Re: Confused about ANNUITIES
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Originally Posted by
Ed
Sound advice...thank you.
Historical TSP annuity rates have exceeded 9% when "i" rates were high. Interest rates will eventually go back up, and suggest when that time comes, you may want to take another look. I sure wished to have locked in Treasury Bonds at 13%-14% back in the 1979/1980 time frame. Receiving, say 7%-9% annuity rates which are virtually risk free and not worrying about returns of the stock market returns, an extra plus, may not be such a bad idea.
Never say no...periodically review your financial circumstances and "all" financial products is always a good approach.
Ed
If the rate was 9% at the time, maybe. However, you must still surrender your principal... which I think is still way too expensive.
The total cost of the annuity could be calculated by subtracting the interest paid from the principal balance, and multiplied by life expectancy. The sum left over is what the annuity provider keeps.
As this sum is likely to be much greater than the amount paid out, it explains why insurance companies sell annuities (no matter what the rate), as the numbers are clearly in their favor. Annuities are almost always very expensive "living insurance."
Official Retirement Date: 06-31-2014!
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