#annuities #retirementplanning #financialadvice
Hey there! π So, my financial planner just mentioned annuities as a potential option for guaranteed income in retirement. I’m kind of intrigued by the idea but also a bit unsure about it. Anyone have any advice or personal experiences with annuities that they’d be willing to share? I’d love to hear your thoughts! Here are some questions I have in mind:
– What are the pros and cons of annuities?
– How do annuities work?
– Are there different types of annuities to consider?
– Any tips on finding a reputable provider?
I’m always looking to learn more about different financial options, so any insights would be greatly appreciated! Let’s start a conversation on annuities and see if we can all benefit from each other’s knowledge. π€π‘
good idea because he is going to make a fat commission on it. Annuities and insurance products are some of the best commission paying products you can sell as an advisor. There a lot of things not to like about annuities but it can work for some people. How old are you though ?
Have you maxed your 401k and IRA?
No maxing out, but like 500k in retirement accounts.
Generally speaking, to the degree that an annuity may be appropriate, a single premium immediate annuity (SPIA) is likely one of the best options.
I was looking at an annuity where you give them a chunk of cash and you get a 7.5% cashflow after a 5 year waiting period. This was pre COVID even rates were very low. If I die before my money is paid back, my heirs would get the money back. It’s essentially an interest free loan to them and I break when on my initial payment in almost 20 years, that is the 5 year waiting period and the 14 years that the 7.5 percent would pay back. Needless to say it was a no-go for me
Maybe as someone else suggested, something with an immediate payout.
I asked a financial planner friend. He said not for the financial benefits but the simplicity if your SO is not financially literate.
Share more about your assets and liabilities + the terms of the annuity please.
There are some spots where an annuity solves a need/gap.
You already have SS as guaranteed income. How much guaranteed income do you need?
My coworker bought a rather large annuity about 4-5 years ago. He has missed out on HUGE market gains since then. But he will get a decent check that is partially indexed to inflation.
If you have an annuity and you need cash now, call JG Wentworth, 877-CashNow!
Heβs trying to make money off of you. Annuities are almost never the answer but they get sold a lot as βfinancial advisersβ make money off of them.
Totally depends on the type of annuity.
Immediate annuity could possibly be reasonable.
Any other kind of annuity is an overly complex, highly commissioned instrument sold with policy “illustrations”, not guarantees.
Avoid any indexed or variable annuities and/or any that have “caps”, participation rates” or disclosures of more than a couple pages.
It depends on what sort of annuity you are talking about and what your financial situation is.
My intention is to get a lifetime annuity around 70yo, enough so that with the govt. pension I would have a decent standard of living. The annuity will provide both longevity insurance and what I call senility insurance (I can’t get scammed out of the whole lot if my mental capacities start to go bad!). It will also potentially provide increased pension benefits due to the way Australia’s means tested pension treats annuities. I don’t have children to leave money to, so the downside of potentially receiving far less than the annuity cost if I die early is not really a consideration.
Because the annuity acts as a safety net I will be able to keep the rest of my assets in riskier investment options, so even though the investment return of the annuities themselves is not great it acts as the “safe bucket” of cash, so the comparison for the annuities investment return should be compared to low risk/return investments, not the higher risk options.
For your own plans you need to work out what role an annuity will play in your own portfolio and how well it meets your needs.
I considered an annuity but decided against it. They are just guaranteeing you a set amount of money each month which is usually less than what you would make if you invested in index funds yourself. If you are ultra conservative it would be the way to go but I believe an annuity leaves nothing when you die, i.e. nothing left for your heirs.
Social security is my annuity, it is just enough for me to squeak by on. My investments in index funds and bonds is my fun money.
I’m sorry I got talked into an annuity. The planner, now fired, would never tell how much he makes from it. My present planner, a CFP, told me exactly.
I asked if he would have recommended it. He said no because he was CFP. It is not a benefit to me.
Did you ever think about how much his commission is on that? It Can be upwards of 10% aka he’s looking out for himself
FYI, not all the annuities are made equal!
Where is the part where you describe the deal? Whatβs the implied rate of return? What are the conditions?
Or you know nothing about annuities and wanted a general answer? It that case is: NO.