by Guest » Tue Jun 19, 2012 11:26 am
Can anyone here give me a rough estimate?
I'm 52 years old now. I want to save for retirement, and considering annuities as my option. How much of a deposit will I need to dole out as a lump sum or even as monthly payments? At least for a target of $150k after 7 years.
I'm 52 years old now. I want to save for retirement, and considering annuities as my option. How much of a deposit will I need to dole out as a lump sum or even as monthly payments? At least for a target of $150k after 7 years.
Posted: Wed Jun 20, 2012 09:37 pm Post Subject:
Your question does not provide sufficient information to give an answer. Are you seeking a lump sum distribution in 7 years or annuitization of $150,000 in 7 years? Fixed annuity, indexed annuity, or variable annuity?
Posted: Thu Jun 21, 2012 01:31 am Post Subject:
$135,000 lump sum or $20,000/year is approximately how much you'll have to pay to guarantee that you will have $150,000 in 7 years. In order to have it guaranteed for this amount, you would need a fixed annuity.
Posted: Tue Jul 03, 2012 07:50 am Post Subject: Annuity investment
Hello Max
I want to go for a variable annuity whereby i can make a series of payments to get around $150k after 7 yrs.
Again $135,000 as a lump sum, is this right?
Posted: Tue Jul 03, 2012 01:41 pm Post Subject:
I want to go for a variable annuity
Anything is possible in a variable annuity -- except guaranteeing how much money any amount of premium will provide in a given period of time. Growing $135,000 to $150,000 in only 7 years "could be" easy -- that's only about a 2%-3% rate of return (as fvavv pointed out in his fixed annuity example above).
You could also put in $135,000 today, grow it to $300,000 in 6 years 364 days, and on the 7th anniversary the next day see the value drop to $130,000 due only to an abrupt decline in the stock market.
With Variable Anything, you have no guarantees. You get what you get -- and it's YOUR RESPONSIBILITY to manage your subaccount portfolio for the maximum return consistent with your risk tolerance. I can't even begin to tell you whether a VA is a suitable product for you. You could put in $135,000 today, and in 7 years have only $10,000. How would you feel about that?
In the first scenario, Your beneficiary could be in line for a $300,000 death benefit ($165,000 taxable as income) or a $135,000 one. However, certain VAs being marketed today with guaranteed withdrawal benefits or guaranteed minimum income benefits could provide you with a significantly greater amount than the $150,000 (a little over $200,000 at a 5% minimum rate). But those guarantees are not free -- they are paid for with periodic deductions from your cash accumulation, which reduces your investment return.
No one can tell you what the stock market is going to do in the next seven years. There are plenty of people speculating on the kind of meteoric rise we DID NOT SEE in the "Roaring 2000s" as Harry S. Dent once predicted in 1998. And there are others who say the profligate spending in Washington, DC and the states is going to fuel a round of inflation that could resemble what some of us remember during the 1973-1986 period, only in some smaller fashion. Who knows? It could even be worse than that.
What is almost a certainty, as I see it, is the potential for higher income taxes at the state and federal levels to pay for all the fiscal waste we are currently generating, and, worse yet, to pay for the "entitlements" of government employee pensions which are bankrupting cities and (soon) states, not to mention the nearly $200,000,000,000,000 in UNFUNDED LIABILITIES for Social Security, Medicare, and the Prescription Drug Plan, which, at almost $20,000,000,000,000 today, has surpassed the SS Retirement liability and is now equal to about 25% of the Medicare liability -- and growing at a significantly faster rate than either of the other two. [See www.usdebtclock.org for the facts]
The gains in Variable Annuity contracts are subject to ordinary income taxes. You could put $5000 per year into a Roth IRA, but would probably not be close to $150,000 in only 7 years (a 10% rate of return would only grow your account to about $41,000). The difference, however, would be tax-free distributions from the Roth IRA. Converting other taxable IRA money to the Roth now, and paying the income tax at today's "lower" rates could have a significant, positive impact on your future cash flow.
But . . . all of that is just speculation. Check your crystal ball for the details . . . mine is broken.
Posted: Wed Jul 04, 2012 06:47 pm Post Subject:
Anything is possible in a variable annuity -- except guaranteeing how much money any amount of premium will provide in a given period of time.
There are variable annuities that will do this.
Posted: Wed Jul 04, 2012 10:08 pm Post Subject:
However, certain VAs being marketed today with guaranteed withdrawal benefits or guaranteed minimum income benefits could provide you with a significantly greater amount than the $150,000 (a little over $200,000 at a 5% minimum rate). But those guarantees are not free
Perhaps you failed to see this above.
There are two discussions about variable contracts: the basic contract that comes with no guarantees, and the more exotic contracts that have these and other benefit riders attached and for which people pay extra (in the internal expenses).
And if you were reading the same kinds of things I read, you would know that the actuaries have become very nervous about the "guarantees" in these contracts and the future difficulties some insurance companies may be facing when it comes to paying off. Those same concerns also spill over into the indexed contracts, that the SEC thought about regulating with Rule 151a, which offer similar guarantees.
The NAIC has seen those same things and has formed a couple of task forces to evaluate and propose proper actuarial accounting methodologies for reserve valuations . . . some actuaries are participants . . . and, for the most part, the actuaries are in agreement with almost all of what the NAIC task force is going to propose later this year or early next year. The companies are not as excited.
Posted: Thu Jul 05, 2012 03:19 pm Post Subject:
So...
What you are saying is that your statement that a VA could not have a future guaranteed value was incorrect.
Posted: Thu Jul 05, 2012 05:34 pm Post Subject:
NO. If a person has a VA without the ADDED guarantees, they have no guarantees. Not all annuities have them, you know.
But you are always PARSING statements, so I expected your response.
Posted: Thu Jul 05, 2012 06:31 pm Post Subject:
Max, the point is that there is no guarantee unless there is a guarantee. You made the blanket statement that simply wasn't true.
Posted: Fri Jul 06, 2012 12:31 am Post Subject:
Fine. Welcome to Burger King where you can have it your way.
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