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Thread: Confused about ANNUITIES

  1. #13

    Exclamation Re: Confused about ANNUITIES

    It's Your Money, don't give it to an Insurance Company!
    The April 8th broadcast is about rip-offs, oops annuities.
    http://www.manarin.com/radio_show/

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  3. #14

    Default Re: Confused about ANNUITIES

    Here is what the financial advisor stated during a recent FERS retirement seminar I attend, concering TSP (Met Life) Annunities - "NOT NOT NOT"! He subsequently stated, "NO WAY in Hell would he recommend giving most of your money to someone for no reason at all". As someone else previously stated, your money is gone for life.........you only get a disgraceful guaranteed monthly handout. Our Advisor went on to say "use the TSP monthly payment plan", as you have control over your account and can do basically what you are doing today with it!

    I am so glad I attended the retirement seminar and I highly recommend all doing it as soon as you can schedule yourself. You will be glad.......it was worth the two days I spent. Oh by the way, we could bring our spouses which I appreciated!

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  5. #15

    Default Re: Confused about ANNUITIES

    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

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  7. #16

    Default Re: Confused about ANNUITIES

    Quote Originally Posted by Ed View Post
    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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  9. #17

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    Default Re: Confused about ANNUITIES

    Quote Originally Posted by SkyPilot View Post
    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."
    What? Now Ben Stein is endorsing buying annuities to "safeguard" retirement?

    (Text from article: How Not to Ruin Your Life) http://finance.yahoo.com/expert/article/yourlife/43552

    >>>>>
    Annuities to the Rescue
    That's where annuities come in. There are now variable annuities (VAs, which are basically pools in which your money is invested in securities and compounds free of tax) where you're guaranteed a certain monthly withdrawal amount for life -- no matter what happens in the stock market.
    That is, the insurer who sells you the VA assumes the risk that the market will fall sharply. The insurer buys hedges of various kinds, and may also risk their own capital to protect your guaranteed withdrawal amounts.
    (Of course, all kinds of annuities have the feature of guaranteeing payments for as long as you live or longer. But the guaranteed-withdrawal-amount VAs give you that benefit plus the possibility of substantial gains from your investments within the VA.)
    Needless to say, these VAs come at a price. It's not cheap for the insurers to buy the swaps and other hedges that allow them to guarantee your payments will never fall from a prescribed amount, but that they could rise substantially instead. They pass that cost onto you to the extent that they can.
    A Safe Pillow

    But as we've seen in the stomach-churning weeks this summer, there's always risk in stocks. If this risk can be insured against at a price that's reasonable, it's a huge weight off the mind of the retiree or pre-retiree. So you should definitely talk to your financial planner about these new VAs. (I do not, however, recommend them for people who are significantly above age 70.)

    At least think about some form of fixed annuities in your accounts when you retire. This is suitable for people of almost any age so long as there's a payment built in geared to life-expectancy tables; that way, if you die early, your heirs will continue to get payments for what would've been your full life span.
    It's a comfort to be able to count on a stream of money pouring in whether you're tragically sick or startlingly healthy -- to know that no matter how the market fluctuates, you'll get a set return on at least a part of your money that will last for as long as you and your spouse do.

    I love following the stock market. In the very long run it's a beautiful thing, at least in the postwar world, and I hope it doesn't turn around and bite my head off the way it did in the tech crash. But to have most investments in fluctuating stocks with a solid amount in VAs and fixed annuities represents a nice pillow on which to lay your head. "Safe" is a happy word.

    Ben Stein has no financial interest in the products mentioned in this column. (???)
    ~ Take nothing but pictures ~ Leave nothing but footprints

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  11. #18

    Default Re: Confused about ANNUITIES

    Quote Originally Posted by bigbobe View Post
    How does one buy into an annunity with TSP and does that bought into Met Life and what is wrong with that???
    Your TSP account is a "Qualified Pension Plan" and as such it can be rolled over to any "other" "Qualified Plan" such as an IRA when you retire and or leave your job.

    The investment vehicle of choice DOES NOT matter. It could be an IRA bank CD with any bank, it could be an IRA Mutual Fund with any investment firm or it could be an IRA Annuity with any insurance company.

    See THIS rollover chart.


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