Investing nearing retirement: are Annuities in your retirement plans?

Racer4

Racer4

Joined
Jul 15, 2020
Messages
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Location
Raleigh Durham NC
I am going to be retiring this year, I currently have over 7 figures in my IRA and 401K, no pension. Was talking to a friend of mine he is close to retirement also. He asked me my thoughts about putting some of your money into an Annuity. Annuities are sold to be guaranteed income for Life. Anyone here that have experience with Annuities you have any regret pros or cons.
 
I had my mother buy an annuity at age 70 because everyone in her prior generation had great health well into their 90s.

Otherwise, its a crap shoot.
 
Never, for a multitude of reasons.

Also, just remember that an annuity is an insurance product. Those companies can and do fail. AIG was one.
 
rijndael said:
Never, for a multitude of reasons.

Also, just remember that an annuity is an insurance product. Those companies can and do fail. AIG was one.
Click to expand...

And what happened when they failed?
They were "too big to fail" and the government orchestrated a deal.
So basically nothing.
 
Most annuities do have a cash value if you're in dire need of fast cash annuities work if you live a long long time . Long-term care insurance which sadly I know too much about is a gamble also . My father bought it for my mother . I added up the premium he paid over the years I came to 22,000 so far she has received $360,000 in benefits. I Tell you folks that's the big expense at the end of your life . Have a trust setup everything in line .
 
its always been odd to me why folks would buy an annuitiy tied to life insurance. Why not do the same for your home or car insurance. My mom had an annutity she paid into for a long time. she was sold that it was good for life. she either was too trusting or misunderstood the item. they take out the insurance cost from your payment . she thought all that money she put in 100 percent was going to investing it. they also every year raised the cost of the life insurance and unless she kept putting money into it , it ate itself to nothing . We told her to just stop paying and let it die. We don't need her insurance money
 
YES! And I am not ashamed to share my thoughts (Dave Ramsey hates annuities). My life is very unique and it makes sense for MY situation. I researched this to the nth. degree about 5 years ago and I did not change my itinerary.

It seems a few years ago thoughts on annuities turned a little more favorable IF you have certain circumstances. One of them I remember is if you don't own a lot of assets (me). I've been contributing to my TIAA portfolio "guaranteed" portion for 40 years and annuitized it last year. For my longevity, I get an 18% bonus. I annuitized about of my portfolio and my "guaranteed" income with Social Security will be more than my current working salary. I still have close to 7 figures in my investing portion. Cake and eat it too, in my opinion. If I die, it transfers to my wife. If both die, the remaining money goes to my kids up to 20 years after start (by then I will have spent most of it out).

It's a personal choice and how you regard risk. My very diversified plan has built-in safety and still ample immediate cash available (six figures). There are no silver bullets and there are many ways to the same ending (enjoyable retirement followed by death). There are many pros and cons. Worry free sleep if the stock market crashes vs. lesser gains long term. You DO pay for this "insurance". There's lots of numbers to crunch for YOUR situation. Keep an open mind, beware of internet opinions, and don't believe everything Dave Ramsey preaches.

My TIAA program does not pertain to starting an annuity late in life. Talk to LOTS of advisors and compare notes.

EDIT: Racer4, you should be talking to an advisor about managing taxes post retirement, RMD's, Roth's..........all sorts of stuff to maximize retirement income/minimize $$ to Uncle Sam. It's mind boggling and I can not do it alone.
 
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My wife had fringe benefit money as part of her pay package. Was meant to used for health or life insurance. We invested the entire amount in an annuity since my health insurance covered us so well. Basically the annuity bought my house and still had money left over.
 
My grandmother used a portion of her funds for an annuity. She lived to 95 and it worked out extremely well for her. Her female siblings all lived to at least 94, with the oldest being 107. Not a bad bet, though I would never want to make it a centrepiece of a retirement portfolio.
 
Racer4 said:
...I currently have over 7 figures in my IRA and 401K, no pension...
Click to expand...
You and I are not the same

But, to answer your question, I have a small pensions coming to me. No more dependents, So I will likely cash out the modest 401k and TSP. (If I had some people who were depending on me, I would be more inclined to go with the annuity )
 
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