I've been looking at some sort of income generator for retirement since shortly after working in 1990. I always look, see the return and stop looking. Been doing that every 2/3 years. Just never made sense. Usually you had to keep your money in a rather long time and could only draw out between 3% and 5%.

Just looked and seems like with the increased payout and the rather large amount the companies put in your "income bucket", 1,000,000 put in today and if you start drawing out in 5 years, you can get over $100,00 per year for the life of both you and your spouse.

That's guaranteed as long as your insurance company is not bankrupt.

That seems pretty good. That's over 10% of your initial investment. And neither my wife or I are over 60.

Question - does everyone hate annuities, or is it worth sinking a portion of my investments into a safe income stream at 10%?

Thoughts?

When I rolled my 401 to my friend/FA he put me in an income annuity. I hit him w/all the bad stuff said about them. He understood & explained that some available thru ins. cos are maybe not investment worthy.

I have 1 that if I wait till I'm 65 to turn on, it will pay me about $30K/yr. I can turn it on now & it would be about $19K/yr.

It's the time value of money decision right now for me, has me thinking.

Good luck with your choice!

12th Man has decent returns for estate annuities where the principal goes to the school upon your demise. You get a few tax advantages out of it too I think. A lot of the major insurance companies offer annuities tied to the stock market that convert to income at a later date. They are fee heavy and will never keep up with the market but they have the potential to outperform just about any immediate or deferred fixed annuity.

Thanks for the input.

There are two that I've seen, but I suspect they both reflect the current market.

Both have two "buckets". One that sets the "worth" of the annuity (how much it's worth when you die) and the other is an "income" bucket.

The annual withdrawal is tied once "income" bucket and is fixed once you turn on the income. That is set for you to get for life.

The withdraw is taken from the "worth" of the Annuity, and if that ever goes to zero, then when you die, your estate gets zero. The "worth" goes up depending on the market and if the market is negative for a year, the "worth" only goes down by the amount you withdraw from your set annual income.

The two companies I've seen are Eagle Life and Midland National. They are different, as one gives a larger percentage of your "income bucket" but doesn't add money each year to your income bucket". One adds 12% - 14% of your investment each year to your income bucket until you turn on income.

Also, they are different in how they grow your "worth" bucket.

It just seems there has been a shift to larger payouts in these annuities. i guess if there is a major correction in the market, some of these companies may go bankrupt trying to hit these massive payouts. 10%A per year seems like alot.

If I go this route, it will be important that I choose wisely.

If you haven't already, I would ask "how do I get my money out if I need it?" I would bet that $1M gets hammered by fees.

Stive said:

---

Annuities, while oversold in many cases, have their place.

If you're considering it for lifetime income for you and a spouse in retirement, especially to cover basic, consistent, monthly expenses, they can be awesome tools as part of an overall plan.

---

That is exactly what we are looking at it for.

Like I said, I've been looking at annuities for quite some time, as I realized when I started working I was not really going to get a pension and wanted some guaranteed income. But in the past 30+ years, I've not seen the guarantees nearly as large as they are right now. I'm sure my being old as dirt has something to do with it, but a 10% guaranteed income off my initial principal for the life of the longer of me or my wife is something I've never seen, even come close.

1Aggie99 said:

---

If you haven't already, I would ask "how do I get my money out if I need it?" I would bet that $1M gets hammered by fees.

---

I did ask in passing, but I will dig deeper into this. Not that this money is planned to NEVER be needed, but you never know.

Make sure the insurance company has a solid rating. Their promise is only as good as there financial strength.

dirkjones said:

---

Why can't you take that 1 million and invest in a mutual fund yourself? Seems like you can withdraw around 40k/year and not be involved with all that high fee bs.

---

Could. But this gets me 100k per year. Guaranteed income.

OldArmyCT said:

---

12th Man has decent returns for estate annuities where the principal goes to the school upon your demise.

---

What rates are they currently offering?

Science Denier said:

---

dirkjones said:

---

Why can't you take that 1 million and invest in a mutual fund yourself? Seems like you can withdraw around 40k/year and not be involved with all that high fee bs.

---

Could. But this gets me 100k per year. Guaranteed income.

---

Could. They are betting you won't live 15 years. But if you do, then at least they had your principal on their books for 5 years before they started doling it back out to you.

Annuities are a great way for someone else to make money off your savings.