Guaranteed Lifetime Income Annuity II- Help

[Bobnfl]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

[Stu from NYC]

Lots of threads on this but be very very careful. Guy recommending it will make a rather large commission. Ask for copy of contract most of the time you will only get it after you sign on the dotted line

I would not do this.

[retired guy]

RUN, Ask how much he makes by SELLING this product.
Ask if he is a fiduciary? ( having your best interest )

[Bill14564]

Not a finance guy so I don't know all the things to watch out for. It does seem like some don't like the word annuity.

7.5% annual draw seems good. Rule of thumb is 4% to maintain the balance in the account but that works in a good market which we don't have today.

- Your advisor will make money selling this to you but there's nothing wrong with that
- If you took 4%, about half as much, and if the market works well for you then when you pass then there will still be funds to pass to your heirs.
- If the market does not get better then that 4% becomes less and less every year
- If you take the annuity and pass in less than 13 years then you leave money on the table that your heirs will not receive
- If you take the annuity and live to 84 (not unlikely) then you will have made money regardless of the market (assuming the payout is not tied to the market)
- If the company goes under then you definitely lose

I have a similar decision to make in the near future and would really like to hear *why* an annuity is such a bad idea.

[dewilson58]

Break even is at 13yrs. .

When R U going to die??

[dewilson58]

Not sure who told you a 13 year breakeven.


Simple Example:
You could ladder out CD's and get over 5%.
If you are getting 5% on your $265k and you take out $1675 per month......you will have over $75,000 left after 13 years.

:popcorn:

[Babubhat]

Never buy this product. It’s the salesman who gets the commission annuity. Buy a Treasury bond to do the same. The value will increase as rates go down and it is is liquid.

Remember the Big Short. Those ratings were worthless in the end.

In my opinion it is criminal this product is allowed to be sold. Nothing they tell you is binding. Nothing. The contracts are horribly one sided. Save yourself a life of aggravation

There are other threads on the site recounting horror stories

I have advanced degrees in finance and READ a contract. It will numb your brain

[Bill14564]

Not sure who told you a 13 year breakeven.


Simple Example:
You could ladder out CD's and get over 5%.
If you are getting 5% on your $265k and you take out $1675 per month......you will have over $75,000 left after 13 years.

:popcorn:

13 years looks to be simple division: 265,000/(12*1,675)=13 years, 2 months

5% interest is available today but it was not last year. Is your crystal ball good enough to be sure it will be available next year?

Even if 5% is sustained it only turns 13 years into about 17 years.

What if the OP celebrates his 90th birthday? With the fixed annuity he will see a check for $1,675; with 5% sustained he will be out of luck.

[dewilson58]

13 years looks to be simple division: 275,000/(12*1,675)=13 years, 8 months

5% interest is available today but it was not last year. Is your crystal ball good enough to be sure it will be available next year?

Even if 5% is sustained it only turns 13 years into about 17 years.

What if the OP celebrates his 90th birthday? With the fixed annuity he will see a check for $1,675; with 5% sustained he will be out of luck.

$375,000 is simple math too. :ohdear::ohdear:
The OP has $265k.

Mine was a simple example to show the OP.....a 13 year breakeven is BS.

The OP can use LT US Bonds for the 5%.............I was not giving him/her investment advice.

[retiredguy123]

Is the $265k coming from a tax deferred account? If so, I would definitely not buy the annuity. If the $265k is coming from a taxable account, you will pay income tax on the portion of the monthly income that is considered earnings. You need to ask how that will be calculated. If you don't need the income to live on, I would not buy the annuity. Currently, you can get 5 percent on a CD or even a money market account, which is $1,104 per month, and you can dip into the principal as needed to make up the difference. To me, that seems like a better way to go because you will be able to preserve part of your principal. Some things to consider. Also, ask your advisor for a "complete" copy of the annuity contract (not a brochure or a sample). Typically, they will refuse to provide it, which is why I hate annuities. I would never agree to a contract that I cannot read in advance. Good luck.

[Bill14564]

$375,000 is simple math too. :ohdear::ohdear:
The OP has $265k.

Mine was a simple example to show the OP.....a 13 year breakeven is BS.

The OP can use LT US Bonds for the 5%.............I was not giving him/her investment advice.

Typo. I corrected my post. Using $265,000 the math comes to 13 years, 2 months which is close enough to call it a 13 year breakeven point.

Not investment advice but you mentioned CDs which actually are not terribly liquid. Not familiar with LT US Bonds but I assume the LT portion means those are not terribly liquid either.

My point is, if the annuity is fixed and if the company can be trusted to survive 20+ years then you can't guarantee something better using the market. The market *could* turn out better but it might not. CDs or Bonds at 5% would give 17 years (if your calculations are correct).

If the question, "When R U going to die?" is important to the OP then he might not want to bet on the answer, "In the next 17 years."

If I am missing something, someone please point it out.

[dewilson58]

Typo. I corrected my post. Using $265,000 the math comes to 13 years, 2 months which is close enough to call it a 13 year breakeven point.

Not investment advice but you mentioned CDs which actually are not terribly liquid. Not familiar with LT US Bonds but I assume the LT portion means those are not terribly liquid either.

My point is, if the annuity is fixed and if the company can be trusted to survive 20+ years then you can't guarantee something better using the market. The market *could* turn out better but it might not. CDs or Bonds at 5% would give 17 years (if your calculations are correct).

If the question, "When R U going to die?" is important to the OP then he might not want to bet on the answer, "In the next 17 years."

If I am missing something, someone please point it out.

"Using $265,000 the math comes to 13 years, 2 months which is close enough to call it a 13 year breakeven point." That is BS, who assumes no time-value-of-money.....besides the salesmen? :1rotfl::1rotfl::1rotfl:

"CDs which actually are not terribly liquid".....they are extremely liquid if you ladder.

"Not familiar with LT US Bonds but I assume the LT portion means those are not terribly liquid either"...................very liquid..........can sell on the open market any time.

"LT US Bonds"......one might be concerned about rates going down. If rates are going down, all things being equal.....the value of the bond is going up.

If you review the prior posts................I asked the OP when he/she is going to die.

There are many other questions as well.........like, do you want to leave any money at death; what other investments do you have, is your house mortgage free, etc.


:ho:

[jimbomaybe]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.
Perhaps you need another professional opinion, one from a fee only certified financial planner who's only compensation is the fee you pay for their advice, they sell you no financial product thereby being unbiased

[Eg_cruz]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.
Don’t do it

[Stu from NYC]

There is an old saying, annuities are never purchased they are sold.

[Jayhawk]

our adviser is suggesting a guaranteed annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a aa+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from rmd. Help us make a decision
thanks for any help you can give.

100929

[Pballer]

Check out immediateannuities.com to see if you are getting a good deal.

[margaretmattson]

Check out immediateannuities.com to see if you are getting a good deal.Ask for the contract before signing. Take it to a financial advisor whom you trust to review and use the above mentioned site. Kinda like getting a second medical opinion. If they do not give you the contract or will not allow a second review, you probably should stay away. Something sketchy going on.

[Papa_lecki]

The fact that you’re asking here tells us you aren’t comfortable with the plan. also, tells me you’re not confident in your financial advisor - maybe look for someone else to help.

[Goldwingnut]

Rule #1 when investing - if you don’t understand what you’re investing in, don’t! If the person who’s recommending something can’t explain it to you so you can understand it, walk away.

If you’ve never heard of him, Dave Ramsey has a radio show (#3 nationally) that provides good financial guidance based on simple principles (don’t spend more than you make, save for retirement, don’t use credit cards, live debt free, etc) that is worth a listen. After nearly 20 years of listening to him I’m pretty sure he’d advise you not to buy an annuity.

Something to consider, if you give the money to this salesman (that truly is what you’re doing) you can never touch it again. They will give you a dole every month but you can never access the principal again. What if your life changes (that would never happen at 70 years old…) and tomorrow you need to lay your hands on some of the money, you can’t pull it from the annuity, that money is no longer yours to control. When you die, is there a survivorship? Likely not or very limited, maybe your spouse, but certainly it won’t continue yielding the monthly dole for generations to come. So what happens to the money, the company keeps it in payment for the “guaranteed income for life”. It’s not hard to figure out that they are betting on you not living as long as you are.

[Rwirish]

They are not a bad idea and for many they may be a beneficial part of one’s overall investment plan.

[Babubhat]

There is no insurance if the company has financial difficulty. They could be sitting on a ton of underwater long term bonds like the banks. The next crisis to occur. Remember the fake ratings from the Big Short.

The goal is to sleep peacefully at night. This is NOT the product to buy.

[Sully2023]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

Over the years I looked at buying an annuity and each time I started to get into the details I found they were very expensive. It always sounded too good to be true. Annuities are very complex insurance products which are commission driven. In addition to the high commission fees it limited access to my money if I needed it for a major emergency. I would suggest that BEFORE you invest, ask two other investment advisors their thoughts. You can buy CDs today and get a good rate on this money. You can tell they are not for me. Good luck - do more research!

[jimschlaefer]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

Several years ago we set up a similar annuity with New York Life through Fidelity. Our intent was to, somewhat, secure a known income source going forward until we died. This is working well for us and we receive a monthly check of known value every month. What we liked about this was it had value that was transferable if we died before "all the money ran out" and that cash could be part of our estate. Not everyone agrees with this position and that's OK, but I would suggest reviewing several different annuities and offerings before 'pulling the trigger' on this one.

[rsmurano]

Never buy an annuity. The market averages 8% per year over the long run. I would never buy cds either. You can get into a money market fund now and get over 5%, I have for over a year. If you take 4 or 5% out each year to live on, you are preserving your base, you are just living off the interest. Then when big changes occur next year and the economy starts to get better in the next 2 years, then you can move your money into any of the many indexed funds that will get you 10% or more. Just this year alone, I’m in 2 indexed funds that have gone up over 25%, and this is in a bad year. The only people making money with annuities are the people selling them, just like the people you hire to control your investments. Learn how to control your finances/investments yourself, you will be much better off and much richer

[FredJacobs]

I have spent almost 30 years teaching insurance agents.

Yes, the selling agent gets a pretty good commission. Depending on whether the product is a Variable Annuity - where the inside cash value grows on the performance of a stock/bond portfolio - or a Fixed Annuity - the inside cash value grows on an interest rate that may fluctuate. The commission rate (before I retired 20 years ago) was about 5% on Variable Annuities and about 10% on Fixed Annuities at the time of sale. Additional deposits paid 1 to 2%.

During this growth period you can withdraw cash from the account with some penalty based on declining sales charges - READ THE CONTRACT. When you withdraw cash, any growth over the amount you invested comes out first and is taxable income. It also reduces your death benefit should you pass while the annuity is in force.

At some point, you can annuitize the cash value. This is like getting an income from a pension. There many variations of annuitizing. For example, like a pension, you can get a distribution based on your life expectancy, a combination of you and your wife with various options on how much the survivor gets when you pass. These should all be explained by the selling agent before you buy. While the distributions are guaranteed by the insurance company, that guarantee is based on the health of the insurance company and its ability to continue paying.

It appears that you are considering an Immediate Annuity. Annuitization is not always the best choice for seniors. The main problem once you annuitize is that you lose access to the cash value of the contract. Should a problem come up such as needing cash for high medical bills, you cannot access any of that $265k - that money is locked. If you do not have other retirement funds and/or savings, annuitization is NOT recommended in your case. Most insurance companies will want the sales agent to submit a detailed report on the client's assets - especially those over 65.

By the way, I am not/will not recommend any company or product for your consideration. I'm just explaining how they work. I surrendered my licenses a long time ago.

A

[MidWestIA]

2 Ways To Guarantee Yourself a Lifetime Stream of Income (https://clark.com/insurance/2-ways-to-guarantee-yourself-a-lifetime-stream/)

[Robbb]

Never buy an annuity. The market averages 8% per year over the long run. I would never buy cds either. You can get into a money market fund now and get over 5%, I have for over a year. If you take 4 or 5% out each year to live on, you are preserving your base, you are just living off the interest. Then when big changes occur next year and the economy starts to get better in the next 2 years, then you can move your money into any of the many indexed funds that will get you 10% or more. Just this year alone, I’m in 2 indexed funds that have gone up over 25%, and this is in a bad year. The only people making money with annuities are the people selling them, just like the people you hire to control your investments. Learn how to control your finances/investments yourself, you will be much better off and much richer

What index funds are you in that returned 25% this year?

[LonnyP]

If you had to ask here then your mind is in the right place. They are trying to make a lot of money off you. Find someone different.

[Babubhat]

This product is about to be crushed. In no way shape or form does it pass this test. It’s the equivalent of car rust proofing of financial products.

As part of its ongoing effort to make it easier for Americans to amass retirement savings and protect consumers from having to pay “junk” fees, the Administration on Tuesday released a proposed rule that would require any financial adviser, broker or insurance agent who sells retirement investments and advice to only do so in the best interest of their clients, not their own.

[retiredguy123]

I have spent almost 30 years teaching insurance agents.

Yes, the selling agent gets a pretty good commission. Depending on whether the product is a Variable Annuity - where the inside cash value grows on the performance of a stock/bond portfolio - or a Fixed Annuity - the inside cash value grows on an interest rate that may fluctuate. The commission rate (before I retired 20 years ago) was about 5% on Variable Annuities and about 10% on Fixed Annuities at the time of sale. Additional deposits paid 1 to 2%.

During this growth period you can withdraw cash from the account with some penalty based on declining sales charges - READ THE CONTRACT. When you withdraw cash, any growth over the amount you invested comes out first and is taxable income. It also reduces your death benefit should you pass while the annuity is in force.

At some point, you can annuitize the cash value. This is like getting an income from a pension. There many variations of annuitizing. For example, like a pension, you can get a distribution based on your life expectancy, a combination of you and your wife with various options on how much the survivor gets when you pass. These should all be explained by the selling agent before you buy. While the distributions are guaranteed by the insurance company, that guarantee is based on the health of the insurance company and its ability to continue paying.

It appears that you are considering an Immediate Annuity. Annuitization is not always the best choice for seniors. The main problem once you annuitize is that you lose access to the cash value of the contract. Should a problem come up such as needing cash for high medical bills, you cannot access any of that $265k - that money is locked. If you do not have other retirement funds and/or savings, annuitization is NOT recommended in your case. Most insurance companies will want the sales agent to submit a detailed report on the client's assets - especially those over 65.

By the way, I am not/will not recommend any company or product for your consideration. I'm just explaining how they work. I surrendered my licenses a long time ago.

A
Thanks. You said that you should "READ THE CONTRACT". I have tried to help friends understand an annuity but, when I have asked the salesperson for a copy of the contract, they refuse to provide it and sometimes they will get angry and hang up on me. Their sales technique seems to be collect the money first and then the company will send the contract. Then, the client has 30 days to cancel the contract and request a refund. Is that correct?

[Mazjaz]

If you don’t want to annuitize your money for good go with a 5 or 7 year fixed annuity at 6.15% and get your entire investment back or reinvest at the end of the term.

[mrf0151]

[QUOTE=dewilson58;2270060]Not sure who told you a 13 year breakeven.


Simple Example:
You could ladder out CD's and get over 5%.
If you are getting 5% on your $265k and you take out $1675 per month......you will have over $75,000 left after 13 years.

So you are saying CD's will hold at 5% or better over 13 years? Really?

[gighilton]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

Take 265K and put in CD at 6%, which is available now, and make 1325 per month... and you don't lose control of your money! This annuity is a bet on your life expectancy!

[crash]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

Your advisor is representing himself the fees and commissions are high on annuity's. Invest in T bills and you get over $1100 a month and when you die the $265,000 is still there for your kids. With an annuity when you both die the company keeps the money still left. If you want the full $1675 a month just withdrawal $500 from the principle each month and you won’t be at zero for over 30 years.


An advisor that truly has your best interest at heart will never recommend an annuity.

[Babubhat]

No layman could possibly understand these contracts. I spent many years litigating and there is NOTHING favorable to you in the language. Find a better product. If you must, go to Vanguard. Shareholders own the company. Lowest cost products .

Had a Harvard lawyer review and they laughed how absurd the contract language was after reading a few pages. Caveat Emptor. Or you can trust a salesman

I have spent almost 30 years teaching insurance agents.

Yes, the selling agent gets a pretty good commission. Depending on whether the product is a Variable Annuity - where the inside cash value grows on the performance of a stock/bond portfolio - or a Fixed Annuity - the inside cash value grows on an interest rate that may fluctuate. The commission rate (before I retired 20 years ago) was about 5% on Variable Annuities and about 10% on Fixed Annuities at the time of sale. Additional deposits paid 1 to 2%.

During this growth period you can withdraw cash from the account with some penalty based on declining sales charges - READ THE CONTRACT. When you withdraw cash, any growth over the amount you invested comes out first and is taxable income. It also reduces your death benefit should you pass while the annuity is in force.

At some point, you can annuitize the cash value. This is like getting an income from a pension. There many variations of annuitizing. For example, like a pension, you can get a distribution based on your life expectancy, a combination of you and your wife with various options on how much the survivor gets when you pass. These should all be explained by the selling agent before you buy. While the distributions are guaranteed by the insurance company, that guarantee is based on the health of the insurance company and its ability to continue paying.

It appears that you are considering an Immediate Annuity. Annuitization is not always the best choice for seniors. The main problem once you annuitize is that you lose access to the cash value of the contract. Should a problem come up such as needing cash for high medical bills, you cannot access any of that $265k - that money is locked. If you do not have other retirement funds and/or savings, annuitization is NOT recommended in your case. Most insurance companies will want the sales agent to submit a detailed report on the client's assets - especially those over 65.

By the way, I am not/will not recommend any company or product for your consideration. I'm just explaining how they work. I surrendered my licenses a long time ago.

A

[Aces4]

[QUOTE=dewilson58;2270060]Not sure who told you a 13 year breakeven.


Simple Example:
You could ladder out CD's and get over 5%.
If you are getting 5% on your $265k and you take out $1675 per month......you will have over $75,000 left after 13 years.

So you are saying CD's will hold at 5% or better over 13 years? Really?

The CD's should hold and may go even higher. Remember that mortgage rates are returning to normal levels and the days of "free money mortgages" are, hopefully, behind us. FDIC products are much more appealing than annuities which may go under.

[talonip]

Once you hand over the money it is no longer yours. It belongs to the salesman if you ever need a large amount of money due to misfortune you cannot take it out without huge penalty. I have one and it was a big mistake. Any profit on your money in the investment they put it in does not get put back in your account. It’s a bad deal.

[MrFlorida]

When an investment person mentions an annuity, I run for the door !

[RRGuyNJ]

13 years looks to be simple division: 265,000/(12*1,675)=13 years, 2 months

5% interest is available today but it was not last year. Is your crystal ball good enough to be sure it will be available next year?

Even if 5% is sustained it only turns 13 years into about 17 years.

What if the OP celebrates his 90th birthday? With the fixed annuity he will see a check for $1,675; with 5% sustained he will be out of luck.

All good points but in the end, does anyone have a crystal ball?
Sure thing is most annuities have large fees attached.
CD's to me are a bit old fasioned but hey, 5% is 5% at today's rates.
For me, I stick with a balanced stock fund with a reputable mutual fund company and enjoy the good market days and growl about the bad market days. I have to admit, I've been doing a fair amount of growling the past couple of years.

[miadford@gmail.com]

We’ve spoken to Skip West at West Financial and the annuity he talked to us about (we have not committed yet), is the rate you receive is a little over 7%, he told us he receives a 7% commission from the annuity company. If you commit, then you cannot take ANY money out for a determined amount of time (he said it is graduated the the first 12 or 13 years). The annuity company receives usually in the range of 2-3% from the investment they make on your money based on the market. Their side can go up or down but will not change what you receive (unless you’ve withdrawn some and early withdrawal is a huge fee). The other nice thing was that the principal amount never goes down! So that money will be 100% left to your family when you pass. My concern is if my husband would pass before me (he is a good bit older that I), is that if it is within the timeframe where none of it can be withdrawn without penalty, what do I do for additional income that would be gone from his now receiving SS. But I did feel like Skip was very honest with us. He told us pros and cons.

[petsetc]

If you want to know too much about annuities, listen to Stan The Annuity Man® | Brutally Honest Facts About Annuities podcasts.

Podcast - Have Fun With Annuities(R) | The Annuity Man (https://www.stantheannuityman.com/fun-with-annuities-podcast)


My additional investment advice - take time to read Paul Merriman’s 3 FREE ebooks.
1. First-Time Investor
2. 101 Investment Decisions
3. Get Smart or Get Screwed (read this first!)

Found at paulmerriman.com

Also on his site are recommended portfolios for using Vanguard, Fidelity, T.Rowe Price or Schwab for DYI'ers. Much good info, ignore the puffery and sales pitches.

Last recommendation is FIRECalc: A different kind of retirement calculator (http://www.firecalc.com) , a Monte Carlo simulation of your future.

FWIW

[cphague]

1 - Do you not trust your advisor? If this individual is confusing you or giving you a high pressure sales pitch that you do not like, find another person or tell your advisor you are not happy.
2 - Why are you asking total strangers for financial advice? Would you go up to random people walking around and ask them what you should do with your money? Talk of The Villages participation does not guarantee knowledge and, as can be seen in the variety of opinions, can be very confusing.

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

[Daddymac]

You can buy, With $100,000 a 6% 11 month CD right now…

[Bill14564]

All good points but in the end, does anyone have a crystal ball?
Sure thing is most annuities have large fees attached.
CD's to me are a bit old fasioned but hey, 5% is 5% at today's rates.
For me, I stick with a balanced stock fund with a reputable mutual fund company and enjoy the good market days and growl about the bad market days. I have to admit, I've been doing a fair amount of growling the past couple of years.

No crystal ball, that's why guaranteed for life is attractive.

If the annuity comes with a fixed payout for life then I don't care about fees. If the company's investments work out and they make money then good for them but if they don't then their income drops while mine stays the same. All I care is that I am getting a good fixed payout for the purchase price.

5% is good but 5% is new. While I don't have a crystal ball I do have a good short-term memory and we haven't seen 5% for quite a while. Perhaps rates will go higher or maybe they will drop again in the next 20 years. Back to that crystal ball.

If that amount is put into a CD Ladder at 5% then it should last 20-22 years at the $1,625/month draw rate as long as the 5% holds for the entire time. At the end of the 22 years I would have $0. If the amount is put into the annuity and I live to 100 then the amount would last 30 years. At the end of the 30 years I would have $0.

Big consideration: If there is a growth period between the time the annuity is purchased and when it begins to pay then that would make a difference. That 30 years of annuity payout might then be from age 80 to 110. The money in the CD would pay out immediately or it would grow and extend the time it was available. I don't want to bet on when I will die but I'm pretty comfortable with the idea that I won't live to 110.

I'm not in a hurry to purchase an annuity but I am thinking about it. Sure, my money might grow if I kept it in the market and I would have something to leave to my heirs but there is always the chance that it would not. Having some left over for heirs is nice but having a guaranteed source of income is nice too.

[Barkriver]

🤣 🤣 😂

[Stu from NYC]

1 - Do you not trust your advisor? If this individual is confusing you or giving you a high pressure sales pitch that you do not like, find another person or tell your advisor you are not happy.
2 - Why are you asking total strangers for financial advice? Would you go up to random people walking around and ask them what you should do with your money? Talk of The Villages participation does not guarantee knowledge and, as can be seen in the variety of opinions, can be very confusing.

It leads to an interesting discussion and some of us might even learn something.

[bigeasy]

No no no. Take the 5.5 % at the bank.

[Cliff Fr]

I agree with Sage. Either cd's or money market accounts would be a lot safer. But imo what you should do is seek the advice of a certified financial planner. They would be a fiduciary and would not be trying to push any particular investment

[Caymus]

No no no. Take the 5.5 % at the bank.

All you need to do is predict inflation and interest rates for the next 20 years.:D:D

[Toymeister]

Duplicate post

[Toymeister]

We’ve spoken to Skip West at West Financial and the annuity he talked to us about (we have not committed yet)...

Skip was very honest with us. He told us pros and cons.

Is this the same Arthur Eugene 'Skip' West who is charged with a felony? Why yes, yes it is!

https://www. Www. V*llagesn*wscom/2022/12/06/prominent-financial-adviser-arrested-after-alleged-attack-at-wolfgang-puck/

Space added between www. And v*llagesn*ws.

Of course he hasn't been convicted yet, so there is that.

[Caymus]

Is this the same Arthur Eugene 'Skip' West who is charged with a felony? Why yes, yes it is.

https://www. Www. V*llagesn*wscom/2022/12/06/prominent-financial-adviser-arrested-after-alleged-attack-at-wolfgang-puck/

Space added between www. And v*llagesn*ws

Looks like he may need the annunity commission for his lawyer fees.:angel:

[cphague]

I completely agree with you and that's why I have read this discussion string as it is very interesting. I was just concerned that the initiator of the conversation was asking for guidance in an important financial decision from total strangers as opposed to an interesting conversation.

Or...I just misread the question!! :)

It leads to an interesting discussion and some of us might even learn something.

[macawlaw]

Are you charitably inclined? Many nonprofit organizations offer gift annuities. The rate might be slightly lower, but there is no middleman making a profit. The proceeds can be directed into a fund that you predetermine.

For example, if you have a gift annuity with a university and there are proceeds left, they could fund a scholarship named for you and/or a family member.

Charitable gift annuities can be for one or two lives. Also, you can know what kind of endowment the charity has, which is an indicator if they will be around for your lifetime.

Good luck with your decision.

[Stu from NYC]

Is this the same Arthur Eugene 'Skip' West who is charged with a felony? Why yes, yes it is!

https://www. Www. V*llagesn*wscom/2022/12/06/prominent-financial-adviser-arrested-after-alleged-attack-at-wolfgang-puck/

Space added between www. And v*llagesn*ws.

Of course he hasn't been convicted yet, so there is that.

We went to one of his dinners a few months ago and he pushed annuities as the best thing since sliced bread and how most people lose by buying stocks or funds.

The best thing about it was we had a very nice dinner.

[Packer Fan]

There is an old saying, annuities are never purchased they are sold.

Which is baloney. I bought 2 as a part of a comprehensive financial plan I went and got quotes and I am very happy. I was not sold them. I know several others who did the same. Btw, I could not care less what the commission was because all I care about it the guarantees to ensure my minimum dignity floor

[Packer Fan]

Rule #1 when investing - if you don’t understand what you’re investing in, don’t! If the person who’s recommending something can’t explain it to you so you can understand it, walk away.

If you’ve never heard of him, Dave Ramsey has a radio show (#3 nationally) that provides good financial guidance based on simple principles (don’t spend more than you make, save for retirement, don’t use credit cards, live debt free, etc) that is worth a listen. After nearly 20 years of listening to him I’m pretty sure he’d advise you not to buy an annuity.

Something to consider, if you give the money to this salesman (that truly is what you’re doing) you can never touch it again. They will give you a dole every month but you can never access the principal again. What if your life changes (that would never happen at 70 years old…) and tomorrow you need to lay your hands on some of the money, you can’t pull it from the annuity, that money is no longer yours to control. When you die, is there a survivorship? Likely not or very limited, maybe your spouse, but certainly it won’t continue yielding the monthly dole for generations to come. So what happens to the money, the company keeps it in payment for the “guaranteed income for life”. It’s not hard to figure out that they are betting on you not living as long as you are.

Wow, wingnut, I have been following you for a long time and this is the first time I strongly disagree. Dave Ramsey is great for get out of debt and I love the guy. However, his investment advice is close to malpractice. Invest in managed mutual funds and assume a 12% return is just crazy. So I tell people to get out of debt with Dave, then read simple path to wealth for investment advice. However, for retirement advice Wade Pfau is the only way to go. The foremost researcher in the retirement income space and he disagrees with you on annuities and so do I. As a small portion to guarantee a minimum income floor they are invaluable. The last 2 years is proof when stocks AND bonds are both down.

I totally agree with understanding what you are buying so read Wade Pfau’s books, especially the complete guid to retirement and you will make better decisions. Do NOT rely on Dave Ramsey for retirement advice PLEASE!

[rsmurano]

What index funds are you in that returned 25% this year?

Check out Vgt. This was 1 of three index funds I was/am in this past year. There are others too. Pretty easy since last year tech sucked and when things are down, then it’s time to buy. I also bought Apple at its low in the high 120’s late last year and rode that up then got out.

Use the stock/fund screener on your brokers website to see what you are looking for.
I have had these same index funds for many years. I sold everything Jan 1, 2022 and got into money markets that are paying over 5%. BUT, throughout the year, I put in a lot of money into a couple of these funds/apple while they were down and then got out of most of them when the peaked. When I think things are going to turn around in this world/stock market, I will sell all my money market funds and repurchase all my trusted index funds and get growth that we haven’t seen in a while. I don’t do bonds, don’t do annuities, just do low risk, high return, high dividends, low turnover, index funds with a couple of single stocks, and never use a broker or advisor

[Lindawc]

From everything I’ve read on annuities, they say don’t do it.

[TerryCamlin]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

I would not do it. If the Company goes under you get nothing. I have always been my own advisor. With today's interest rates get a CD you will make more in the long run and if you die your heirs get nothing with this deal. I am happily surprise at how much I am making these days with simple compounding interest.

[Karmanng]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

I would not do it.........you can get the same $$ from didvidend stocks, or any tax free mutual funds like Franklin tax free or even Cd and tie up your money with them for a few months at a time while rates are high........

[Caymus]

Which is baloney. I bought 2 as a part of a comprehensive financial plan I went and got quotes and I am very happy. I was not sold them. I know several others who did the same. Btw, I could not care less what the commission was because all I care about it the guarantees to ensure my minimum dignity floor


I listen to their podcast. :BigApplause:

[jimbomaybe]

Which is baloney. I bought 2 as a part of a comprehensive financial plan I went and got quotes and I am very happy. I was not sold them. I know several others who did the same. Btw, I could not care less what the commission was because all I care about it the guarantees to ensure my minimum dignity floor

Risk is always present to one degree or another from any number of factors, the greater the return the greater the potential risk, the lowest risk would be United States Government Bonds, it is not unheard of that financial companies go bankrupt

[rsmurano]

Annuity companies are vultures, they prey on people who don’t know how to handle their money. Same goes for brokers and advisors.
As far as dave Ramsey, along with suze orman, I wouldn’t listen to them for advice at all. Suze is particularly bad because the 1st thing she wants you to do is pay off your home, even if you can’t afford living there. Dave has good ideas about getting out of debt, but that’s it.
If you want a good book on investing, read any or all from John Bogle, and become a boglehead.

[JRcorvette]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.

Read all the Small Print…. Many of these will pay until you die and then whatever is left the Company gets to keep. Very risky in my opinion. Go talk to Greg Parady first… he will give you honest advice.

[Topspinmo]

Our adviser is suggesting a Guaranteed Annuity for some extra monthly income. Please inform me of the pros and cons. $265k for a $1675 monthly income for life. Break even is at 13yrs. Is it worth it. It is with a AA+ rated company. There are no fees but once invested there is no refund or backing out. You have it for life. We are now 70yo. 3 years from RMD. Help us make a decision
Thanks for any help you can give.


Was his name SAM???? Remember it’s your money spend it, give it away, or lose it how you wish. I would be very suspicious of that scheme? But that me. By my calculations you would only break even in 13 years providing you live that long. Another thing, what’s 1695. Going to be worth in 13 years? It Vegas owner bet, he have no skin in game till 13 years plus plus he had 265K to invest. Now if the company done everything right and not bankrupt you may of made out even or better of live more than 84?

[Dusty_Star]

Is this the same Arthur Eugene 'Skip' West who is charged with a felony? Why yes, yes it is!

https://www. Www. V*llagesn*wscom/2022/12/06/prominent-financial-adviser-arrested-after-alleged-attack-at-wolfgang-puck/

Space added between www. And v*llagesn*ws.

Of course he hasn't been convicted yet, so there is that.

Excellent contribution to the thread. I sincerely hope Miadford reads your comment, for her own benefit.

[ShaSha]

Run! I did this…
Backed out after 3 years. Had to have an attorney. Your advisor makes the $$$. Ours was brought up on charges for selling and misrepresenting the actual facts. Why tie up your money? It is NOT a liquid investment. Liquidity is always better as you age.

[retiredguy123]

Run! I did this…
Backed out after 3 years. Had to have an attorney. Your advisor makes the $$$. Ours was brought up on charges for selling and misrepresenting the actual facts. Why tie up your money? It is NOT a liquid investment. Liquidity is always better as you age.
I agree with staying liquid with your money. Annuity salespeople misrepresent the facts and they won't allow you to read the contract. Verbal promises are worthless, but a lot of people will buy an annuity based on them.

[Robbb]

Annuity companies are vultures, they prey on people who don’t know how to handle their money. Same goes for brokers and advisors.
As far as dave Ramsey, along with suze orman, I wouldn’t listen to them for advice at all. Suze is particularly bad because the 1st thing she wants you to do is pay off your home, even if you can’t afford living there. Dave has good ideas about getting out of debt, but that’s it.
If you want a good book on investing, read any or all from John Bogle, and become a boglehead.

Yea I agree with you to a point, however the boglehead "thing" of 60/40 with 50% of equities in foreign stocks really has not worked out well over the last decade or so. Foreign stocks have significantly underperformed US markets and bond returns over the past decade to date have been flat if not had negative returns. The bond crash over the past 2 years has erased any gains over the past 10 years.