Annuities?

[M59]

When deciding on whether to invest in a 401K or a Roth IRA or any other similar style of investment, check to see if your employer will match the funds that you put into it. I've had employers that will match anywhere from 25% to 100% of what you put in.

If you get a match then wonderful BUT always always ALWAYS max out the 401K and any other pre tax investment vehicle since that is one less dollar that Uncle Sam gets to tax. Sometimes, if you are lucky, socking money away into pre tax vehicle can move you into lower Fed tax bracket. Double wonderful

Fun Time with tax code.

 

[MossRoad]

Anyone invest in annuities?

I work with Northwestern Mutual on an old 401K from an old company and have a couple of whole life insurance plans. I like the guy I work with (always talk to him on the phone as he's two hours away from me).

We have some money tied up in CD's that will be maturing soon from the bank, as well as some "expendable" cash sitting in our savings account that really isn't generating any type of interest.

Needless to say, anything we "invest" isn't "do or die money" and we're figuring we'll be here at our home for the last 18 years until we figure out the game-plan with my wife's 76 year old mother.

Thing is, best rates I've seen on CD's from the bank is around 4%. Could do much better with a annuity.

We don't want to play the stock market with the assessable money we have as our 401K's haven't done as well the last couple of years, but consider it a sin to have money sitting in the bank where it's not generating any substantial income and would like something low to no risk as to losing the investment. We understand that until we both hit age 59, any interest generated from the annuity will be dinged an additional 10% for taxes.

Here, this will help...

13 Reasons Why Annuities Are A Good Investment (2023)

We will explore 13 reasons why annuities are a good investment so that you can make an informed decision about whether or not they are right for you.

www.annuityexpertadvice.com

8 Reasons Why Annuities Are A Poor Investment Choice (2023)

An annuity is not for everyone, just like other investments. Learn 8 reasons why annuities are a poor investment choice.

www.annuityexpertadvice.com

 

[MossRoad]

Glad I could help.

 

[Jstpssng]

This

Roth 401(k): Is It The Right Option For Your Retirement Plan?

A Roth 401(k) is an employer-sponsored retirement plan that's funded by after-tax dollars. It shares certain similarities with a traditional 401(k) and a Roth IRA, although there are important differences to understand. Roth 401(k) vs 401(k) Taxes and when you pay them are key to understanding

www.forbes.com

answered my question. The only wild card is how much money it may grow before withdrawals. For somebody younger it would be worthwhile to consider it. I'm looking 8-10 years out so will keep it in the regular 401k.

 

[M59]

This is why an annuity, any annuity, is not something I can justify for myself and for most people. Bottom line is an annuity is someone else is taking your money, investing it, and then giving you a guaranteed pittance every month. Plugging $100K into the following Schwab annuity (Income Annuity Estimator: Calculate Your Payout) for a 61 year old person and desiring annuity to start 1 Dec 2023, the MONTHLY income is $592 for life. Unless my math is wrong, the 1st years rate of return is 7.104% and gets worse as the money handed to the annuity seller grows in value FOR THE ANNUITY SELLER.

I have attached several pictures showing yearly gain and loss for S&P. Notice that the total number of yearly gains far exceed the total number of losses since the great depression AND the percentage gains frequently FAR exceed the losses.

In 2022 (Left pic ) the S&P was down 19.44% over the year and 2021 ( Right pic ) was up 26.89%.
S&P link: S&P 500 Index - 90 Year Historical Chart

Again, my personal preference is to avoid annuities as one receives very little in return for handing an investor your hard earned money for which THEY profit handsomely.

I appreciate MossRoad's links to pros and cons but much, in my opinion, is glossed over in both the pros and cons. A good fee for service advisor is the best resource for planning for retirement AND self education is always in your best interest. I am not, and never have been, a member of or affiliated with the investment community so I have no ax to grind in any direction.

Hopefully not rocked any body's boat with this comment.

 

[Fuddyduddy1952]

We got lucky...8% fixed rate until death, then passed to beneficiary. It's just part, about 10% of portfolio. For us it suits.

 

[ovrszd]

I'm certain you over estimate my "investment resources"

Sometimes it's just nice not to have to live paycheck to paycheck and being debt free.

Thing is, when I was younger, I never thought "long term" (honestly I figured I'd be dead by the time I hit 30).

Coming up to age 60, and need to start some kind of game plan other than me and the misses 401K's.

Funny, always thought I hated Missouri, never heard anything good about that state from guys who went to Ft. Leonard Wood. Living in in the western part of NC now for 20 plus years (still about 90 minutes east of M59), I know it's kind of like judging NC by living in Fayetteville NC.

Peace my friend.

 

[drssg]

However, I guess we are only looking for something for 3-5 years, because with our son moving out of our home and not knowing how my MIL will play out due to her age, we don't want to tie up some substantial amount of money for too long if that makes sense.

There are a bunch of different types of annuities that have different rules. When I looked into them, they wouldn't support a 3-5 year investment plan. You could take the money out whenever you want, but the guaranteed rate of return goes away. You would get whatever the underlying investments actually got for the invested time period.

Yours might work differently, but I would verify that with your financial advisor. It would be bad to get a nasty surprise in several years.

 

[kenmac]

I have / had some money sitting in a regular savings account. I have talked to my advisor several times about buying an annuity with this money. He will not talk to me about an annuity. All he says is he doesn't like them , so he won't even discuss them with me, even though he can sell them.
He says for some, they are great, but in my situation, he says no !
Instead of annuities, he has gotten me into private equities.

So, I took part of this savings account money and did something I have never done, I bought a 15 mo CD @ 3.75 %

Oh, and someone mentioned RMD's @ 72. They raised the age again for RMD's, it's now 73.
I hope they continue kicking that can down the road...., 74,75,76 etc, LOL

 

[marhar]

Anyone invest in annuities?

I work with Northwestern Mutual on an old 401K from an old company and have a couple of whole life insurance plans. I like the guy I work with (always talk to him on the phone as he's two hours away from me).

We have some money tied up in CD's that will be maturing soon from the bank, as well as some "expendable" cash sitting in our savings account that really isn't generating any type of interest.

Needless to say, anything we "invest" isn't "do or die money" and we're figuring we'll be here at our home for the last 18 years until we figure out the game-plan with my wife's 76 year old mother.

Thing is, best rates I've seen on CD's from the bank is around 4%. Could do much better with a annuity.

We don't want to play the stock market with the assessable money we have as our 401K's haven't done as well the last couple of years, but consider it a sin to have money sitting in the bank where it's not generating any substantial income and would like something low to no risk as to losing the investment. We understand that until we both hit age 59, any interest generated from the annuity will be dinged an additional 10% for tax

From your post, I assume you are younger than 59. If you are interested in the lifetime income an annuity will provide I suggest investing the money in a variable-rate annuity invested in index funds. I suggest a conservative approach that will be classified as asset preservation/income generation. When you are ready to begin the income stream I suggest a dual life annuity; doing so will give you a much larger payout but your heirs will not inherit any investment in the annuity. I am not affiliated with Fidelity; I cannot say enough good about the annuities they sell. I helped a 75-year-old friend buy a direct annuity yielding +9%.

Do not go to an investment firm that earns a commission get your business.