[Jayhawk]

Originally Posted by 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.

[Pballer]

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

[margaretmattson]

Originally Posted by Pballer

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]

Originally Posted by 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.

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]

Originally Posted by 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.

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

[Robbb]

Originally Posted by 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

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.