In my view, that’s a huge factor and congrats to you and you siblings. In a scenario where there is no “”backstop” that is a totally different problem/solution.
OT: How To Maximize Fixed Income as a Retiree
- Thread starter KK1827
- Start date
If she is trying to max cash flow, she should wait until 70 to collect SS. The no fee products mean you are paying other ways.
Sounds like she is in great financial shape. She can park a big chunk in Synchrony bank which currently pays 4.75% or some other high yield account until she knows what she wants to invest in. The interest is taxable, and the interest rate will be dropping once the fed rate is dropped.
If not considered already, and sorry of off topic, consider if she has a long term care insurance policy. Long term care costs can derail the best laid retirement savings plans.
If she puts the whole thing in a Schwab rollover account I think it's less. But with $4600/mo. coming from other sources do you want the whole thing in an annuity?
Agree... no such thing as free. I was asked by my brother in law to recently review Schwab's zero fee automated investment. It seems good until you realize that they maintain 6%of the investment in a cash account that pays 0.5% less than treasuries. So that is where the fees come from.
Definitely not free (regarding SS). Waiting to 70 means she will get $0 from SS for the next 3 years. People need to factor in what they are missing out on by waiting.
Last edited:
Any small amount of research clearly shows.....an immediate fixed annuity is the easy choice, but definitely not the best one in terms of managing wealth.
First you would transfer that money into an IRA. Then the money that you used to fund the annuity you would pay on each distribution on a monthly basis taxes are taken out of each distribution.
2028? Let that 800k roll on us winning 2027 Rose Bowl. Al says it’s a lock.
Yes, but in my opinion, the best choice is probably not an annuity, at least not as the sole solution.
Last edited:
Are you saying if the 67 yr old person dies at 77, the heirs get nothing? Am I understanding you correctly. If so, do not buy this.
Maybe consider putting some of the money into SYLD or QYLD. Smarter people could DIY writing options to generate income.
Without bothering to look it up, the rate might be variable or require waiting a long time before it generates income.
Wouldn’t a good bond fund do this for you? Seems like remembering to keep buying bonds at set times could be onerous.
If it were a single life annuity with no term certain that could happen. But you'd be nuts to sign up for that with the only benefit a VERY slight higher monthly payment
Good points. I am NOT an annuity advocate. Insurance products are extremely complex—emphasize extremely complex. In my opioion, there are generally hidden fees and “gotta ya” features and characteristics with insurance products. You pay for features like guaranteed terms, joint life, etc which may or may not be suitable for the investor/person. Read the contract, prospectus, and demand an “Illustration.” I have never bought any annuity or insurance product other than term life, in my view, for almost all circumstances, there are valid reason for the oft quoted phrase “buy term and invest the rest.” Again, not advocating any insurance product but some scenarios where a SPIA maymake sense: no heirs or charitable inclinations, sufficient assets to carry through one’s life, good health genes, desire to supplement PART of assets to buy for longevity, desire to buy a cost-adjusted product (inflation adjusted , to have a joint survivorship etc. (again, you pay for these feature so they or may not be suitable for a specific investor, tax considerations, etc.). I’m k) I not providing advise, I am suggesting folks educate themselves on these matters. For me, a balanced portfolio that considers short and long term goals, tax implications , RMD, legacy, cash flow, legacy considerations, etc works.
In short, educate yourself. And, let me add, tell someone else the terms you signed up for, and the choices yet to be made.
depending on the the life contingency - meaning the annuity is life only - the remaining balance defaults to the insurer at death . Other contingencies include 10 years certain, 50% and 100% joint and survivorship based on a spouse or other person. Check to see if the annuity has NO contingencies.