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joetaxpayer <j...@n...com> writes:
> g...@g...com wrote:
>
> > Thank you all for your input. I think that at this point, I'm going to
> > seek the advice of a professional. Thank you all!
> > -Ryan
>
> May I stress the point, choose a fee-based pro, not commission
> based. And if he suggests any kind of annuity, walk away, and seek out
> someone else.
What's so wrong with annuities for an older investor such that the
suggestion of them is worthy of a litmus test?
I honestly don't much about annuities other than I know someone in her
70's that has at least one somewhere who is generally pretty sharp
with her money.
Best Regards,
--
Todd H.
http://www.toddh.net/
Todd H. wrote:
> joetaxpayer <j...@n...com> writes:
>
>
>>g...@g...com wrote:
>>
>>
>>>Thank you all for your input. I think that at this point, I'm going to
>>>seek the advice of a professional. Thank you all!
>>>-Ryan
>>
>>May I stress the point, choose a fee-based pro, not commission
>>based. And if he suggests any kind of annuity, walk away, and seek out
>>someone else.
>
>
> What's so wrong with annuities for an older investor such that the
> suggestion of them is worthy of a litmus test?
>
> I honestly don't much about annuities other than I know someone in her
> 70's that has at least one somewhere who is generally pretty sharp
> with her money.
>
> Best Regards,
> --
> Todd H.
> http://www.toddh.net/
She's 40. An immediate annuity at 70 can be good/great. At 40, well,
I've never seen a rate for that young, but guessing it will be closer to
6% (damn, I'm good, just checked http://www.immediateannuities.com and
for a male it's exactly 6%, for female 5.772%) with no inflation factor.
For other annuities, I'll spare the group a repeat of my VA rants.
JOE
Definitely no annuity at this point (By the way, I'm not always
anti-annuity)!
Inflation would kill the annuity's income stream in later years even if
she could get the needed return (which she can't).
joetaxpayer <j...@n...com> writes:
> Todd H. wrote:
>
> > What's so wrong with annuities for an older investor such that the
> > suggestion of them is worthy of a litmus test?
> > I honestly don't much about annuities other than I know someone in
> > her
> > 70's that has at least one somewhere who is generally pretty sharp
> > with her money.
> > Best Regards, --
> > Todd H. http://www.toddh.net/
>
> She's 40.
doh. Hee hee. Nuff said! I missed that.
> For other annuities, I'll spare the group a repeat of my VA rants.
Hee hee... gotcha!
--
Todd H.
http://www.toddh.net/
...@t...net (Todd H.) writes:
> joetaxpayer <j...@n...com> writes:
> > g...@g...com wrote:
> >
> > > Thank you all for your input. I think that at this point, I'm going to
> > > seek the advice of a professional. Thank you all!
> > > -Ryan
> >
> > May I stress the point, choose a fee-based pro, not commission
> > based. And if he suggests any kind of annuity, walk away, and seek out
> > someone else.
>
> What's so wrong with annuities for an older investor such that the
> suggestion of them is worthy of a litmus test?
The biggest problem is probably that when one says "annuities"
there are many different things that can mean. Mainly, two
variables implying four different types - deferred vs. immediate
and variable versus fixed (the latter potentially inflation
adjusted).
A traditional pension, once it starts paying out, is basically
an immediate fixed annuity. And potentially a very useful tool
for a risk-averse investor who needs a predictable cashflow (ie. to
live on).
Unfortunately, the thing folks need to be very wary of - the
thing which is often pushed (ie. sold very hard) is the
deferred variable annuity. I'm much harder pressed to come
up with scenarios where a deferred VA is the right choice.
Sadly, they are sold all the time and very often to folks
for whom they are entirely innapropriate.
--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting
kastnna wrote:
> Definitely no annuity at this point (By the way, I'm not always
> anti-annuity)!
>
> Inflation would kill the annuity's income stream in later years even if
> she could get the needed return (which she can't).
There exist inflation-indexed annuities, described at
http://www.investopedia.com/articles/05/inflationpro
tectannuity.asp .
b...@a...com wrote:
> There exist inflation-indexed annuities, described at
> http://www.investopedia.com/articles/05/inflationpro
tectannuity.asp .
Well I'll be damned! I guess I haven't ran into them very often in my
work. Do they carry higher than average expenses (T.N.S.T.A.A.F.T)?
Annuities already run relatively high expenses in many cases.
kastnna wrote:
> b...@a...com wrote:
> > There exist inflation-indexed annuities, described at
> > http://www.investopedia.com/articles/05/inflationpro
tectannuity.asp .
>
> Well I'll be damned! I guess I haven't ran into them very often in my
> work. Do they carry higher than average expenses (T.N.S.T.A.A.F.T)?
> Annuities already run relatively high expenses in many cases.
For an immediate annuity, where the payoffs are fixed, "expense ratio"
is a nebulous concept, unlike a variable annuity or a mutual fund where
returns = asset returns - expenses
If the "fair value" of an immediate annuity is 95% of its purchase
price, the 5% cost should be compared with the alternatives. Such an
annuity could be cheaper than paying a fee-only planner 1% of assets,
annually, for 20 years.
.
kastnna wrote:
> b...@a...com wrote:
> > There exist inflation-indexed annuities, described at
> > http://www.investopedia.com/articles/05/inflationpro
tectannuity.asp .
>
> Well I'll be damned! I guess I haven't ran into them very often in my
> work. Do they carry higher than average expenses (T.N.S.T.A.A.F.T)?
> Annuities already run relatively high expenses in many cases.
Almost every retiree effectively has the option to buy a limited amount
of inflation-indexed annuity (IIA) by deferring the date he or she
starts receiving Social Security benefits. If the earliest date one
start receiving benefits is age 60 and the last date deferral makes
sense (when benefits stop increasing) is age 70, and the monthly
difference in payments between the two options is $X per month, the
government is offering you an $X per month IIA starting at age 70 for
the cost of the foregone benefits between ages 60 and 70. The age 60
level of payments constitutes the base IIA that everyone gets.
The ages 60 and 70 above are just illustrative -- I am unfamiliar with
the details of how Social Security benefits depend on the age they
commence.
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