NY Times: interest rising in deferred-income annuities

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
Post Reply
User avatar
hoppy08520
Posts: 2005
Joined: Sat Feb 18, 2012 11:36 am

NY Times: interest rising in deferred-income annuities

Post by hoppy08520 » Sat Jun 07, 2014 10:01 am

Buying a Guaranteed Retirement Income, for Some Peace of Mind
New York Times
June 6, 2014
NY Times wrote:Many workers long for the sense of security that only an old-fashioned pension can provide. The big insurers are well aware of this, and that’s why many of them are offering new ways for investors to buy and build a pension on their own.

More than a dozen companies have recently begun pitching products, known as deferred-income annuities, that allow individuals to buy the income themselves: They pay a lump sum to an insurer — or make a series of payments over time — in exchange for a guaranteed paycheck for life that begins several years later....
I've read about deferred annuities before. Maybe from William Bernstein?

An interesting concept. You buy the annuity but don't even begin collecting for years, even a decade or more, later. Cheaper (obviously) than getting an annuity that pays immediately; the insurers can save money knowing that some people will never make it to the payout stage, and those who do are older and won't live as long. But, as the article explains, a difficult product to purchase from a psychological perspective. It's hard to plunk down a lot of money that you might never collect, should you die early. This is like the opposite of life insurance -- with life insurance, you pay the premiums and hope you never collect. With deferred-income annuities, you buy it hoping you will collect.

It seems that where this can work is in a scenario like this. Suppose you have $1M at age 65. Take around $100K and buy one of these that starts at age 80. Now you're down to $900K. As a result, your retirement income is a little lower because you have a smaller portfolio. But now you have some fallback in case you run low on money over the next 15 years. It won't be a lot, but it's better than poverty.

User avatar
Phineas J. Whoopee
Posts: 7566
Joined: Sun Dec 18, 2011 6:18 pm

Re: NY Times: interest rising in deferred-income annuities

Post by Phineas J. Whoopee » Sat Jun 07, 2014 10:05 am

Until they're CPI adjusted I won't even be a browser, let alone a buyer.
PJW

dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Re: NY Times: interest rising in deferred-income annuities

Post by dhodson » Sat Jun 07, 2014 10:08 am

even better at age 65 continue to invest appropriate and at age 80 buy a SPIA. That way the money grows at a better rate, you dont have to worry about inflation as much, concerns of the ability of insurance company to make good on their promises is likely less of a concern, if your health changes for the worse then dont bother with either.

There just isnt any magic in this world and insurance companies primarily have high costs and invest in bonds/treasuries. Sure you get some mortality credits with the approach but not enough in my view for all the negs. If this was such a great approach then why not just start at age 30?

Spirit Rider
Posts: 8883
Joined: Fri Mar 02, 2007 2:39 pm

Re: NY Times: interest rising in deferred-income annuities

Post by Spirit Rider » Sat Jun 07, 2014 10:14 am

Except that if you wait until 80 to buy an immediate annuity it will be far cheaper and you (and your heirs) will have more flexibility in the interim. In this interest rate environment I would not be locking myself into something that would not be paying out for fifteen years.

I would change the title to "Insurance companies looking for profits, market more products with questionable value to seniors."

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: NY Times: interest rising in deferred-income annuities

Post by sscritic » Sat Jun 07, 2014 10:29 am

TIAA Traditional has always been exactly this. Your contract says that in return for $100 invested today they will pay your $x.xx a month for life starting at age 65. That is the guarantee, but they can pay you more than that. The way they pay you more than that is by giving you additional paid up amounts each year (or month) which become new guaranteed future income streams. In that sense, the more is not a future future more, but an immediately today future more.

steve_14
Posts: 1507
Joined: Wed Jun 20, 2012 12:05 am

Re: NY Times: interest rising in deferred-income annuities

Post by steve_14 » Sat Jun 07, 2014 10:31 am

Thanks for the link. Given the inflation and interest rate risk inherent even in immediate annuities (especially currently), I'd be very hesitant to buy a deferred one. Might be worth it to some folks though.

User avatar
hoppy08520
Posts: 2005
Joined: Sat Feb 18, 2012 11:36 am

Re: NY Times: interest rising in deferred-income annuities

Post by hoppy08520 » Sat Jun 07, 2014 10:36 am

Wade Pfau: Why Retirees Should Choose DIAs over SPIAs. This piece is also discussed in this forum: Deferred Immediate Annuities.

I re-read a section in William Bernstein's "The Ages of the Investor" and he is not as taken in with DIA because of the inflation risk, default risk of the insurer, the lack of joint-survivorship provisions for married couples, and the fact that it's a complicated marketplace and you might not wind up with a good product.

livesoft
Posts: 62776
Joined: Thu Mar 01, 2007 8:00 pm

Re: NY Times: interest rising in deferred-income annuities

Post by livesoft » Sat Jun 07, 2014 10:42 am

The article mentions something about both of those flaws: inflation-indexing and joint-survivorship. So these issues are being addressed.
Wiki This signature message sponsored by sscritic: Learn to fish.

LongerPrimer
Posts: 903
Joined: Thu Jun 05, 2014 10:01 pm

Re: NY Times: interest rising in deferred-income annuities

Post by LongerPrimer » Sat Jun 07, 2014 11:36 am

We have some GLIW deferred VA and GLIW Fixed Indexed. Bought 3-6years ago. Neither Vanguard nor Fidelity offered this type of annuity at the time, only the plain jane VA. Vanguard now offers this GLIW VA. Yes, I do know I pay high fees and I knowingly pay for the options offered. The annuities we purchased are no longer offered at the rates we got: The VA's are 5% guaranteed income growth in the Income account and 5% withdrawal rate. Our largest VA results: actual account has grown by 80% (as of 06/06/14) and the income account has reset to the actual account. Average annual return of 14.5% and a 2013 return of 27% in an all equity portfolio (I gave up additional 2% in the last two months when I moved the account to the internal MM inorder to guarantee the gains). Our smallest VA, intended as a mock 529 is 2.5yo, has an actual account 51% higher, 19% average growth, we expect to cash out this annuity as a gift to any grandchildren. We purchased the VAs laddered in amounts purchased, not by time or yield. (yields mentioned are net of all fees except for surrender charges)

We bought Insurance Contracts and are paying for the insurance of downside risk protection and the insurance company bought our funds with the guarantees. This type of contract allows us to be aggressive in the annuity portfolio, and aggressive in the trading account. It is a very complicated product when compared to MF and retirement programs but not as complicated as option futures. We thoroughly studied it prior to purchase.

I gave up a Deferred Income VA, paying a 1% surrender charge for the GLIW, deferred VA.

I got unmercifully bullied in another forum by longtime posters and by the moderators, who refused to believe that I bought these contracts as insurance first and the investment possibilities second.

User avatar
Captain Sensible
Posts: 24
Joined: Sat Apr 05, 2014 11:17 pm
Location: North Carolina

Re: NY Times: interest rising in deferred-income annuities

Post by Captain Sensible » Sat Jun 07, 2014 12:58 pm

dhodson wrote:Sure you get some mortality credits with the approach but not enough in my view for all the negs. If this was such a great approach then why not just start at age 30?
I started in my teens! It's called Social Security.

I'm considering DIAs for another reason, as a "carrot" for taking better care of myself. As dumb as it sounds, I think this would do more to motivate me to eat right and exercise than all the obvious reasons. I'm a cheap little man...

dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Re: NY Times: interest rising in deferred-income annuities

Post by dhodson » Sat Jun 07, 2014 1:12 pm

LongerPrimer wrote:We have some GLIW deferred VA and GLIW Fixed Indexed. Bought 3-6years ago. Neither Vanguard nor Fidelity offered this type of annuity at the time, only the plain jane VA. Vanguard now offers this GLIW VA. Yes, I do know I pay high fees and I knowingly pay for the options offered. The annuities we purchased are no longer offered at the rates we got: The VA's are 5% guaranteed income growth in the Income account and 5% withdrawal rate. Our largest VA results: actual account has grown by 80% (as of 06/06/14) and the income account has reset to the actual account. Average annual return of 14.5% and a 2013 return of 27% in an all equity portfolio (I gave up additional 2% in the last two months when I moved the account to the internal MM inorder to guarantee the gains). Our smallest VA, intended as a mock 529 is 2.5yo, has an actual account 51% higher, 19% average growth, we expect to cash out this annuity as a gift to any grandchildren. We purchased the VAs laddered in amounts purchased, not by time or yield. (yields mentioned are net of all fees except for surrender charges)

We bought Insurance Contracts and are paying for the insurance of downside risk protection and the insurance company bought our funds with the guarantees. This type of contract allows us to be aggressive in the annuity portfolio, and aggressive in the trading account. It is a very complicated product when compared to MF and retirement programs but not as complicated as option futures. We thoroughly studied it prior to purchase.

I gave up a Deferred Income VA, paying a 1% surrender charge for the GLIW, deferred VA.

I got unmercifully bullied in another forum by longtime posters and by the moderators, who refused to believe that I bought these contracts as insurance first and the investment possibilities second.
Glad you are happy with your purchase. You might want to continue to keep a close eye on it. If you search you will find that companies who offered "generous" income riders are now looking to get out of them. Some have tried to offer people other lump sum options and some have decided that only certain investment options will allow you to continue with the income rider and that if you dont switch to one in the new list of approved investments that you lose the guarantee. Bottom line is that you only have so much down side protection bc if they cant generate the income to satisfy that rider then you might have a hard time collecting it.

steve_14
Posts: 1507
Joined: Wed Jun 20, 2012 12:05 am

Re: NY Times: interest rising in deferred-income annuities

Post by steve_14 » Sat Jun 07, 2014 1:34 pm

dhodson wrote:Glad you are happy with your purchase. You might want to continue to keep a close eye on it. If you search you will find that companies who offered "generous" income riders are now looking to get out of them. Some have tried to offer people other lump sum options and some have decided that only certain investment options will allow you to continue with the income rider and that if you dont switch to one in the new list of approved investments that you lose the guarantee. Bottom line is that you only have so much down side protection bc if they cant generate the income to satisfy that rider then you might have a hard time collecting it.
Interesting. The risk of this happening, no doubt, was understood by each insurance salesman and fully explained to each customer before the contract was signed ;) .

LongerPrimer
Posts: 903
Joined: Thu Jun 05, 2014 10:01 pm

Re: NY Times: interest rising in deferred-income annuities

Post by LongerPrimer » Sat Jun 07, 2014 3:21 pm

Thankyou for your concern. I am aware of insurance companies trying to buyback some of the contracts they sold, In my research at that time, I was looking for those 7% guarantees but alas those guarantees had dropped to 5%-4.5% and now <=4%. Yes, I have read those articles. I have one of those investment companies stopping by in a couple of weeks to sell me something that is not an annuity, Hopefully they will offer me something I can't refuse.

Vanguard is now offering a GLIW deferred annuity through a insurance underwriter. Buyers need not take the GLIW or the options. My sister bought a Fidelity deferred variable annuity because she no longer had eligibility in 401k or IRAs. She paid the annuity fee because she wanted the tax deferral.

These are insurance products. Buyers of annuities are laying off risk in return for guarantees. In a investment product, stocks, bonds, mf, indexes, the buyer takes 100% of the risks. We no longer want to take that risk for our entire retirement portfolio.

User avatar
hoppy08520
Posts: 2005
Joined: Sat Feb 18, 2012 11:36 am

Re: NY Times: interest rising in deferred-income annuities

Post by hoppy08520 » Sat Jun 07, 2014 5:34 pm

Captain Sensible wrote:I'm considering DIAs for another reason, as a "carrot" for taking better care of myself. As dumb as it sounds, I think this would do more to motivate me to eat right and exercise than all the obvious reasons. I'm a cheap little man...
Captain, thanks for the laugh. That's as good of a reason as any to be healthy.

May you enjoy a long life and bleed the insurance company dry with your DIA.
:sharebeer

letsgobobby
Posts: 11647
Joined: Fri Sep 18, 2009 1:10 am

Re: NY Times: interest rising in deferred-income annuities

Post by letsgobobby » Sat Jun 07, 2014 5:50 pm


dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Re: NY Times: interest rising in deferred-income annuities

Post by dhodson » Sat Jun 07, 2014 6:22 pm

LongerPrimer wrote:Thankyou for your concern. I am aware of insurance companies trying to buyback some of the contracts they sold, In my research at that time, I was looking for those 7% guarantees but alas those guarantees had dropped to 5%-4.5% and now <=4%. Yes, I have read those articles. I have one of those investment companies stopping by in a couple of weeks to sell me something that is not an annuity, Hopefully they will offer me something I can't refuse.

Vanguard is now offering a GLIW deferred annuity through a insurance underwriter. Buyers need not take the GLIW or the options. My sister bought a Fidelity deferred variable annuity because she no longer had eligibility in 401k or IRAs. She paid the annuity fee because she wanted the tax deferral.

These are insurance products. Buyers of annuities are laying off risk in return for guarantees. In a investment product, stocks, bonds, mf, indexes, the buyer takes 100% of the risks. We no longer want to take that risk for our entire retirement portfolio.

You never remove all of the investment risk with these purchases in my view. There is no magic in this world. Insurance companies have the same investment options as everyone else. They can guarantee whatever % but if their investments don't make more than that then you are still the one holding the bag.

LongerPrimer
Posts: 903
Joined: Thu Jun 05, 2014 10:01 pm

Re: NY Times: interest rising in deferred-income annuities

Post by LongerPrimer » Sat Jun 07, 2014 7:20 pm

^ That is what we call "investing" and insurance. 8-)
Nothing is really tangible, it is all promises that the money is there in the MF, brokerage, bank, or insurance co. I am sure glad that we sold the ingots when people wanted them. :greedy

LongerPrimer
Posts: 903
Joined: Thu Jun 05, 2014 10:01 pm

Re: NY Times: interest rising in deferred-income annuities

Post by LongerPrimer » Sat Jun 07, 2014 7:32 pm

@hoppy, IMO the GLIW contracts that we bought are very generous by today's standard. Just as I thought that 7% guarantees was very generous in 2008. The traditional annuity-life insurance companies only have a competitive product if they offer some incentives, which may end up biting them. We can call the contracts for the benefits at anytime forward or take the surrender. We have 3 years to RMD and 5 years to expiration taking the GLIW option.

pkcrafter
Posts: 13098
Joined: Sun Mar 04, 2007 12:19 pm
Location: CA
Contact:

Re: NY Times: interest rising in deferred-income annuities

Post by pkcrafter » Sat Jun 07, 2014 8:11 pm

Deferred (longevity) annuities fit the description: products that are sold, not bought.

New retirees who want to insure they have money later can, A) buy a longevity annuity, or B) put aside the money to pay for the annuity and live on what's left. In 15 or 20 years they can then spend the saved money.

Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.

steve_14
Posts: 1507
Joined: Wed Jun 20, 2012 12:05 am

Re: NY Times: interest rising in deferred-income annuities

Post by steve_14 » Sat Jun 07, 2014 9:15 pm

It's also important to note that deferred annuities are a lot like long term care insurance - one group of employees is getting paid at the time of sale, and another group is having to suffer financially decades later with the payouts. As we've seen with LTCI, this creates a situation where your insurer may or may not be able or willing to pay out when the time comes.

HIinvestor
Posts: 1687
Joined: Tue Apr 08, 2014 3:23 am

Re: NY Times: interest rising in deferred-income annuities

Post by HIinvestor » Sat Jun 07, 2014 10:08 pm

Another BIG risk the buyer assumes in a deferred annuity is whether or not the seller will be solvent and around to pay out the annuity that was purchased. Companies DO go under and if that one you purchased from does, there's not much you will get for your purchase.

With any annuity purchase, be sure to do your due diligence to check out the credit rating of the seller as thoroughly as possible.

grok87
Posts: 8443
Joined: Tue Feb 27, 2007 9:00 pm

Re: NY Times: interest rising in deferred-income annuities

Post by grok87 » Sat Jun 07, 2014 11:00 pm

pkcrafter wrote:Deferred (longevity) annuities fit the description: products that are sold, not bought.

New retirees who want to insure they have money later can, A) buy a longevity annuity, or B) put aside the money to pay for the annuity and live on what's left. In 15 or 20 years they can then spend the saved money.

Paul
agree.
why buy early and take the credit risk for an unnecessarily long period of time. the key thing is to have the money invested in treasuries/tips that match the duration characteristics of the longevity annuity you are planning to buy in the future.
Keep calm and Boglehead on. KCBO.

Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 8:41 pm
Location: Nowhere

Re: NY Times: interest rising in deferred-income annuities

Post by Leeraar » Sun Jun 08, 2014 2:34 am

I would be very cautious. Making a Defined Contribution plan look like a Defined Benefit plan is fraught with difficulty. I would not do it, because I do not understand how it works, not because I believe it is a bad deal.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

The Wizard
Posts: 12341
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: NY Times: interest rising in deferred-income annuities

Post by The Wizard » Sun Jun 08, 2014 6:34 am

I don't like DEFERRED annuities. I want an annuity that starts when I retire and I didn't know when that would be until I decided, at age 63.1.
So I began an annuity with a 10 year guarantee period then...
Attempted new signature...

User avatar
obgyn65
Posts: 770
Joined: Sun May 06, 2012 9:11 am

Re: NY Times: interest rising in deferred-income annuities

Post by obgyn65 » Sun Jun 08, 2014 7:14 am

I bought a couple of deferred annuities two years ago. They will generate 12% income when / if I reach 62.
"The two most important days in someone's life are the day that they are born and the day they discover why." -John Maxwell

User avatar
VictoriaF
Posts: 18597
Joined: Tue Feb 27, 2007 7:27 am
Location: Black Swan Lake

Re: NY Times: interest rising in deferred-income annuities

Post by VictoriaF » Sun Jun 08, 2014 7:16 am

The title is ambiguous. I thought that the interest used by insurance companies to calculate annuity payouts was rising.

Victoria
WINNER of the 2015 Boglehead Contest. | Every joke has a bit of a joke. ... The rest is the truth. (Marat F)

sscritic
Posts: 21858
Joined: Thu Sep 06, 2007 8:36 am

Re: NY Times: interest rising in deferred-income annuities

Post by sscritic » Sun Jun 08, 2014 7:22 am

The Wizard wrote:I don't like DEFERRED annuities. I want an annuity that starts when I retire and I didn't know when that would be until I decided, at age 63.1.
So I began an annuity with a 10 year guarantee period then...
I first bought TIAA Traditional when I was 28. At the time, the only way out was a lifetime annuity. I could start it whenever I retired, although the starting date on the contract was 65. That was 37 years of guaranteed deferral. I didn't mind a bit. I still don't, and I am still deferring, even though I have passed the 65 mark.

Now in a way we agree. I wanted to defer from when I started 40 years ago until I retired. So buy a deferred annuity at age 25 or 30 and let it ride. The problem is that we are both too old for that now. :)

User avatar
Frugal Al
Posts: 1697
Joined: Fri May 28, 2010 10:09 am

Re: NY Times: interest rising in deferred-income annuities

Post by Frugal Al » Sun Jun 08, 2014 7:26 am

Also in the article, Milevsky makes a good point about not loading up annuities with guarantees, which undoes the very features that make them a useful financial tool.
“What worries me is a lot of people are buying a life annuity under the guise of longevity insurance,” Professor Milevsky said, “but what they end up doing is piling on so many guarantees and what they really end up buying is an expensive bond fund.”

User avatar
hoppy08520
Posts: 2005
Joined: Sat Feb 18, 2012 11:36 am

Re: NY Times: interest rising in deferred-income annuities

Post by hoppy08520 » Sun Jun 08, 2014 7:31 am

VictoriaF wrote:The title is ambiguous. I thought that the interest used by insurance companies to calculate annuity payouts was rising.
I'm glad someone noticed my pun.

grok87
Posts: 8443
Joined: Tue Feb 27, 2007 9:00 pm

Re: NY Times: interest rising in deferred-income annuities

Post by grok87 » Sun Jun 08, 2014 7:42 am

Frugal Al wrote:Also in the article, Milevsky makes a good point about not loading up annuities with guarantees, which undoes the very features that make them a useful financial tool.
“What worries me is a lot of people are buying a life annuity under the guise of longevity insurance,” Professor Milevsky said, “but what they end up doing is piling on so many guarantees and what they really end up buying is an expensive bond fund.”
great quote
Keep calm and Boglehead on. KCBO.

Austintatious
Posts: 774
Joined: Thu Sep 13, 2012 7:01 pm

Re: NY Times: interest rising in deferred-income annuities

Post by Austintatious » Sun Jun 08, 2014 7:59 am

Assuming that long term insco commitment to contractual obligations and/or fiscal viability are legitimate concerns, I still like the simplicity and safety of the "savings bond annuity" approach Mel Lindauer has spoken of. See this forum post:

http://www.bogleheads.org/forum/viewtop ... 7#p1628298

Obviously, this would require relatively long term planning and the capacity to make those bond purchases ("annuity premiums") early on, but it relieves one's concerns re the insco's long term commitment to its contractual promises and/or its fiscal viability. And as the gloomy interest rate forecasts get even gloomier, the returns on this kind of investment seem more attractive than ever, IMHO. Just wish I'd been smart enough at 50 to think of something like this.

dhodson
Posts: 4117
Joined: Mon May 24, 2010 3:03 pm

Re: NY Times: interest rising in deferred-income annuities

Post by dhodson » Sun Jun 08, 2014 11:50 am

grok87 wrote:
Frugal Al wrote:Also in the article, Milevsky makes a good point about not loading up annuities with guarantees, which undoes the very features that make them a useful financial tool.
“What worries me is a lot of people are buying a life annuity under the guise of longevity insurance,” Professor Milevsky said, “but what they end up doing is piling on so many guarantees and what they really end up buying is an expensive bond fund.”
great quote
exactly. there is no magic in this world so any piece which is an "investment" isnt likely to work out that well. Nobody here would promote buying a highly managed, front loaded, difficult to surrender bond fund as an investment.

User avatar
Christine_NM
Posts: 2635
Joined: Tue Feb 20, 2007 1:13 am
Location: New Mexico

Re: NY Times: interest rising in deferred-income annuities

Post by Christine_NM » Sun Jun 08, 2014 12:15 pm

Deferred-payout annuities are not new by any means. Colleges and universities have been offering them for decades. I bought several biannually while I was working for a five-year deferred payout rate of 8.9%. Show me a decent bond fund that can match that today!

Making it a charitable donation means a tax deduction and, if you transfer appreciated securities, the capital gains are paid out over 20 years or so. And that cap gain of about $120 a year is now covered by my large carryover loss from 2008.

Mainly I like this because it is primarily a gift and I don't feel I'm ripped off or overprotected by some insurance company.
17% cash 47% stock 36% bond. Retired, w/d rate 2.85%

Leeraar
Posts: 4109
Joined: Tue Dec 10, 2013 8:41 pm
Location: Nowhere

Re: NY Times: interest rising in deferred-income annuities

Post by Leeraar » Sun Jun 08, 2014 12:39 pm

dhodson wrote:
grok87 wrote:
Frugal Al wrote:Also in the article, Milevsky makes a good point about not loading up annuities with guarantees, which undoes the very features that make them a useful financial tool.
“What worries me is a lot of people are buying a life annuity under the guise of longevity insurance,” Professor Milevsky said, “but what they end up doing is piling on so many guarantees and what they really end up buying is an expensive bond fund.”
great quote
exactly. there is no magic in this world so any piece which is an "investment" isnt likely to work out that well. Nobody here would promote buying a highly managed, front loaded, difficult to surrender bond fund as an investment.
The simplest example is perhaps to buy an SPIA as insurance for living beyond your life expectancy, then supplementing it with term life insurance in case you die early.

L.
You can get what you want, or you can just get old. (Billy Joel, "Vienna")

The Wizard
Posts: 12341
Joined: Tue Mar 23, 2010 1:45 pm
Location: Reading, MA

Re: NY Times: interest rising in deferred-income annuities

Post by The Wizard » Sun Jun 08, 2014 3:10 pm

sscritic wrote:
The Wizard wrote:I don't like DEFERRED annuities. I want an annuity that starts when I retire and I didn't know when that would be until I decided, at age 63.1.
So I began an annuity with a 10 year guarantee period then...
I first bought TIAA Traditional when I was 28. At the time, the only way out was a lifetime annuity. I could start it whenever I retired, although the starting date on the contract was 65. That was 37 years of guaranteed deferral. I didn't mind a bit. I still don't, and I am still deferring, even though I have passed the 65 mark.

Now in a way we agree. I wanted to defer from when I started 40 years ago until I retired. So buy a deferred annuity at age 25 or 30 and let it ride. The problem is that we are both too old for that now. :)
Good historical point re TIAA Traditional, but somewhere back in the 80's they changed the rules and offered a nine-year payout which I did on much of my Trad, to get into higher-yielding riskier investments.
When I annuitized a year ago, I put just 20% in SPIA-equivalent Trad, and 80% into higher-yielding riskier Variable stuff...
Attempted new signature...

User avatar
CWRadio
Posts: 339
Joined: Sat Feb 02, 2008 10:04 am
Location: In the Michigan ionosphere

Some Peace of Mind

Post by CWRadio » Sun Jun 08, 2014 6:00 pm

Any thinking about the Some Peace of Mind part of the article(Buying a Guaranteed Retirement Income, for Some Peace of Mind)?
Does Peace of Mind have a value?
Paul

Post Reply