Annuities. Who of you invests and what’s your takes?

[TPC]

Wife is retiring and invested her disbursed pension.
Some into annuities. Just some.
They look attractive.
What’s your take?

 

[TripleB]

I don’t invest but my company had a defined benefit pension plan, for the most part an annuity. That said what type of annuity, 20 year certain, life, life plus survivor?
A lot will depend on what you two are comfortable with?
Very little risk involved can give you peace of mind but at what cost?
An example, to get the biggest monthly payout you choose life time no survivor, you pay for it get 6 months of payment and die, that’s it they keep the money you get nothing, on the other hand the economy goes into an absolute downward spiral, everyone’s wages get slashed, but the annuity won’t care you keep getting payed.
I don’t like them but it doesn’t mean they’re bad, my advice is talk to a financial planner who won’t get a commission check for selling the annuity.

Then again do you want advice from people on a boating forum?

 

[cofooter]

What he said, watch out for fees/commission, some are pretty high, also there is risk if the company underwriting them fails. Not for me but some like them.

 

[bowtiejunkie]

I think they were quite popular in the 1980's (and maybe prior??) when interest rates were high. I believe they are a talking point / of unrest again due to (what were) rising interest rates. Watch the sales / admin fees and whether you will be ok with the funds not being readily available if needed for unexpected expenses. Variable annuity likely won't keep up with inflation, but the tax shelter might be advantageous. Like most investments, best to have several types (baskets), with each basket having specific goals and help diversify your income stream and risks.

 

[TPC]

Then again do you want advice from people on a boating forum?

Ya mean people with money on a boating forum? Read the responses below.

Not looking for advice, wife is invested with a planner, just getting up to speed on what they are all about.
The responses below are perfect takes.

Never looked into them, but the wife placed some money in a few.

 

[2Driver]

They make good money for the broker selling them and the insurance company running them.

Way better stuff out there imo

 

[Aces & Eights]

I recently retired, I have a pension that covers all of my living expenses so it was not a good idea for me to go with annuity. For now I have a fiduciary advisor from Schwab managing my 401k (a little over 1m).

I’m not happy with the close to 1 percent I’m paying but I’m very happy with the big gains this year he’s made with my investments. He has me in 75/25 stocks and bonds so I’m making money and have some stability as well. I’m watching and learning, once I get a better hold on managing my own money I might move over to Vanguard Personal Advisor Select. It’s close to the same attention and response I get from my current advisor but it only costs .30 percent.

 

[Aces & Eights]

Additional note. I met with 4 or 5 financial planners before I settled on my current one. Might be a good idea to meet with different people to get that right fit for you and what you want to do.

 

[2Driver]

I recently retired, I have a pension that covers all of my living expenses so it was not a good idea for me to go with annuity. For now I have a fiduciary advisor from Schwab managing my 401k (a little over 1m).

I’m not happy with the close to 1 percent I’m paying but I’m very happy with the big gains this year he’s made with my investments. He has me in 75/25 stocks and bonds so I’m making money and have some stability as well. I’m watching and learning, once I get a better hold on managing my own money I might move over to Vanguard Personal Advisor Select. It’s close to the same attention and response I get from my current advisor but it only costs .30 percent.

Generally you dont trade much at all in a 401k. Why would you pay anyone anything for a 401k.

 

[Aces & Eights]

Generally you dont trade much at all in a 401k. Why would you pay anyone anything for a 401k.

Actually it was my 457b plan in Voya, it’s similar to a 401k so I just said that. My work, or former employer, allows me to grant access to my retirement account to Schwab so they can manage the money for me. The money is managed within my 457b plan and Schwab takes their fees quarterly from the fund.

 

[BHC Vic]

I have my pension annuity and 401k through work

 

[2Driver]

Actually it was my 457b plan in Voya, it’s similar to a 401k so I just said that. My work, or former employer, allows me to grant access to my retirement account to Schwab so they can manage the money for me. The money is managed within my 457b plan and Schwab takes their fees quarterly from the fund.

Got it, by the way that fee is negotiable. I let them manage some funds for me for a couple years and got them to .6%.

 

[relaxalot]

Generally bad.. don't do it. I had some at one time. Never again. There are much better investments out there!

Annuities typically have high interest at first.. a teaser.. then they suck until the surrender period .. Invest in the S and P Maybe VOO. Low fees and big returns.

 

[cofooter]

Actually it was my 457b plan in Voya, it’s similar to a 401k so I just said that. My work, or former employer, allows me to grant access to my retirement account to Schwab so they can manage the money for me. The money is managed within my 457b plan and Schwab takes their fees quarterly from the fund.

75% stocks seems pretty high for someone in retirement, but then again, I'm at the opposite end of the spectrum when it comes to tolerating risk. But, I also don't pay an advisor.........

 

[rivermobster]

I looked into it. Fees were Way too high.

 

[Aces & Eights]

Got it, by the way that fee is negotiable. I let them manage some funds for me for a couple years and got them to .6%.

Thanks for the heads up, I like my guy I just think I’m paying a little too much. I’ll give him a couple of years and try the negotiation route.

 

[boatnam2]

I like stan the annuity man, has great you tube videos on all the stuff about them.

 

[Mike Honcho]

Okay here is some real experience, I now manage all of my 87 year old father’s money at fidelity. A couple years ago he was doing better physically and handled things himself.
He heard that interest rates would rise and wanted to invest some money in a few options to capitalize on this.

He bought a 100k T-bill at minimum 5% and also invested in a short term annuity with another 100k. After the year for each roughly last Nov. they would continue or could be cashed out. He wanted to cash them and put the money back in his shirt yield savings again w Fidelity.
Based on market conditions he made 5.1% on the annuity and 6.1% on the T-bill. I had both cashed out and redeposited to the savings as stated.

The downside to these were roughly the 11k in interest raised his taxes beyond normal holdings so he had to pay a more taxes which he was not happy with.

The second option:
My dad bought a lifetime annuity via fidelity and they may call it a 20 year annuity for both him and mom and spent 130k and receive 1k per month for life either his or hers whoever lasts longer. Should they both pass prior to drawing the initial investment of 130k/ 10yr10 months the balance of the initial investment would go to the beneficiaries.
He had procured this investment roughly 22 years ago. So that’s correct as to date he has received 264k more than double his investment. Although I think it’s funny he loops that back into his high yield savings at fidelity so his money just grows and they don’t use it.

These are both options I am aware of and on the first option the money could have stayed but the interest rate dropped as mentioned prior from others.

I also have my money with fidelity and I moved both dad and I to a higher yield savings they offer that was at 5.15% but recently when the feds raised rates it dropped and now is 4.675%.

Hope this helps but best bet is speak to an FA (financial adviser) about what options are there. Maybe an option that works for you it should cost you anything for a sit down and education.

Good luck

 

[Flatsix66]

Hire a fee only fiduciary financial advisor, someone that doesn't make a commission on selling products. If they try to pitch you an insurance product, run. The answer to your question really depends on your life situation, goals, risk tolerance and tax situation.