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Thread: New Member with a couple questions....

  1. #13

    Default Re: New Member with a couple questions....

    Quote Originally Posted by DreamboatAnnie View Post
    Thanks. Heres sweet little tune I like a lot. Enjoy!
    Best wishes on your invesments!!!!!
    oopps... hopE this link works!




    Oh and after song there is a link to Magic Man!
    Don't take my comments as trading advice /IFT: 2-13-24=100G/https://www.theepochtimes.com/ & http://www.ewg.org/PermaCharts@p430#5159/strategy#4918p.410

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  3. #14

    Join Date
    Mar 2006
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    Raleigh, NC
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    3,416

    Default Re: New Member with a couple questions....

    Ozarkharleyguy,

    All Midland Life does is invest your assets in various funds - just like you would do in TSP or a rollover IRA. The only benefit to you is that they have a longer time horizon than you so they can potentially weather out a longer drawdown. If the drawdown on the investments Midland Life makes with your money lasts longer than expected you will find out what the 'guarantee' means.

    You are paying for a gimmicky life insurance policy. You are paying for the 'service'. Why replace a tax advantaged investment account with a tax advantaged life insurance policy with a high fee investment account attached to it? Why not put the assets in something like the LIncome or L2020. The LIncome fund only lost 5% in 2008 and recovered that in less than a year. Your fees are then less than 0.2%.

    A 3% return is slightly less than the 3.1% average rate of inflation. Like Burro, I think we will snap up in inflation and you will lose money every minute it is in a 3% account. If you already had the annuity income streaming your way to pay for the Winnebago gas would you be happy? Gas is $4 a gallon in Kalefornea.

    Finally, I would keep my money liquid and free. Like the 60's. What happens if your CSRS pension doesn't keep up with expenses or gets cut? What happens if the Chinese stop funding our annual deficit and your Social Security gets cut. What if President Clinton changes the tax code on Social Security - a Clinton did it once, another can do it again!!!

    I would bucketize. An annuity like this could be used in Bucket 1 (cash requirement for 5 - 7 years).
    Lookin' up at the 'G Fund'!!!

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  5. Default Re: New Member with a couple questions....

    Interesting "stuff" that everyone is posting and I do appreciate it. Its certainly helping me turn over in my mind some different perspectives and consider different ideas. Here is a thought or two in the form of bullet statements for you guys to consider and comment on:

    --I've been around since the inception of the TSP and I have seen many ups and downs. Even though 3% is not a good return it beats a downturn year where you lose money.

    --At this point since I've retired I ask myself "what am I more content with...missing a 7% return with the possibility of it tanking or settling for a positive 2.09% (G fund return over last 12 months) return with NO possibility of loss??"

    --I know there are some fans of the L Funds out there but I suppose I am not. I guess if you want to invest your money and forget about it that may be the way to go but look at the drag the I Fund has been on L fund lately. A little study and you will probably be able to do much better. And maybe that is my answer now. I'm mostly considering the rollover because I believe the downturn is coming and the annuity has the 7% rollover attached to it.

    Anyway, thanks again in advance for discussing these things and sharing your time in print. I look forward to more responses.

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  7. #16

    Join Date
    Oct 2010
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    Default Re: New Member with a couple questions....

    Quote Originally Posted by Ozarkharleyguy View Post
    --I've been around since the inception of the TSP and I have seen many ups and downs. Even though 3% is not a good return it beats a downturn year where you lose money.

    --At this point since I've retired I ask myself "what am I more content with...missing a 7% return with the possibility of it tanking or settling for a positive 2.09% (G fund return over last 12 months) return with NO possibility of loss??"
    Everyone must decide on how much 'risk tolerance' they have, so there is no 'right' or 'wrong' answer to your questions. But I might offer some 'food for thought'. It is very much like previous posts I've made regarding approaches to investing, so if you want more explanations, feel free to search my other posts. Or look in the investment strategies section of the forum.

    1) you are in CSRS. your pension is MUCH higher than FERS. This part is definitely NO risk. Therefore you can afford to treat your TSP with a little more risk than you might otherwise feel comfortable with.

    2) You recently retired. Today's 65 year old has a 50% chance of living to 95. Retirement is around 30 yrs. There is a lot of time to recover from a brief downtrend.

    3) Keeping funds in G is risky in itself, if it does not let you keep up with, or preferably exceed, inflation. Trying to avoid risk may actually place you in a more risky situation.

    4) I like the 'bucket' idea expressed earlier. Have a bucket of funds that you will use the next 5 years. Place that bucket in G (or better yet L Income). Longer term funds put in equities or longer range L funds. Then every year move funds into the lower risk bucket to cover the 5th out year. That way, you get the low risk for the 5 years, and the other funds have 5 years to recover any downturn.
    Stay Positive! And welcome to the boards!!
    There are 10 types of people in the world. Those who know binary, and those that don't!!
    Retired on December 31, 2018!!

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  9. #17

    Join Date
    Oct 2008
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    Default Re: New Member with a couple questions....

    Quote Originally Posted by Ozarkharleyguy View Post
    Interesting "stuff" that everyone is posting and I do appreciate it. Its certainly helping me turn over in my mind some different perspectives and consider different ideas. Here is a thought or two in the form of bullet statements for you guys to consider and comment on:

    --I've been around since the inception of the TSP and I have seen many ups and downs. Even though 3% is not a good return it beats a downturn year where you lose money.

    --At this point since I've retired I ask myself "what am I more content with...missing a 7% return with the possibility of it tanking or settling for a positive 2.09% (G fund return over last 12 months) return with NO possibility of loss??"

    --I know there are some fans of the L Funds out there but I suppose I am not. I guess if you want to invest your money and forget about it that may be the way to go but look at the drag the I Fund has been on L fund lately. A little study and you will probably be able to do much better. And maybe that is my answer now. I'm mostly considering the rollover because I believe the downturn is coming and the annuity has the 7% rollover attached to it.

    Anyway, thanks again in advance for discussing these things and sharing your time in print. I look forward to more responses.
    Ozarkharleyguy, good response. Everyone does always have lots of "stuff" to say. Usually about how your goals for the % suck and they did much better, you should too. I like your bullets. Many responders didn't know what a TSP was in 02-03 or 07-08. Based on 2013 they think it's no prob.

    They almost sound like a late night TV add sometimes?

    My own investment history in TSP has been less than spectacular. You can look it up here TSP Talk AutoTracker back to 2009 and have to take my word for it prior to that. I have posted prior years somewhere on here and they are available on request.

    Finding the % the TSP sponsored annuity actually pays is like pulling teeth with a pair of pliers. Finding out who administers the annuity is even worse.

    My main reason for responding was the "interesting 'stuff'" comment. There is lot's of "stuff" on here and this post can be considered "stuff".

    If you are happy with 3% v market volatility, so be it. If I decide to move out of TSP or in to G fund due to retirement approaching, so be it. Many MB members will point out that we lost the 455% gain equities are sure to make in the next two years. Unless equities don't make any gains. Then they will be busy asking why they were not told they would lose 455%. Occasionally one will notice those in the G fund or those that got out. Usually they will tell us we should have shared our knowledge.

    Keep on keeping on.

    PO

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  11. Default Re: New Member with a couple questions....

    PessOptimist; doesn't MetLife administer the annuity for TSP if you go that route? I've never put a pencil to it but why not be your own annuity. I had first thought I might begin about 65 yrs old taking a monthly check to offset my CSRS COLA which would not keep pace with inflation and every year up that check a little from TSP. The only problem with that plan is when I reach 70 years old is my RMD will cause me to have to take much more money yearly.

    But with the market being IMO over-bought right now if I rollover TSP and buy dividend type stock that possibly will hedge against inflation and a downturn in the market.

    Just thinking in print.


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  13. #19

    Join Date
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    Default Re: New Member with a couple questions....

    Quote Originally Posted by Ozarkharleyguy View Post
    PessOptimist; doesn't MetLife administer the annuity for TSP if you go that route? I've never put a pencil to it but why not be your own annuity. I had first thought I might begin about 65 yrs old taking a monthly check to offset my CSRS COLA which would not keep pace with inflation and every year up that check a little from TSP. The only problem with that plan is when I reach 70 years old is my RMD will cause me to have to take much more money yearly.

    But with the market being IMO over-bought right now if I rollover TSP and buy dividend type stock that possibly will hedge against inflation and a downturn in the market.

    Just thinking in print.
    PO is right - as are you. You have to be able to sleep with your decision. Plus, when you are in your Winnebago traveling through South Dakota you really don't want to be timing the market or whatever.

    However, if you want my yak and if it were me in your situation I would roll my TSP to a self directed IRA. I would then bucketize the assets where I would have:
    5 years of assets in something like a Money Market and short term Treasuries and Bonds. Then I would crunch the numbers and move an appropriate amount into REITs, longer term Bonds, and commodities. Then the rest would be in something like C/S/I.

    1. In your example Bucket 1 would contain $32,000 in cash ($500/month inflation adjusted). The G Fund would be awesome for that because there is NO other investment that is guaranteed that makes 2% nowadays. A money market would earn 0.5%. If you want to extend your cash to seven years than allocate $50K to Bucket 1. Your annuity can be figured here and blended through the other buckets. Why not annuitize enough to cover the $500/month inflation adjusted and leave the rest liquid, investable, and available as needed?
    2. Bucket 2 would have about $30K invested in things like REITs, longer term bonds, and other mid-term assets that return around 5%
    3. Bucket 3 would be your long term growth fund. It would be a mix of something like the C/S/I. Maybe the total stock market.

    That is what I think I would do in your situation. I mean, you seem to have enough in your TSP account to worry about RMDs at 70 which I think are 4% of your total. But, you also only appear to want walking around money from TSP. Something like the above avoids contractually locking in all of your TSP assets for a monthly payment. What if you find you need $750/month or want to buy a Corvette or want all terrain tires on your Winnebago. Your needs are largely covered by your pension, your fun can be covered by an IRA. And, if you want to create an inheritance for me (or, ahem the children or wife) then Buckets 2 and 3 give you growth to give. Myself and your siblings would be very happy and would be buying our late life Corvettes with the inheritance. By the way, you could just reinvest your RMDs back into the IRA assets if you don't want to spend it. The only negative is that you will have to pay income tax on the RMDs, but really so what. You would be pulling 4% out and playing 30% on that 4%. It would be minimal. If you have $2.5 million in your retirement account and pulled 4% ($100K) you would pay $30K in taxes on that money.
    Lookin' up at the 'G Fund'!!!

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  15. Default Re: New Member with a couple questions....

    Boghie,

    When you speak Winnebago to me I no speaka da language but when you say Corvette, I now understand perfectly!!

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  17. Default Re: New Member with a couple questions....

    Quote Originally Posted by Ozarkharleyguy View Post
    Hello,

    I am a retired CSRS employee, 60 years old. I have been dealing with a Midland Life specialist for 20 years that I trust. They are offering a 7% bonus to rollover TSP to their company. I will not be touching the money for several years and possibly not till RMD at 70 years old. I'm required to leave the money for 1 year before I start drawing on it which is not a problem. I've talked to others which indicate they have not had a problem getting their money. I've also talked to others who indicated they are getting over 3% on their money which is better than G Fund which is where I had planned to leave my money. Their Fund is guaranteed to not lose money. The salesman does not draw a commission from my fund, he gets his money from the company. They used to offer a slightly higher rollover percent but drew commission from fund but have changed in order to take the salesman commission from company, I suspect.

    I've read the fine print. I've done a search for complaints against the company. Seems the complaints I can find, people bought who shouldn't have bought when they might need their money to get by on and should have never bought in the first place because they had limited funds. They did not realize the amount they would surrender should they try to access the entire amount before the penalty period.

    So couple questions:

    1. What am I missing and what is the downside to this?

    2. My original plan was to leave my TSP in the G Fund and at about 65 start taking a check for about $500 a month and every year to increase that by about $100 to offset the lack of COLA. But I've hear you cannot change the amount of TSP that often. Is that true?


    Thanks in advance.

    Ozark,

    What he is pitching sounds like a Fixed Index Annuity (FIA). There is nothing wrong with one, as long as you understand them. The issue is most people don't. Midland is a decent stable company that would be fine to invest with. However, I'm sure there are better options. This friend you are talking to is probably a captured representative with Midland and sells their products without considering better options that fits your needs.

    Having a 7% bonus is not uncommon in an annuity. A lot of companies have products that give you a bonus for buying. The downside is the fees within the contract are generally higher than other products offered. Most companies have rider fees with their annuities. I'm sure the one he showed you had around a 1% lifetime income rider fee. And since it has a bonus there are other riders you may be paying for. These riders are living benefits you can utilize while in the contract.

    There shouldn't be a problem getting your money from a company this stable. If you hear any noise of people having issues they're more than likely just idiots. These contract have surrender charges. Most people make a big deal about this, but it protects the financial stability of the company. They are generally 10 year to 15 year contracts. But you have a 10% free withdrawal with no charge. I wouldn't get longer than a 10 year contract. Any longer doesn't provide enough of a benefit. Ask him if it's 10/10 compliant.

    3-5% would be a good average to expect. FIAs do nothing more than have covered calls on a index. And sometimes bonds. Ask him what the cap and spread are on the contract. Normal right now is they will "cap" the percentage you can receive on a yearly basis at 4.75%. A good spread would be 1.75%. This means if the index you follow does 11%, they will subtract 1.75% and credit you that amount.

    These contracts do guarantee not to lose money. That is what is appealing to them. The salesman does get a commission from the company that does not come out of your premium. It has always been that way. You are paying 0-2% in fees for peace of mind. For them going out and doing what you don't want to learn or spend time doing. Putting call options on index and bonds to protect your money. If this contract is higher than 1% I would look elsewhere. There are very strong insurance companies out there that charge 0% for their annuities. You may message me with any questions.

    -CRPC101

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  19. Default Re: New Member with a couple questions....

    Quote Originally Posted by Ozarkharleyguy View Post
    Hello,

    I am a retired CSRS employee, 60 years old. I have been dealing with a Midland Life specialist for 20 years that I trust. They are offering a 7% bonus to rollover TSP to their company. I will not be touching the money for several years and possibly not till RMD at 70 years old. I'm required to leave the money for 1 year before I start drawing on it which is not a problem. I've talked to others which indicate they have not had a problem getting their money. I've also talked to others who indicated they are getting over 3% on their money which is better than G Fund which is where I had planned to leave my money. Their Fund is guaranteed to not lose money. The salesman does not draw a commission from my fund, he gets his money from the company. They used to offer a slightly higher rollover percent but drew commission from fund but have changed in order to take the salesman commission from company, I suspect.

    I've read the fine print. I've done a search for complaints against the company. Seems the complaints I can find, people bought who shouldn't have bought when they might need their money to get by on and should have never bought in the first place because they had limited funds. They did not realize the amount they would surrender should they try to access the entire amount before the penalty period.

    So couple questions:

    1. What am I missing and what is the downside to this?

    2. My original plan was to leave my TSP in the G Fund and at about 65 start taking a check for about $500 a month and every year to increase that by about $100 to offset the lack of COLA. But I've hear you cannot change the amount of TSP that often. Is that true?


    Thanks in advance.
    Oh, and I would recommend not putting more than 50-70% of your assets in a FIA. Take the other 30-50% and put it in a good moderate equity portfolio. The agent and insurance company shouldn't actually allow more than 70% of your portfolio from the suitability report when you do the application. If you're so conservative that you planned to have all assets in G fund, maybe build a MYGA ladder. Janet Yellen speaking recently helped raise these rates on these recently. Do something like a 3-5-7 yr.

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