Gyroscopic Investing

...seem to be paying around 4.5% currently.  Since you can ladder them, it seems like an interesting option for deep cash.  Has anyone considered or done it?

I think it's a good idea for covering the basic cash flow needs of life, if you shop around for the best rate from a very highly rated insurance company, and you don't mind giving up or reducing your ability to leave a legacy. You can always do a two-life annuity, or single-life with a period certain, but less return while you are alive. Don't expect to be able to reverse your decision, it's a one-way valve.

ochotona wrote: I think it's a good idea for covering the basic cash flow needs of life, if you shop around for the best rate from a very highly rated insurance company, and you don't mind giving up or reducing your ability to leave a legacy. You can always do a two-life annuity, or single-life with a period certain, but less return while you are alive. Don't expect to be able to reverse your decision, it's a one-way valve.

Do they offer inflation-protection as an addon rider or are you stuck to laddering it?  It seems a little weird to ladder when there's no maturity date to keep it rolling over.

ochotona wrote: I think it's a good idea for covering the basic cash flow needs of life, if you shop around for the best rate from a very highly rated insurance company...

This is the essence of my wariness concerning SPIAs. Who is to guarantee that today's "very highly rated insurance companies" really are correctly rated? Enron, anyone?

And once you sign on the dotted line, who can guarantee that today's *authentically* highly rated insurance companies will not lose their mojo tomorrow? Does anyone recall the "Nifty Fifty," not to mention the endless hype surrounding their innumerable heirs and successors down to the present day?

All in all, the concept of a SPIA sounds enticing as a great way to increase returns while we are still on this earth, but the implementation is a big problem. At a minimum, I think anyone contemplating SPIAs should invest small amounts in numerous insurance companies, and even this strategy does not preclude a systemic crash a la 1929. So caveat emptor, as always.