Annuity recommended for a friend by a financial advisor

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
Post Reply
Topic Author
Slackergirl
Posts: 13
Joined: Tue Feb 18, 2020 3:40 pm

Annuity recommended for a friend by a financial advisor

Post by Slackergirl »

A friend has asked me for my opinion regarding some advice she received from a financial advisor who she trusts. Here are the details of my friends financial position:

66 years old
Retired and currently not working
She would prefer not to work

Assets:
Paid for house and car
Traditional IRA: 280k invested 100% in Vanguards S&P 500 Index Fund
Taxable account:19k cash savings
Social Security: $1,088 monthly after taxes

The financial advisor has suggested placing 170k into a fixed index annuity, Allianz Benefit Control Annuity.

My friend’s goal is to create additional monthly income. Her SS income of $1,088 is doable, but very tight.

Does anyone know about this annuity or perhaps can suggest a strategy to help my friend create a monthly income?
User avatar
retired@50
Posts: 6760
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Annuity recommended for a friend by a financial advisor

Post by retired@50 »

What was the payout offered in the adviser's annuity?

Check here: https://www.immediateannuities.com/

You might be able to see if what's being offered is in the same ballpark.

Generally, using an SPIA is the best course of action, ** IF ** you decide to pursue an annuity at all. Using an annuity indexed to something like the S&P 500 isn't usually recommended.

See also: https://www.bogleheads.org/wiki/Immediate_fixed_annuity

Regards,
This is one person's opinion. Nothing more.
deikel
Posts: 1214
Joined: Sat Jan 25, 2014 7:13 pm

Re: Annuity recommended for a friend by a financial advisor

Post by deikel »

You would have to post more information to make a reasonable call about this specific offering (how much monthly pay out, inflation adjusted or not, for life, immediate or delayed, I assume no survivor payment is necessary)

In general a SPIA is a good idea in these scenarios because you trade some of your nest egg for a guaranteed monthly payment irrespective of how the market is doing (you have a contract with the issuing company). This is meant to cover all essential payments with no further market risk, what's left in the nest egg is then for fun money.

HOWEVER, in the post you use the word 'fixed index' annuity AND it comes from a financial advisor, so my suspicion is that this particular offering is maybe not what you want - just a hunch right now w/o any more details its hard to say

check out SPIA first (which is what you want), then compare here: https://www.immediateannuities.com/ and then compare with the actual contract offering of the sales guy....that should show quickly if this is a reasonable product offering

Allianz as a company is rock solid, its a German insurance company around since a while, so I don't think there is any reason to believe they would fold any time soon (and your contract becoming void).
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
Northern Flicker
Posts: 8316
Joined: Fri Apr 10, 2015 12:29 am

Re: Annuity recommended for a friend by a financial advisor

Post by Northern Flicker »

Slackergirl wrote: Tue Sep 14, 2021 3:24 pm A friend has asked me for my opinion regarding some advice she received from a financial advisor who she trusts. Here are the details of my friends financial position:

66 years old
Retired and currently not working
She would prefer not to work

Assets:
Paid for house and car
Traditional IRA: 280k invested 100% in Vanguards S&P 500 Index Fund
Taxable account:19k cash savings
Social Security: $1,088 monthly after taxes

The financial advisor has suggested placing 170k into a fixed index annuity, Allianz Benefit Control Annuity.

My friend’s goal is to create additional monthly income. Her SS income of $1,088 is doable, but very tight.

Does anyone know about this annuity or perhaps can suggest a strategy to help my friend create a monthly income?
Your friend should fire the advisor. This is a product being recommended so that the advisor can earn a commission. The only type of snnuities to consider are single premium inmediate annuities (SPIAs) and deferred income annuities (DIAs). These can be bought through a broker like immediateannuities.com. The advisor should be willing snd able to make a recommendation for such a product without having to be the broker who sells it.

100% stock is a pretty high allocation for a 66 year old. The friend could purchase a SPIA with a portion of that to increase monthly income and then move the residual amount yo a Vanguard LifeStrategy fund consistent with risk tokerance, which could, if consistent with risk tolerance, be an aggressive fund if substantial assets are annuitized.

With a LifeStratrgy fund, no advisor is needed. Target Retirement Income could also be considered.

Stick to insurance companies with good ratings for a SPIA-- examples are NY Life, NW Mutual, Mass Mutual. Want AM Best financial strength and credit ratings of A or higher, perhaps even insiting on AA or higher to be conservative.
Last edited by Northern Flicker on Tue Sep 14, 2021 3:51 pm, edited 1 time in total.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
Dottie57
Posts: 10320
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Annuity recommended for a friend by a financial advisor

Post by Dottie57 »

How much does friend need to meet her expenses? Was she ever married and could collect on an ex-spouses SS for more money?

An SPIA ( single payment immediate annuity) would generate about $800+ a month for life.

Please don’t use any other annuity type - it will not turn out well for friend.
User avatar
Mlm
Posts: 581
Joined: Sat Apr 09, 2016 6:00 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Mlm »

It would be helpful to know how much her expenses are. She can create a base income through a SPIA but it won't adjust for inflation. She needs to fully understand any contract first and it doesn't sound like the salesman gave her enough information to do that.
Mary
retiredjg
Posts: 45448
Joined: Thu Jan 10, 2008 12:56 pm

Re: Annuity recommended for a friend by a financial advisor

Post by retiredjg »

A fixed index annuity is generally more advantageous to the salesperson than the customer. It is too bad she trusts him/her. If she choses that route, she will get a mediocre product while the salesperson gets a nice commission. :( That does not mean she will necessarily run out of money although it may mean she will have less money to spend.

If she needs an annuity at all (not yet demonstrated), she should look into a SPIA (single payment immediate annuity) which is essentially "buying a pension". (See link already posted.) She should not use her entire savings for this, just a portion. Another one may be needed down the line in 10 years or so as inflation bites into the buying power of the first one.

If no annuity is used at all, she should be able (based on historical models) to take $10k to $11k from the IRA each year without experiencing portfolio failure.

However, being invested at 100% stock is incredibly risky (what idiot suggested that for a person her age?) She may not be able to afford what happens to her portfolio if that risk comes home to roost. Her IRA should be invested at something closer to 40% stocks to maybe as high as 60% stocks.

If her SS income is doable but tight, another $10k or so a year should be comfortable (although I'm not suggesting she take it all each year - there are lumpy expenses some years....like a roof or septic system to consider).

Do not assume you can change her mind with truth or logic. :( Trust can be very blinding.
dbr
Posts: 37015
Joined: Sun Mar 04, 2007 9:50 am

Re: Annuity recommended for a friend by a financial advisor

Post by dbr »

The general answer to how you obtain income from a portfolio of investments is that you make withdrawals from your assets in any amount on any schedule you want by any variety of means. While doing so you have to attend to not spending too much so as to run down your assets. There are models to compute how much is too much.

The means can include any of the following:6.

1. Many brokers or fund companies have plans by which they will deduct and send a fixed amount to the investor every month.

2. The investor can have dividends and interest in taxable investments deposited in their bank whenever those are paid.

3. The investor can sell assets at any time in any amount and take the cash. This includes taking distributions from tax deferred accounts if desired.

4. One can purchase a single premium immediate fixed annuity and get a monthly payment. Social Security amounts in effect to such an annuity and is even inflation indexed. Some people have a pension.

5. One can have ladders of bonds arranged so that different rungs mature at planned times and the proceeds are sent out.

6. Probably other that I am not thinking of just now.

7. Certainly not an equity indexed annuity.

All of this does require some attention to managing cash flow. That is not different from any other time in one's life except that perhaps there are more varieties in how to take money and most of them do not adhere to rigid schedules and may or may not be as automatic as getting a paycheck. It could be argued that such things as annuity payments and a cash withdrawal plan are more reliable than a paycheck.
brewbaker
Posts: 11
Joined: Sat Mar 02, 2019 11:32 am

Re: Annuity recommended for a friend by a financial advisor

Post by brewbaker »

Wow - don't write off a fixed indexed annuity (FIA) for a SPIA without comparing their benefits and features. Going blindly into a SPIA may not be the right solution. Both the SPIA and the FIA can provide lifetime income.

The SPIA might, repeat might, have a bigger monthly payment, but it might not. Compare the payments and also check to see if the FIA has a way or ways the payment might increase. FIA payments can increase if the underlying index performs well even during the income period. Also, you might find that waiting a year or years gives you a higher percentage of the income account. Generally, SPIAs do not have a mechanism for increasing payments unless you have some sort of inflation protection, which negatively impacts the starting payment.

The SPIA will likely not have a death benefit, while the fixed indexed annuity might pay the remainder of the account balance to beneficiaries if it has not all been paid out in benefits. That may also be important to some people.

I was looking at SPIA's and found that an FIA (in my case purchased without a commission via an RIA) paid out about 6% for me at age 68. A much better deal with the current low rates.

The free market offers multiple tools to deal with different financial goals and constraints. I suggest not getting tunnel vision and instead comparing a number of options.
dbr
Posts: 37015
Joined: Sun Mar 04, 2007 9:50 am

Re: Annuity recommended for a friend by a financial advisor

Post by dbr »

It is indeed true that an SPIA today is not a great deal. A really good annuity deal is to delay Social Security to age 70 but that is now foregone should it have looked like a possible option in the first place.

The real problem is that responding to an issue in managing cash flow from assets by offering an annuity product is not responsible regarding the interests of the client. Taking a withdrawal of $800/month (current SPIA payout and a safe 3.5% rate of withdrawal) by any of the conventional means would be simple and not involve an annuity or any investment costs. It isn't clear she wants even near that much income, so why is the proposed EIA so large? I would hate to see the assets not tied up in annuities being as little as only $130,000 left.

It would also be important for the retiree to understand the general process for how assets can be used for income and to understand what a financial plan for retirement looks like. The advisor should be giving her a plan and not a product, which product certainly benefits him, especially with that large a fraction of her assets going into it. That sounds like a money grab to me. Also, further annuitization in the face of the majority of the income already in annuity form of SS is probably not recommended. The EIA does have flexibility regarding getting money out that an SPIA does not have.
Topic Author
Slackergirl
Posts: 13
Joined: Tue Feb 18, 2020 3:40 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Slackergirl »

retired@50 wrote: Tue Sep 14, 2021 3:31 pm What was the payout offered in the adviser's annuity?

Check here: https://www.immediateannuities.com/

You might be able to see if what's being offered is in the same ballpark.

Generally, using an SPIA is the best course of action, ** IF ** you decide to pursue an annuity at all. Using an annuity indexed to something like the S&P 500 isn't usually recommended.

See also: https://www.bogleheads.org/wiki/Immediate_fixed_annuity

Regards,
The payout is $789 a month, it can go up but never down.
User avatar
retired@50
Posts: 6760
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Annuity recommended for a friend by a financial advisor

Post by retired@50 »

Slackergirl wrote: Tue Sep 14, 2021 5:49 pm The payout is $789 a month, it can go up but never down.
Did you try plugging her details into the immediate annuities site I linked above?

Regards,
This is one person's opinion. Nothing more.
Topic Author
Slackergirl
Posts: 13
Joined: Tue Feb 18, 2020 3:40 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Slackergirl »

Dottie57 wrote: Tue Sep 14, 2021 3:46 pm How much does friend need to meet her expenses? Was she ever married and could collect on an ex-spouses SS for more money?

An SPIA ( single payment immediate annuity) would generate about $800+ a month for life.

Please don’t use any other annuity type - it will not turn out well for friend.
She is not eligible for spousal SS. My friend currently needs her investments to generate an additional $500 a month. This $500 would be on top of her SS for a total of about $1,600 a month.
User avatar
retired@50
Posts: 6760
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Annuity recommended for a friend by a financial advisor

Post by retired@50 »

Slackergirl wrote: Tue Sep 14, 2021 6:06 pm ... My friend currently needs her investments to generate an additional $500 a month. This $500 would be on top of her SS for a total of about $1,600 a month.
Given the $280k invested in the S&P 500 fund, withdrawing $500 per month doesn't seem like it would pose a problem of any kind.

$6,000 per year ( 12 * $500 ) is about a 2.1% withdrawal rate.

Is your friend nervous about the stock market? Maybe she should consider a more conservative portfolio by adding some bonds. Maybe a Vanguard LifeStrategy fund of some kind?

Regards,
This is one person's opinion. Nothing more.
User avatar
Sandtrap
Posts: 14022
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: Annuity recommended for a friend by a financial advisor

Post by Sandtrap »

Email your friend a link to this forum and thread so engagement is less removed might be an idea.

j🌺
Wiki Bogleheads Wiki: Everything You Need to Know
Topic Author
Slackergirl
Posts: 13
Joined: Tue Feb 18, 2020 3:40 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Slackergirl »

Sandtrap wrote: Tue Sep 14, 2021 6:22 pm Email your friend a link to this forum and thread so engagement is less removed might be an idea.

j🌺
Thank you for the suggestion, she is following this thread.
retiredjg
Posts: 45448
Joined: Thu Jan 10, 2008 12:56 pm

Re: Annuity recommended for a friend by a financial advisor

Post by retiredjg »

Slackergirl wrote: Tue Sep 14, 2021 6:06 pm
Dottie57 wrote: Tue Sep 14, 2021 3:46 pm How much does friend need to meet her expenses? Was she ever married and could collect on an ex-spouses SS for more money?

An SPIA ( single payment immediate annuity) would generate about $800+ a month for life.

Please don’t use any other annuity type - it will not turn out well for friend.
She is not eligible for spousal SS. My friend currently needs her investments to generate an additional $500 a month. This $500 would be on top of her SS for a total of about $1,600 a month.
"Generate" is the wrong word. It implies that she will get $500 income without using any of the $280k. That is not realistic.

However, a 4% withdrawal rate would start at $933 a month and that is generally expected (but not guaranteed) to be safe and not cause the portfolio to run dry in 30 years. If she simply takes $500 a month to add to her SS, she is highly likely to be safe because that is much less than a 4% withdrawal rate.

With her situation, I suggest not using the full 4% because there will be some years when she will need extra (for lumpy expenses).

Taking $500 a month or $6k a year (increased each year by inflation) is not difficult and does not require an accountant or an advisor or paying fees for a costly annuity.

However, she definitely should NOT stay at her current 100% equity portfolio. It would be reckless.
Northern Flicker
Posts: 8316
Joined: Fri Apr 10, 2015 12:29 am

Re: Annuity recommended for a friend by a financial advisor

Post by Northern Flicker »

1. Move the IRA to a suitable balanced and diversified fund, say VTINX Target Retirement Income.

2. Spend down about $75-80K from the IRA to fund delaying SS to age 70.

3. At age 70, use funds from the IRA to buy a SPIA to cover the income shortfall at that point relative to the higher SS benefit. The higher SS benefit is inflation-adjusted, the advantage of this strategy.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
Dottie57
Posts: 10320
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Annuity recommended for a friend by a financial advisor

Post by Dottie57 »

retired@50 wrote: Tue Sep 14, 2021 6:19 pm
Slackergirl wrote: Tue Sep 14, 2021 6:06 pm ... My friend currently needs her investments to generate an additional $500 a month. This $500 would be on top of her SS for a total of about $1,600 a month.
Given the $280k invested in the S&P 500 fund, withdrawing $500 per month doesn't seem like it would pose a problem of any kind.

$6,000 per year ( 12 * $500 ) is about a 2.1% withdrawal rate.

Is your friend nervous about the stock market? Maybe she should consider a more conservative portfolio by adding some bonds. Maybe a Vanguard LifeStrategy fund of some kind?

Regards,
Agree with this.
Topic Author
Slackergirl
Posts: 13
Joined: Tue Feb 18, 2020 3:40 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Slackergirl »

Northern Flicker wrote: Tue Sep 14, 2021 6:32 pm 1. Move the IRA to a suitable balanced and diversified fund, say VTINX Target Retirement Income.

2. Spend down about $75-80K from the IRA to fund delaying SS to age 70.

3. At age 70, use funds from the IRA to buy a SPIA to cover the income shortfall at that point relative to the higher SS benefit. The higher SS benefit is inflation-adjusted, the advantage of this strategy.
She is already receiving SS and wants to continue. I think she should look at another fund as well…such as theVTINX Target Retirement Income.
Topic Author
Slackergirl
Posts: 13
Joined: Tue Feb 18, 2020 3:40 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Slackergirl »

However, she definitely should NOT stay at her current 100% equity portfolio. It would be reckless.
[/quote]

At the time she decided to be 100% in equities, she was earning close to 40k a year. That situation has changed and she is now retired.
User avatar
Mlm
Posts: 581
Joined: Sat Apr 09, 2016 6:00 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Mlm »

Dottie57 wrote: Tue Sep 14, 2021 7:13 pm
retired@50 wrote: Tue Sep 14, 2021 6:19 pm
Slackergirl wrote: Tue Sep 14, 2021 6:06 pm ... My friend currently needs her investments to generate an additional $500 a month. This $500 would be on top of her SS for a total of about $1,600 a month.
Given the $280k invested in the S&P 500 fund, withdrawing $500 per month doesn't seem like it would pose a problem of any kind.

$6,000 per year ( 12 * $500 ) is about a 2.1% withdrawal rate.

Is your friend nervous about the stock market? Maybe she should consider a more conservative portfolio by adding some bonds. Maybe a Vanguard LifeStrategy fund of some kind?

Regards,
Agree with this.
I also agree with this plan
Mary
senex
Posts: 810
Joined: Wed Dec 13, 2017 4:38 pm

Re: Annuity recommended for a friend by a financial advisor

Post by senex »

FINRA (the regulatory agency) has issued an Investor Alert about index annuities. If you browse their Alerts, you see lots of warnings about scams and fraud. These annuities are not scams per se, but this is the company they keep, due to a pattern of being often oversold and inappropriate.

https://www.finra.org/sites/default/fil ... 125847.pdf
User avatar
Stinky
Posts: 8505
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Annuity recommended for a friend by a financial advisor

Post by Stinky »

Slackergirl wrote: Tue Sep 14, 2021 5:49 pm
retired@50 wrote: Tue Sep 14, 2021 3:31 pm What was the payout offered in the adviser's annuity?

Check here: https://www.immediateannuities.com/

You might be able to see if what's being offered is in the same ballpark.

Generally, using an SPIA is the best course of action, ** IF ** you decide to pursue an annuity at all. Using an annuity indexed to something like the S&P 500 isn't usually recommended.

See also: https://www.bogleheads.org/wiki/Immediate_fixed_annuity

Regards,
The payout is $789 a month, it can go up but never down.
A SPIA at her current age with a premium of $170k would pay her $813 per month per immediateannuities.com.
It's a GREAT day to be alive! - Travis Tritt
User avatar
Nate79
Posts: 7456
Joined: Thu Aug 11, 2016 6:24 pm
Location: Delaware

Re: Annuity recommended for a friend by a financial advisor

Post by Nate79 »

I would caution you to avoid taking the advice of anyone, including a salesman trying to sell you such a toxic product like fixed indexed annuities and all their ugly cousins.

If they want income in the form of an annuity generally Bogleheads only recommends SPIA as good annuities. But I would also not annuitize all of my portfolio - that really reduces any flexibility if you need a chunk of money.
Raycpact
Posts: 41
Joined: Thu Jun 24, 2021 9:00 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Raycpact »

Instead of buying an annuity, why not use same funds to defer SS?
venkman
Posts: 1276
Joined: Tue Mar 14, 2017 10:33 pm

Re: Annuity recommended for a friend by a financial advisor

Post by venkman »

A fixed index annuity can be expected to have returns that are on par with (and perhaps slightly higher than) CD's. This Allianz FIA, if linked to the S&P 500, is currently capped at 2.75%, meaning the maximum annual return will be 2.75%, no matter how well the S&P 500 does. If the S&P 500 is negative in a given year (only on price--dividends aren't included in the calculation), the annuity earns 0% return, but doesn't lose any value. Typically, the cap rate can be changed at the insurance company's discretion every year.

FIA's aren't automatically horrible or unsuitable, if one is looking for guaranteed principal with the chance for higher-than-CD yields; but FIA's are complex products designed to be sold, not bought. I suggest your friend start from scratch and consult an independent annuity agent (e.g. Stan the Annuity Man or Blueprint Income) about what the best option for her would be.
Northern Flicker
Posts: 8316
Joined: Fri Apr 10, 2015 12:29 am

Re: Annuity recommended for a friend by a financial advisor

Post by Northern Flicker »

Slackergirl wrote: Tue Sep 14, 2021 7:14 pm
Northern Flicker wrote: Tue Sep 14, 2021 6:32 pm 1. Move the IRA to a suitable balanced and diversified fund, say VTINX Target Retirement Income.

2. Spend down about $75-80K from the IRA to fund delaying SS to age 70.

3. At age 70, use funds from the IRA to buy a SPIA to cover the income shortfall at that point relative to the higher SS benefit. The higher SS benefit is inflation-adjusted, the advantage of this strategy.
She is already receiving SS and wants to continue. I think she should look at another fund as well…such as theVTINX Target Retirement Income.
Delaying SS is equivalent to buying an annuity with the funds used to replace the SS income, but at a more cost effective rate than actually buying an annuity. It is a subtle point, and dismissing the idea out of hand may miss out on the best strategy.

At the very least, it should be understood before dismissing it.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
Pops1860
Posts: 154
Joined: Thu Mar 14, 2013 4:05 pm

Re: Annuity recommended for a friend by a financial advisor

Post by Pops1860 »

Three suggestions:

1) Remind your friend there is no need to rush to make any decision. In fact, if the financial advisor is suggesting there is an urgency, this is also a red flag. If she wants, she can 'think about it' for as long as she wants (several months). Then make a decision (that may affect her finances for the rest of her life!) after she has become comfortable with what the options are. No rush.

2) If she is looking for reliable monthly income, and her 'estimated monthly expenses' are well established, then using some of the $$ for an SPIA annuity (to meet her minimum monthly income goal), and then keeping the rest for 'emergency fund' type use would be my thought. Just stay away from any annuity that's not an SPIA.

3) As situation is described, she is in a low income tax bracket, but at least check out what tax impact a large withdrawal from her traditional IRA would be. Sometimes people tend to forget that traditional IRA $$ are taxable upon withdrawal.
The power of accurate observation is often called cynicism by those who do not have it. ~George Bernard Shaw
deikel
Posts: 1214
Joined: Sat Jan 25, 2014 7:13 pm

Re: Annuity recommended for a friend by a financial advisor

Post by deikel »

Dottie57 wrote: Tue Sep 14, 2021 7:13 pm
retired@50 wrote: Tue Sep 14, 2021 6:19 pm
Slackergirl wrote: Tue Sep 14, 2021 6:06 pm ... My friend currently needs her investments to generate an additional $500 a month. This $500 would be on top of her SS for a total of about $1,600 a month.
Given the $280k invested in the S&P 500 fund, withdrawing $500 per month doesn't seem like it would pose a problem of any kind.

$6,000 per year ( 12 * $500 ) is about a 2.1% withdrawal rate.

Is your friend nervous about the stock market? Maybe she should consider a more conservative portfolio by adding some bonds. Maybe a Vanguard LifeStrategy fund of some kind?

Regards,
Agree with this.
An S+P500 index fund has an average dividend yield of around 2% in the last couple of years alone. So, at a 2.1% withdrawel, there is a good chance that she is not even touching the principle and in many years she would be able to draw even double then what she currently needs making for singular fun events like vacations/cruises/new car ect.

Plus the money stays around under her management for other emergencies as they may arise

I think that is a much better strategy then the suggested index annuity or even a SPIA.

If interest rates increase over the next 10 years, she could still revisit a SPIA, at then better conditions. SO all options stay open with a withdrawal approach.

Like everyone else, she should not be 100% in stocks, but have some of it in bonds/cash to cover her needed money for 3-5 years to buffer for down years and recessions. She already has 3 years cash in a taxable.

Ditch the advisor, that advice was not in her favor from any point of view.
Everything you read in this post is my personal opinion. If you disagree with this disclaimer, please un-read the text immediately and destroy any copy or remembrance of it.
Post Reply