Annuities?

Other discussions not related to the Permanent Portfolio

Moderator: Global Moderator

User avatar
Cortopassi
Executive Member
Executive Member
Posts: 1437
Joined: Mon Feb 24, 2014 2:28 pm
Location: Illinois

Re: Annuities?

Post by Cortopassi » Sat May 19, 2018 3:22 pm

barrett wrote:
Sat May 19, 2018 11:55 am

All very interesting. My big realization in reviewing this stuff as a result of this thread is that my wife won't need to claim based on my earnings. She's now reached the point where it will be more favorable to collect based on her own earnings. Crap, I'd better not tell her and give her one more reason to hit the road.

Obviously there are things I have no idea about WRT SS, like this claiming discussion. Is the government website the best place to learn about this or some other site?
User avatar
mathjak107
Executive Member
Executive Member
Posts: 1890
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Annuities?

Post by mathjak107 » Sat May 19, 2018 6:43 pm

i learned by reading books on the subject . there is a lot to know. of course now with the doing away with file and suspend , the ability to pay back ss whenever you want and start over and restricted application for those who were not 62 in 2015 or older , it is easier .

there are different rules and formulas for ss retirement and different rules and formulas for survivor .

i am pretty well versed in it now except i did not have to learn about the windfall elimination provision .

with 80 million voting baby boomers it would be political suicide letting ss take a reduction . as usual it will be dealt with in the 11th hour .
User avatar
mathjak107
Executive Member
Executive Member
Posts: 1890
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Annuities?

Post by mathjak107 » Sun May 20, 2018 3:43 am

Cortopassi wrote:
Sat May 19, 2018 3:22 pm
barrett wrote:
Sat May 19, 2018 11:55 am

All very interesting. My big realization in reviewing this stuff as a result of this thread is that my wife won't need to claim based on my earnings. She's now reached the point where it will be more favorable to collect based on her own earnings. Crap, I'd better not tell her and give her one more reason to hit the road.

Obviously there are things I have no idea about WRT SS, like this claiming discussion. Is the government website the best place to learn about this or some other site?
just don't buy any annuity product without plans to delay ss first or you will pay more and get less . i guess that can be lesson 1 .
User avatar
sophie
Executive Member
Executive Member
Posts: 3053
Joined: Mon Apr 23, 2012 7:15 pm

Re: Annuities?

Post by sophie » Sun May 20, 2018 8:08 am

barrett wrote:
Sat May 19, 2018 2:46 pm
ochotona wrote:
Sat May 19, 2018 2:28 pm
I'm going to discount the future Social Security cash flows after a certain date like what was it 2034 when the trust fund runs out of money? The trustees report that only 79% of the benefits will be able to be paid out? So discount by at least that much.
Yeah, the wording on the annual statements is deliberately wishy washy, I think. My last one says "... by 2034, the payroll taxes collected will be enough to pay out only about 77% of scheduled benefits." They don't really say where we are right now. I mean, it doesn't go from 100% to 77% overnight, right?

I can't imagine that Congress will do much until the very last minute, so maybe in another decade (right as Cortopassi is getting ready to claim!). The age increases under the 1983 changes to SS affect those born up to 1960. I would expect that one of the changes will be that those born in 1961 or later will see a gradual increase in age at which they can collect (both the minimum age to get anything as well as one's FRA).

But I am obviously just speculating.
That 77% number is useful to know. I've been discounting my future Social Security income by 20% for planning purposes, but maybe I should up that to 25%.

The FRA increase to 67 for those born after 1960 will decrease the boost you can get by delaying SS to age 70, so it's already effectively an SS cut. I guess the next step, when Congress gets around to it, is to continue the FRA increase all the way to age 70, and probably to delay the age when you can start taking benefits to 65. That way they can cut SS benefits by just about the right amount without actually having to say they're cutting benefits.
User avatar
mathjak107
Executive Member
Executive Member
Posts: 1890
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Annuities?

Post by mathjak107 » Sun May 20, 2018 8:46 am

well all i can say is keep working and paying in , my check depends on you ha ha ha
barrett
Executive Member
Executive Member
Posts: 1516
Joined: Sat Jan 04, 2014 2:54 pm

Re: Annuities?

Post by barrett » Sun May 20, 2018 9:11 am

sophie wrote:
Sun May 20, 2018 8:08 am
barrett wrote:
Sat May 19, 2018 2:46 pm
ochotona wrote:
Sat May 19, 2018 2:28 pm
I'm going to discount the future Social Security cash flows after a certain date like what was it 2034 when the trust fund runs out of money? The trustees report that only 79% of the benefits will be able to be paid out? So discount by at least that much.
Yeah, the wording on the annual statements is deliberately wishy washy, I think. My last one says "... by 2034, the payroll taxes collected will be enough to pay out only about 77% of scheduled benefits." They don't really say where we are right now. I mean, it doesn't go from 100% to 77% overnight, right?

I can't imagine that Congress will do much until the very last minute, so maybe in another decade (right as Cortopassi is getting ready to claim!). The age increases under the 1983 changes to SS affect those born up to 1960. I would expect that one of the changes will be that those born in 1961 or later will see a gradual increase in age at which they can collect (both the minimum age to get anything as well as one's FRA).

But I am obviously just speculating.
That 77% number is useful to know. I've been discounting my future Social Security income by 20% for planning purposes, but maybe I should up that to 25%.

The FRA increase to 67 for those born after 1960 will decrease the boost you can get by delaying SS to age 70, so it's already effectively an SS cut. I guess the next step, when Congress gets around to it, is to continue the FRA increase all the way to age 70, and probably to delay the age when you can start taking benefits to 65. That way they can cut SS benefits by just about the right amount without actually having to say they're cutting benefits.
One of the things that was apparent to me when I was looking over my SS statements yesterday (I have paper statements from 2000 to 2010) was how much the last recession appeared to affect the SS shortfall projections (fewer people paying in because they didn't have jobs is my guess). My statement dated 6/17/09 shows 78% as of 2041, and my statement dated 6/11/10 shows 76% as of 2037. So the current numbers are probably optimistic considering that recessions are a pretty regular thing.
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 1437
Joined: Mon Feb 24, 2014 2:28 pm
Location: Illinois

Re: Annuities?

Post by Cortopassi » Sun May 20, 2018 9:25 am

mathjak107 wrote:
Sun May 20, 2018 3:43 am
Cortopassi wrote:
Sat May 19, 2018 3:22 pm
barrett wrote:
Sat May 19, 2018 11:55 am

All very interesting. My big realization in reviewing this stuff as a result of this thread is that my wife won't need to claim based on my earnings. She's now reached the point where it will be more favorable to collect based on her own earnings. Crap, I'd better not tell her and give her one more reason to hit the road.

Obviously there are things I have no idea about WRT SS, like this claiming discussion. Is the government website the best place to learn about this or some other site?
just don't buy any annuity product without plans to delay ss first or you will pay more and get less . i guess that can be lesson 1 .
mj, I don't even understand lesson 1. You mean somehow related to taxes? Or meaning the annuity is not the best vehicle and if I did that I better delay SS to make up for less than expected from the annuity?
User avatar
mathjak107
Executive Member
Executive Member
Posts: 1890
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Annuities?

Post by mathjak107 » Sun May 20, 2018 9:32 am

social security is the best annuity you can buy .

for the amount in checks you give up from 62 to 70 you can't buy any commercial annuity that gives you as much , passes to a spouse and is cola adjusted . so before you buy an annuity plan on delaying ss . you layout out what you are not getting from ss out of your portfolio from 62 to 70 and fund your draw that way ..

it would not be wise to take early ss and then spend that money on a commercial annuity .
technovelist
Executive Member
Executive Member
Posts: 4809
Joined: Wed Sep 15, 2010 11:20 pm

Re: Annuities?

Post by technovelist » Wed May 23, 2018 11:39 pm

mathjak107 wrote:
Fri May 18, 2018 7:05 am
it would be poor financial sense to ever buy any annuity before delaying taking ss first .

there is no commercial annuity that you can buy that would pay as much , be cola adjusted and pass to a spouse that would be as good as what you would get from ss for the cost of laying out the ss amount you are not collecting from 62 to 70.

it is the best value in an annuity you can buy . annuities should only be considered after you delay taking ss . it is a terrible deal in comparison taking early ss and then buying a commercial annuity product.

cola adjusted annuities are the worst deals out there and the main reason you never want to use annuities in isolation . keep in mind your personal cost of living is very different from the adjustments the cpi gives you . there is little in common between your cost of living and a price index which has most of the items not applying to you or the way you buy or even your location .

you want your inflation protection in growth vehicles .
I don't trust SS not to be means-tested at some point.
technovelist
Executive Member
Executive Member
Posts: 4809
Joined: Wed Sep 15, 2010 11:20 pm

Re: Annuities?

Post by technovelist » Wed May 23, 2018 11:47 pm

I have spent a lot of time writing a program to show the effects of different social security claiming times, life insurance, and annuities. It's available free at rhino-retirement-analyzers.com.

I'll also send a copy of the companion book in PDF form to anyone here who wants to read it.

BTW, I'm a licensed life insurance agent in AZ, CA, FL, IA, MI, OH, PA, TX, and VA, so if anyone who lives in one of those states is interested in buying a fixed annuity like the ones listed on immediateannuities.com, I'd be happy to discuss that with them. The cost to the purchaser is the same no matter what agent you use.

Note: I don't believe in, and will not sell, any variable annuities, including "fixed indexed".
technovelist
Executive Member
Executive Member
Posts: 4809
Joined: Wed Sep 15, 2010 11:20 pm

Re: Annuities?

Post by technovelist » Wed May 23, 2018 11:50 pm

mathjak107 wrote:
Sun May 20, 2018 9:32 am
social security is the best annuity you can buy .

for the amount in checks you give up from 62 to 70 you can't buy any commercial annuity that gives you as much , passes to a spouse and is cola adjusted . so before you buy an annuity plan on delaying ss . you layout out what you are not getting from ss out of your portfolio from 62 to 70 and fund your draw that way ..

it would not be wise to take early ss and then spend that money on a commercial annuity .
SS does not pass to a spouse in the same way as joint and survivor annuities do. In fact, if both spouses have the same SS payment, the survivor gets 0 benefit from the first spouse's SS account after the first spouse dies. (Oversimplified but generally accurate).
User avatar
mathjak107
Executive Member
Executive Member
Posts: 1890
Joined: Fri Jun 19, 2015 2:54 am
Location: bayside queens ny
Contact:

Re: Annuities?

Post by mathjak107 » Thu May 24, 2018 3:06 am

this is true , under those circumstances . but it is rare there is not a higher and lower benefit in ss . especially in survivor benefits which can contain not only delayed credits but where it is not based on half amounts either. even if both benefits are the same if you were at least 62 in 2015 you can let your benefit grow and collect spousal no matter who's is bigger.

you also get to have ex wives if they qualify collect off your record no matter how many there are , you can't do that with an annuity. the fact still stands , do not buy an annuity without delaying ss first , it makes no sense . there is no better cola adjusted annuity that will pay you as much for the price !
Post Reply