuities]


ADDED: Sorry, I posted this in the wrong thread. I thought I was posting in one of the threads about deferred fixed annuity purchases.
Last edited by SlowMovingInvestor on Wed Jul 22, 2020 3:55 pm, edited 1 time in total.
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Stinky
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Re: Just Bought an Annuity

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SlowMovingInvestor wrote: Wed Jul 22, 2020 2:18 pm This might push my purchase into next month, and I presume rates typically change at the end of the month ? I would prefer to buy through Schwab, but I don't want to get a lower rate simply because of this delay.
When I worked for a life insurance company, we had a formal rate review process every two weeks. Rates didn’t always change.

In times of fast moving rates, we would change every week.

Other companies may do this differently.
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Re: Just Bought an Annuity

Post by SlowMovingInvestor »

Stinky wrote: Wed Jul 22, 2020 2:20 pm
SlowMovingInvestor wrote: Wed Jul 22, 2020 2:18 pm This might push my purchase into next month, and I presume rates typically change at the end of the month ? I would prefer to buy through Schwab, but I don't want to get a lower rate simply because of this delay.
When I worked for a life insurance company, we had a formal rate review process every two weeks. Rates didn’t always change.

In times of fast moving rates, we would change every week.

Other companies may do this differently.
Thanks for the info. What about the 'online' sites like Stan the annuity man or Blueprint ? Is a rate locked in when you apply ? Or only when you fund the annuity (or maybe in between when you send in a signed form indicating acceptance of contract) ?


ADDED: The more general question might be -- when do you get a rate lock in for an annuity purchase ?
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Re: Just Bought an Annuity

Post by Stinky »

SlowMovingInvestor wrote: Wed Jul 22, 2020 2:24 pm
Stinky wrote: Wed Jul 22, 2020 2:20 pm
SlowMovingInvestor wrote: Wed Jul 22, 2020 2:18 pm This might push my purchase into next month, and I presume rates typically change at the end of the month ? I would prefer to buy through Schwab, but I don't want to get a lower rate simply because of this delay.
When I worked for a life insurance company, we had a formal rate review process every two weeks. Rates didn’t always change.

In times of fast moving rates, we would change every week.

Other companies may do this differently.
Thanks for the info. What about the 'online' sites like Stan the annuity man or Blueprint ? Is a rate locked in when you apply ? Or only when you fund the annuity (or maybe in between when you send in a signed form indicating acceptance of contract) ?


ADDED: The more general question might be -- when do you get a rate lock in for an annuity purchase ?
I don’t know the precise procedure.

I suggest that you call one of those firms to be sure, unless you can find something on websites.
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Re: Just Bought an Annuity

Post by tj »

Based on that Barrons article, it seemed like CUNA Mutual and American National have had the top rates recently. I did not see either of those compaanies in the Blueprint quoter. I think American National is only through captive agents....
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Re: Just Bought an Annuity

Post by kadye »

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tj
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Re: Just Bought an Annuity

Post by tj »

kadye wrote: Sat Jul 25, 2020 6:54 pm This was a very educational and interesting thread. Thanks for sharing.
I suspect 4.4% payout rates are no longer available because of the current low rate environment and forward guidance.
TravelforFun wrote: Tue Apr 02, 2019 1:07 pm After months of consideration, we pulled the trigger last month and bought an annuity policy from New York Life. We chose:

- The premium of $250K because this is the limit the Texas Life & Health Insurance Guaranty Association would cover.

- Single Premium Immediate Annuity (SPIA), Joint Life with Cash Refund and 2% COLA. That means if I die first, my wife would continue to receive the monthly payments until she dies (Joint Life). If we both die before the sum of our annuity payments reaches $250K, our beneficiaries would receive the difference (Cash Refund).

This is the most conservative type of annuity you can get and hence, the payout is smaller than other policies I looked into but this is what my wife insisted. I am 67, my wife is 63 and we would receive $908 a month the first year which represents 4.4% of the $250K. The 2% COLA will make this rate grow.

The first annuity payment was deposited into our checking account today. So far so good!

We will pay taxes on the annuity payments since I used IRA money to pay the premium, but that also means the $250K have been removed from the RMD equation which I like very much.

We intend to purchase a similar SPIA next year. A ladder of four SPIAs and two social security income will take care of our expenses including a large travel budget and two long term care insurance policies. The rest of our asset will glide up to 80/20 and will be enjoyed by our heirs.

TravelforFun
He said that he would purchase a similar SPIA this year. I wonder how the rates varied.
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Re: Just Bought an Annuity

Post by TravelforFun »

tj wrote: Sat Jul 25, 2020 7:52 pm
kadye wrote: Sat Jul 25, 2020 6:54 pm This was a very educational and interesting thread. Thanks for sharing.
I suspect 4.4% payout rates are no longer available because of the current low rate environment and forward guidance.
TravelforFun wrote: Tue Apr 02, 2019 1:07 pm After months of consideration, we pulled the trigger last month and bought an annuity policy from New York Life. We chose:

- The premium of $250K because this is the limit the Texas Life & Health Insurance Guaranty Association would cover.

- Single Premium Immediate Annuity (SPIA), Joint Life with Cash Refund and 2% COLA. That means if I die first, my wife would continue to receive the monthly payments until she dies (Joint Life). If we both die before the sum of our annuity payments reaches $250K, our beneficiaries would receive the difference (Cash Refund).

This is the most conservative type of annuity you can get and hence, the payout is smaller than other policies I looked into but this is what my wife insisted. I am 67, my wife is 63 and we would receive $908 a month the first year which represents 4.4% of the $250K. The 2% COLA will make this rate grow.

The first annuity payment was deposited into our checking account today. So far so good!

We will pay taxes on the annuity payments since I used IRA money to pay the premium, but that also means the $250K have been removed from the RMD equation which I like very much.

We intend to purchase a similar SPIA next year. A ladder of four SPIAs and two social security income will take care of our expenses including a large travel budget and two long term care insurance policies. The rest of our asset will glide up to 80/20 and will be enjoyed by our heirs.

TravelforFun
He said that he would purchase a similar SPIA this year. I wonder how the rates varied.
I looked into getting another and identical SPIA from the same company and the payout is less than what I got from last year policy even though we're one year older and have one less year to live.

Turns out the interest this year is even lower than last year's low interest rate and that reduces the payments.

I think I'll wait two years (I'll be 70 then) to try to buy another SPIA. Hopefully, interest rate would be up a little bit by then.

TravelforFun
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Re: Just Bought an Annuity

Post by FBN2014 »

TravelforFun wrote: Tue Apr 02, 2019 1:07 pm After months of consideration, we pulled the trigger last month and bought an annuity policy from New York Life. We chose:

- The premium of $250K because this is the limit the Texas Life & Health Insurance Guaranty Association would cover.

- Single Premium Immediate Annuity (SPIA), Joint Life with Cash Refund and 2% COLA. That means if I die first, my wife would continue to receive the monthly payments until she dies (Joint Life). If we both die before the sum of our annuity payments reaches $250K, our beneficiaries would receive the difference (Cash Refund).

This is the most conservative type of annuity you can get and hence, the payout is smaller than other policies I looked into but this is what my wife insisted. I am 67, my wife is 63 and we would receive $908 a month the first year which represents 4.4% of the $250K. The 2% COLA will make this rate grow.

The first annuity payment was deposited into our checking account today. So far so good!

We will pay taxes on the annuity payments since I used IRA money to pay the premium, but that also means the $250K have been removed from the RMD equation which I like very much.

We intend to purchase a similar SPIA next year. A ladder of four SPIAs and two social security income will take care of our expenses including a large travel budget and two long term care insurance policies. The rest of our asset will glide up to 80/20 and will be enjoyed by our heirs.

TravelforFun
Can you share the details of the long term care insurance you bought?
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Re: Just Bought an Annuity

Post by rich126 »

I'm going through the process of getting a MYGA and with those you fill out the paperwork and then there is a period of time when you can withdraw from the agreement if the rate changes and you don't want to go forward with it. In my experience the rate is NOT locked when you apply. I am using my CPA who has a FA company to buy the MYGA since it doesn't affect my rate on the annuity. The commission is already built in and I figured he might as well get the small commission since he has helped me with a lot of questions w/o charging me for his time (except for doing the taxes).

At least that is my limited (hopefully correct) information regarding that stuff.
Topic Author
TravelforFun
Posts: 2186
Joined: Tue Dec 04, 2012 11:05 pm

Re: Just Bought an Annuity

Post by TravelforFun »

FBN2014 wrote: Mon Aug 17, 2020 10:53 am
TravelforFun wrote: Tue Apr 02, 2019 1:07 pm After months of consideration, we pulled the trigger last month and bought an annuity policy from New York Life. We chose:

- The premium of $250K because this is the limit the Texas Life & Health Insurance Guaranty Association would cover.

- Single Premium Immediate Annuity (SPIA), Joint Life with Cash Refund and 2% COLA. That means if I die first, my wife would continue to receive the monthly payments until she dies (Joint Life). If we both die before the sum of our annuity payments reaches $250K, our beneficiaries would receive the difference (Cash Refund).

This is the most conservative type of annuity you can get and hence, the payout is smaller than other policies I looked into but this is what my wife insisted. I am 67, my wife is 63 and we would receive $908 a month the first year which represents 4.4% of the $250K. The 2% COLA will make this rate grow.

The first annuity payment was deposited into our checking account today. So far so good!

We will pay taxes on the annuity payments since I used IRA money to pay the premium, but that also means the $250K have been removed from the RMD equation which I like very much.

We intend to purchase a similar SPIA next year. A ladder of four SPIAs and two social security income will take care of our expenses including a large travel budget and two long term care insurance policies. The rest of our asset will glide up to 80/20 and will be enjoyed by our heirs.

TravelforFun
Can you share the details of the long term care insurance you bought?
My LTC policy is provided by Unum. My wife and I pay $381 a month for approx. $10k and $6k a month coverage for my wife and me, respectively. We've bought this inflation adjusted policy in 2008 when I was 56 (wife was 52) and the premium at that time was $256 a month. We live in the Dallas - Fort Worth Area.

TravelforFun
Topic Author
TravelforFun
Posts: 2186
Joined: Tue Dec 04, 2012 11:05 pm

Re: Just Bought an Annuity

Post by TravelforFun »

rich126 wrote: Mon Aug 17, 2020 2:41 pm I'm going through the process of getting a MYGA and with those you fill out the paperwork and then there is a period of time when you can withdraw from the agreement if the rate changes and you don't want to go forward with it. In my experience the rate is NOT locked when you apply. I am using my CPA who has a FA company to buy the MYGA since it doesn't affect my rate on the annuity. The commission is already built in and I figured he might as well get the small commission since he has helped me with a lot of questions w/o charging me for his time (except for doing the taxes).

At least that is my limited (hopefully correct) information regarding that stuff.
Can you provide specific details like amounts, term, rates, etc?

TravelforFun
fatcoffeedrinker
Posts: 265
Joined: Mon Mar 23, 2020 2:03 pm

Re: Just Bought an Annuity

Post by fatcoffeedrinker »

TravelforFun wrote: Mon Aug 17, 2020 3:42 pm
rich126 wrote: Mon Aug 17, 2020 2:41 pm I'm going through the process of getting a MYGA and with those you fill out the paperwork and then there is a period of time when you can withdraw from the agreement if the rate changes and you don't want to go forward with it. In my experience the rate is NOT locked when you apply. I am using my CPA who has a FA company to buy the MYGA since it doesn't affect my rate on the annuity. The commission is already built in and I figured he might as well get the small commission since he has helped me with a lot of questions w/o charging me for his time (except for doing the taxes).

At least that is my limited (hopefully correct) information regarding that stuff.
Can you provide specific details like amounts, term, rates, etc?

TravelforFun
Not Rich126, but I am also going through the process of buying an MYGA. We are using Blueprintincome.com. The MYGA is for $100K, 5 years at 3.20%. The issuing company is Americo ("A" rated by AM Best). I'm hoping to get this final before the rate goes down, as the nearest competitor has a lot lower rate.
Topic Author
TravelforFun
Posts: 2186
Joined: Tue Dec 04, 2012 11:05 pm

Re: Just Bought an Annuity

Post by TravelforFun »

fatcoffeedrinker wrote: Mon Aug 17, 2020 3:47 pm
TravelforFun wrote: Mon Aug 17, 2020 3:42 pm
rich126 wrote: Mon Aug 17, 2020 2:41 pm I'm going through the process of getting a MYGA and with those you fill out the paperwork and then there is a period of time when you can withdraw from the agreement if the rate changes and you don't want to go forward with it. In my experience the rate is NOT locked when you apply. I am using my CPA who has a FA company to buy the MYGA since it doesn't affect my rate on the annuity. The commission is already built in and I figured he might as well get the small commission since he has helped me with a lot of questions w/o charging me for his time (except for doing the taxes).

At least that is my limited (hopefully correct) information regarding that stuff.
Can you provide specific details like amounts, term, rates, etc?

TravelforFun
Not Rich126, but I am also going through the process of buying an MYGA. We are using Blueprintincome.com. The MYGA is for $100K, 5 years at 3.20%. The issuing company is Americo ("A" rated by AM Best). I'm hoping to get this final before the rate goes down, as the nearest competitor has a lot lower rate.
Interestingly, Blueprint Income did not show me any result for $100K investment, 5-yr term, no withdrawal, Texas, and financial rating A or better.

TravelforFun
tj
Posts: 3388
Joined: Thu Dec 24, 2009 12:10 am

Re: Just Bought an Annuity

Post by tj »

TravelforFun wrote: Mon Aug 17, 2020 4:44 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 3:47 pm
TravelforFun wrote: Mon Aug 17, 2020 3:42 pm
rich126 wrote: Mon Aug 17, 2020 2:41 pm I'm going through the process of getting a MYGA and with those you fill out the paperwork and then there is a period of time when you can withdraw from the agreement if the rate changes and you don't want to go forward with it. In my experience the rate is NOT locked when you apply. I am using my CPA who has a FA company to buy the MYGA since it doesn't affect my rate on the annuity. The commission is already built in and I figured he might as well get the small commission since he has helped me with a lot of questions w/o charging me for his time (except for doing the taxes).

At least that is my limited (hopefully correct) information regarding that stuff.
Can you provide specific details like amounts, term, rates, etc?

TravelforFun
Not Rich126, but I am also going through the process of buying an MYGA. We are using Blueprintincome.com. The MYGA is for $100K, 5 years at 3.20%. The issuing company is Americo ("A" rated by AM Best). I'm hoping to get this final before the rate goes down, as the nearest competitor has a lot lower rate.
Interestingly, Blueprint Income did not show me any result for $100K investment, 5-yr term, no withdrawal, Texas, and financial rating A or better.

TravelforFun
Get rid of the no withdrawal filter. The Americo policy has the withdrawal option. It's an option, not a requirement.
fatcoffeedrinker
Posts: 265
Joined: Mon Mar 23, 2020 2:03 pm

Re: Just Bought an Annuity

Post by fatcoffeedrinker »

tj wrote: Mon Aug 17, 2020 4:47 pm
TravelforFun wrote: Mon Aug 17, 2020 4:44 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 3:47 pm
TravelforFun wrote: Mon Aug 17, 2020 3:42 pm
rich126 wrote: Mon Aug 17, 2020 2:41 pm I'm going through the process of getting a MYGA and with those you fill out the paperwork and then there is a period of time when you can withdraw from the agreement if the rate changes and you don't want to go forward with it. In my experience the rate is NOT locked when you apply. I am using my CPA who has a FA company to buy the MYGA since it doesn't affect my rate on the annuity. The commission is already built in and I figured he might as well get the small commission since he has helped me with a lot of questions w/o charging me for his time (except for doing the taxes).

At least that is my limited (hopefully correct) information regarding that stuff.
Can you provide specific details like amounts, term, rates, etc?

TravelforFun
Not Rich126, but I am also going through the process of buying an MYGA. We are using Blueprintincome.com. The MYGA is for $100K, 5 years at 3.20%. The issuing company is Americo ("A" rated by AM Best). I'm hoping to get this final before the rate goes down, as the nearest competitor has a lot lower rate.
Interestingly, Blueprint Income did not show me any result for $100K investment, 5-yr term, no withdrawal, Texas, and financial rating A or better.

TravelforFun
Get rid of the no withdrawal filter. The Americo policy has the withdrawal option. It's an option, not a requirement.
Also, I am in CA, so that may matter.
rich126
Posts: 2011
Joined: Thu Mar 01, 2018 4:56 pm

Re: Just Bought an Annuity

Post by rich126 »

TravelforFun wrote: Mon Aug 17, 2020 3:42 pm
rich126 wrote: Mon Aug 17, 2020 2:41 pm I'm going through the process of getting a MYGA and with those you fill out the paperwork and then there is a period of time when you can withdraw from the agreement if the rate changes and you don't want to go forward with it. In my experience the rate is NOT locked when you apply. I am using my CPA who has a FA company to buy the MYGA since it doesn't affect my rate on the annuity. The commission is already built in and I figured he might as well get the small commission since he has helped me with a lot of questions w/o charging me for his time (except for doing the taxes).

At least that is my limited (hopefully correct) information regarding that stuff.
Can you provide specific details like amounts, term, rates, etc?

TravelforFun
I don't know if things changed but I've seen the same numbers posted here elsewhere. $100K, 3 yrs, 2.40% from an A+ company. I know you can get more (3%?) from an A- company. I'm being very conservative (I think) in sticking with the higher rated company. I had zero interest in going out longer term. This money might be used in my early retirement years while I hold off on collecting social security.
tj
Posts: 3388
Joined: Thu Dec 24, 2009 12:10 am

Re: Just Bought an Annuity

Post by tj »

fatcoffeedrinker wrote: Mon Aug 17, 2020 4:54 pm
tj wrote: Mon Aug 17, 2020 4:47 pm
TravelforFun wrote: Mon Aug 17, 2020 4:44 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 3:47 pm
TravelforFun wrote: Mon Aug 17, 2020 3:42 pm
Can you provide specific details like amounts, term, rates, etc?

TravelforFun
Not Rich126, but I am also going through the process of buying an MYGA. We are using Blueprintincome.com. The MYGA is for $100K, 5 years at 3.20%. The issuing company is Americo ("A" rated by AM Best). I'm hoping to get this final before the rate goes down, as the nearest competitor has a lot lower rate.
Interestingly, Blueprint Income did not show me any result for $100K investment, 5-yr term, no withdrawal, Texas, and financial rating A or better.

TravelforFun
Get rid of the no withdrawal filter. The Americo policy has the withdrawal option. It's an option, not a requirement.
Also, I am in CA, so that may matter.
I just toggled my state to CA, and the results did not change, so no, it doesn't matter.
fatcoffeedrinker
Posts: 265
Joined: Mon Mar 23, 2020 2:03 pm

Re: Just Bought an Annuity

Post by fatcoffeedrinker »

tj wrote: Mon Aug 17, 2020 5:06 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 4:54 pm
tj wrote: Mon Aug 17, 2020 4:47 pm
TravelforFun wrote: Mon Aug 17, 2020 4:44 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 3:47 pm

Not Rich126, but I am also going through the process of buying an MYGA. We are using Blueprintincome.com. The MYGA is for $100K, 5 years at 3.20%. The issuing company is Americo ("A" rated by AM Best). I'm hoping to get this final before the rate goes down, as the nearest competitor has a lot lower rate.
Interestingly, Blueprint Income did not show me any result for $100K investment, 5-yr term, no withdrawal, Texas, and financial rating A or better.

TravelforFun
Get rid of the no withdrawal filter. The Americo policy has the withdrawal option. It's an option, not a requirement.
Also, I am in CA, so that may matter.
I just toggled my state to CA, and the results did not change, so no, it doesn't matter.
Try this link.

https://www.blueprintincome.com/fixed-a ... stRating=A
tj
Posts: 3388
Joined: Thu Dec 24, 2009 12:10 am

Re: Just Bought an Annuity

Post by tj »

fatcoffeedrinker wrote: Mon Aug 17, 2020 6:53 pm
tj wrote: Mon Aug 17, 2020 5:06 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 4:54 pm
tj wrote: Mon Aug 17, 2020 4:47 pm
TravelforFun wrote: Mon Aug 17, 2020 4:44 pm
Interestingly, Blueprint Income did not show me any result for $100K investment, 5-yr term, no withdrawal, Texas, and financial rating A or better.

TravelforFun
Get rid of the no withdrawal filter. The Americo policy has the withdrawal option. It's an option, not a requirement.
Also, I am in CA, so that may matter.
I just toggled my state to CA, and the results did not change, so no, it doesn't matter.
Try this link.

https://www.blueprintincome.com/fixed-a ... stRating=A
Why are you telling me to try? I was informing Travelforfun that he needs to uncheck the "no withdrawal" filter because the annuity in question is one that allows withdrawals. The withdrawal is an option not a requirement. That';s the reason it did not show up for him in Texas. If you uncheck that filter, it will show up in whichever state they are licensed to sell the policy in. I only checked AZ, CA, HI and TX. It showed up in all of them.
fatcoffeedrinker
Posts: 265
Joined: Mon Mar 23, 2020 2:03 pm

Re: Just Bought an Annuity

Post by fatcoffeedrinker »

tj wrote: Mon Aug 17, 2020 7:49 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 6:53 pm
tj wrote: Mon Aug 17, 2020 5:06 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 4:54 pm
tj wrote: Mon Aug 17, 2020 4:47 pm

Get rid of the no withdrawal filter. The Americo policy has the withdrawal option. It's an option, not a requirement.
Also, I am in CA, so that may matter.
I just toggled my state to CA, and the results did not change, so no, it doesn't matter.
Try this link.

https://www.blueprintincome.com/fixed-a ... stRating=A
Why are you telling me to try? I was informing Travelforfun that he needs to uncheck the "no withdrawal" filter because the annuity in question is one that allows withdrawals. The withdrawal is an option not a requirement. That';s the reason it did not show up for him in Texas. If you uncheck that filter, it will show up in whichever state they are licensed to sell the policy in. I only checked AZ, CA, HI and TX. It showed up in all of them.
The link was for TravelFun. I just replied top the most recent post.
Topic Author
TravelforFun
Posts: 2186
Joined: Tue Dec 04, 2012 11:05 pm

Re: Just Bought an Annuity

Post by TravelforFun »

fatcoffeedrinker wrote: Mon Aug 17, 2020 8:28 pm
tj wrote: Mon Aug 17, 2020 7:49 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 6:53 pm
tj wrote: Mon Aug 17, 2020 5:06 pm
fatcoffeedrinker wrote: Mon Aug 17, 2020 4:54 pm

Also, I am in CA, so that may matter.
I just toggled my state to CA, and the results did not change, so no, it doesn't matter.
Try this link.

https://www.blueprintincome.com/fixed-a ... stRating=A
Why are you telling me to try? I was informing Travelforfun that he needs to uncheck the "no withdrawal" filter because the annuity in question is one that allows withdrawals. The withdrawal is an option not a requirement. That';s the reason it did not show up for him in Texas. If you uncheck that filter, it will show up in whichever state they are licensed to sell the policy in. I only checked AZ, CA, HI and TX. It showed up in all of them.
The link was for TravelFun. I just replied top the most recent post.
Got it. Thank you.

TravelforFun
SlowMovingInvestor
Posts: 1824
Joined: Sun Sep 11, 2016 11:27 am

Re: Just Bought an Annuity

Post by SlowMovingInvestor »

rich126 wrote: Mon Aug 17, 2020 5:05 pm
I don't know if things changed but I've seen the same numbers posted here elsewhere. $100K, 3 yrs, 2.40% from an A+ company. I know you can get more (3%?) from an A- company. I'm being very conservative (I think) in sticking with the higher rated company. I had zero interest in going out longer term. This money might be used in my early retirement years while I hold off on collecting social security.

That one is going down to 2.10% soon :(
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