SPIA Annuity

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vnatale
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SPIA Annuity

Post by vnatale » Wed May 17, 2023 1:38 pm

I know that there is an extreme anti-annuity bias here (which I do share) ....

But after reading the below I am open to, perhaps, buying some.

However, I still come back to how much value they'd retain 20 to 25 years from now after inflation.

Vinny


SPIA Annuity

https://www.whitecoatinvestor.com/spia- ... d-annuity/

Single Premium Immediate Annuity (SPIA) could be compared to term life insurance. Life insurance agents don't like selling term life insurance for the same reasons that it is the main, and probably only, type of life insurance you should buy. Term life and SPIAs are simple, low-cost, low-commission, financial products. Who wants to sell the most boring, lowest-commission product out there? That's like seeing nothing but URIs in clinic all day.



What is a Single Premium Immediate Annuity (SPIA)?

A Single Premium Immediate Annuity (SPIA) is a contract with an insurance company where you give them a lump sum of money, and the insurance company pays you a set amount every month for the rest of your life. This ensures you'll never run out of money, and so can be a useful part of retirement planning for many people, particularly those who have barely “enough” or even a little less than “enough.” They are also referred to as immediate payment annuities, income annuities, and immediate annuities. Portfolio withdrawal experts such as Wade Pfau have been recommending them for a long time. Now that most investors don't have a pension from their company, an annuity can take its place in the “three-legged retirement stool” (# 1 Pension, # 2 Social Security, # 3 Savings and Investment portfolio). You're essentially buying yourself a pension with a portion of your portfolio.



SPIA Benefits Compared to the Fancy Annuity My Agent is Trying to Sell Me?
A SPIA is a simple commodity. Just like term life insurance is “pure” insurance, a SPIA is “pure” income. The terms are simple and standardized. Because of this, there are lots of insurance companies out there competing for your business. This competition keeps prices (and agent commissions) lower and provides you a better deal. There are plenty of bells and whistles that can be added on to a SPIA, but every additional feature will cost you a little more. Not only because the insurance company has to pass the cost of it on to you, but also because as the product becomes less standardized, there is less competition for it.



How Much Can You Expect From SPIAs, and What Kind of a Return Will that Probably Be?
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
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