7% on a Fixed Annuity? Don't Believe it.

[MULTIZ321]

7% on a Fixed Annuity? Don't Believe it.

7% on a Fixed Annuity? Don't Believe It.

Ads touting 7% guarantees are misleading, though not quite false. Real rates around 4% range are attractive enough.

www.kiplinger.com

.


Richard

 

[Talent312]

In the year 2019... The S&P 500 gained 30%.
The Dow Jones Industrial Avg. gained 23%.
The NASDAQ Composite gained 37%.
Of course, past performance does not guarantee future results.
.

 

[capjak]

In the year 2019... The S&P 500 gained 30%.
The Dow Jones Industrial Avg. gained 23%.
The NASDAQ Composite gained 37%.
Of course, past performance does not guarantee future results.
.

I cringe every time I see "annuity" are XXXX as there are so many types; Fixed Index Annuity vs Fixed Annuity vs Single Premium Annuity vs Multi Year Guaranteed Annuity vs Variable Annuity vs Secondary Market Annuities vs Period Certain Annuity vs Joint SPIA vs Single SPIA vs Annuity plus income rider vs Annuity plus Longterm Care rider vs .......

Fixed annuity (Multi year guaranteed annuity MYGA) is a CD like product, it is not to compete with the stock market.

A Fixed Index Annuity is also a product for the fixed income side to compete with a CD not the stock market (although a stock market index is used in the calculation of how much interest it pays each year but you do not own the stock market index and the insurance company does not use your money to invest in the stock market....very misleading and advertised falsely by many as a stock alternative..... For stock market growth you need to invest in the .............stock market.

These products are CD competitors.

Now as the article states when an income rider is added it is an insurance product against running out of money as you live to 100+. Single Premium Immediate Annuitys are better at providing an income stream for life than (IMO) than an income rider.

 

[VacationForever]

I cringe every time I see "annuity" are XXXX as there are so many types; Fixed Index Annuity vs Fixed Annuity vs Single Premium Annuity vs Multi Year Guaranteed Annuity vs Variable Annuity vs Secondary Market Annuities vs Period Certain Annuity vs Joint SPIA vs Single SPIA vs Annuity plus income rider vs Annuity plus Longterm Care rider vs .......

Fixed annuity (Multi year guaranteed annuity MYGA) is a CD like product, it is not to compete with the stock market.

A Fixed Index Annuity is also a product for the fixed income side to compete with a CD not the stock market (although a stock market index is used in the calculation of how much interest it pays each year but you do not own the stock market index and the insurance company does not use your money to invest in the stock market....very misleading and advertised falsely by many as a stock alternative..... For stock market growth you need to invest in the .............stock market.

These products are CD competitors.

Now as the article states when an income rider is added it is an insurance product against running out of money as you live to 100+. Single Premium Immediate Annuitys are better at providing an income stream for life than (IMO) than an income rider.

Precisely. Very well said. We used about 15% of our investable assets to buy deferred income annuities, keep another 10% in cash and the rest managed by money managers. It satisfies our desire for diversification.

 

[rapmarks]

In the year 2019... The S&P 500 gained 30%.
The Dow Jones Industrial Avg. gained 23%.
The NASDAQ Composite gained 37%.
Of course, past performance does not guarantee future results.
.

Now I feel bad, my portfolio only went up twenty percent

 

[Talent312]

Now I feel bad, my portfolio only went up twenty percent

Don't feel bad, ours only went up 15%, becuz I'm hedged with bonds (~50/50).
Over the last 10 years, our portfolio has gained an average of 15.7% per year.

I'm jus' saying that, unless you need the income, you can do better on your own.
.

 

[capjak]

Talent312,

Annuity would replace part of the 50% hedged bonds, it would not replace any of the 50% equity asset, for some retirees they feel more comfortable with a higher equity percentage knowing that they have a "floor" that along with the other COLA annuity (social security) meets most of their essential expenses for most/rest of their lives. Just another way to diversify, perhaps when a person hits an advanced age 70s/80s or to allow for higher spending in early retirement.
Professor Wade Pfau;

https://www.advisorperspectives.com/articles/2015/08/04/why-bond-funds-don-t-belong-in-retirement-portfolios

"When retirement is short, partial annuitization leads to a smaller legacy (though in the case of short retirement, both approaches still support a pretty reasonable legacy). For longer retirements, partial annuitization offers sound spending support while also fortifying a larger legacy. It is a more efficient retirement income strategy, and that is why income annuities serve as a viable replacement for bonds in a retirement income portfolio.

When the income annuities include provisions for cash or installment refunds, an early death may not leave beneficiaries in any worse shape with regard to their inheritance, than a plan excluding income annuities. This would lose some of the “kick” from mortality credits, so it would effectively trade more legacy wealth in early retirement for less in later retirement. But it is an option for clients not fully convinced by the life-only strategy."

 

[bogey21]

Annuities have their place but you have to (1) really understand what you are trying to accomplish with them then (2) really understand in depth what you are buying. The worst thing you can do is rely on the guy (or girl) who is selling you the annuity. I'm not sure which is worse, TimeShare salesmen or Annuity salesmen...

George

 

[DrQ]

... I'm not sure which is worse, TimeShare salesmen or Annuity salesmen...

George

True Dat!

I need to look for an annuity for specific reasons and there are sure some snakes out there.

 

[VacationForever]

True Dat!

I need to look for an annuity for specific reasons and there are sure some snakes out there.

There are many online annuities sites but I particularly like immediateannuities.com because you don't need to send them your information to get quotes. Explore and if you don't like the quotes wait a few months. The rate fluctuations have more to do with which AAA company decides to undercut other companies rather than because of changes in Treasury rates.

 

[Luvtoride]

True Dat!

I need to look for an annuity for specific reasons and there are sure some snakes out there.

What did you find?


Sent from my iPhone using Tapatalk

 

[pedro47]

No annuity for me. Their sales commission are just to high for me.
The stock market gains were good until this Coronavirus.

 

[Roger830]

First Executive went bankrupt in the early 90's because they held high yield bonds.
Annuity holders lost money.

It's likely that there will be many failures in the current high yield market.