Lifetime Annuity

[Half Smoke]

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I'm not really close to it yet - but when I'm 75 and my wife is 70 I am strongly considering a Single Premium Lifetime Annuity covering both of us with no other riders

a female who has reached age 70 has a life expectancy of 87.6 years

I've crunched the numbers and if that is what happens the total payout of the Annuity will be about 29% greater that what it was purchased for

certainly a person could do better than that but if one of us lives to age 95 - especially my wife - it looks like it could be a good deal - taking some of the worry out of things

if that were to happen the total payout would be about 33% more than what was put in

of course, if you draw down from a cash account - even if it's earning interest - after every yearly drawdown - assuming no change in the interest rate - your next year's earning will be less

of course, it could lessen the estate if a person is planning on providing for others but that is not a concern for us

and it would most likely earn less than many other investments but it provides for security

and if we didn't get a good deal because both of us are dead after just 10 years - we don't really care - because we're both dead


would like to hear comments - thanks

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[Half Smoke]

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too late to edit

calculation above was wrong

if my wife lived to age 95 then the payout of the annuity would be about 84% greater than what was put in

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[Red Knave]

Originally Posted by Half Smoke

if my wife lived to age 95 then the payout of the annuity would be about 84% greater than what was put in

Wait until you get a lot closer to those ages before you commit. Interest rates (which are the deciding factor in calculating what you get paid) will be different than now.

Start looking now for a fee only investment advisor and see what they say about the annuity thing. You may be surprised.

[cratman]

An important issue with annuities is inflation. Inflation erodes purchaing power so the 1000 15 years from now is likely worth about 40% less with an assumption of 3% inflation which may be a modest assumption.
Insurance regulators will not permit companies to issue inflation-adjusted annuities because companies cannot effectively hedge the risk.
Something to consider.

[cratman]

One alternative to consider is to delay SS until 70. This increases an inflation-adjusted income stream. It can be complicated when one is married but there are websites and literature on this.