Annuities are tempting me again......MYGA?

[Rukh O'Rorke]

I never heard of this before, its a Multi-year guaranteed annuity and works like a hybrid of a CD and annuity. Can get the interest - or interest and 10% of principal back each year after 1 year.

Seems a much better deal than a purchased short term annuity. Looking at a 10 year MYGA now that pays 5.5%, but that doesn't include the principal payback over time.

I wish I could get a lifetime annuity that pays like 60k/year, but it is just too much money. And will they still pay me when I am in the nursing home at 103? I have trust issues!

Was looking at 5 and 10 year annuities, but the annual interest (based on my bootstrapping calcs) is pretty low compared to the MYGA.

[azucena]

What's your goal for an annuity? I think that's important to understand.

My actuarial life insurance work crosses paths with annuities so while I don't claim to be an expert, I personally feel like annuities cost too much. You're paying for the insurance companies commissions, expenses and profits. You can likely earn more by investing on your own.

MYGAs are just the latest iteration of annuity marketing. Many of my life insurance company clients are rolling these out as brand new with full marketing splashes.

[Rukh O'Rorke]

Nov 11, 2024 12:56:49 GMT -5 azucena said:

What's your goal for an annuity? I think that's important to understand.

My actuarial life insurance work crosses paths with annuities so while I don't claim to be an expert, I personally feel like annuities cost too much. You're paying for the insurance companies commissions, expenses and profits. You can likely earn more by investing on your own.

MYGAs are just the latest iteration of annuity marketing. Many of my life insurance company clients are rolling these out as brand new with full marketing splashes.

Thanks, this is helpful. Guess I am just feeling insecure and looking for something stable.

[minnesotapaintlady]

Nov 11, 2024 12:56:49 GMT -5 azucena said:

What's your goal for an annuity? I think that's important to understand.

My actuarial life insurance work crosses paths with annuities so while I don't claim to be an expert, I personally feel like annuities cost too much. You're paying for the insurance companies commissions, expenses and profits. You can likely earn more by investing on your own.

MYGAs are just the latest iteration of annuity marketing. Many of my life insurance company clients are rolling these out as brand new with full marketing splashes.

There are so many kinds of annuities though. It's like lumping universal life with term life.  I wouldn't say annuities are ever money makers, but if the goal is X amount of guaranteed income forever an SPIA or MYGA may fit the bill.

[pulmonarymd]

If you are close to retirement age, given the coming uncertainties due to the eleCtion, having some guaranteed income stream may not be such a bad idea. Especially if stock returns decrease after this recent rnup

[Rukh O'Rorke]

Nov 11, 2024 15:16:06 GMT -5 minnesotapaintlady said:

Nov 11, 2024 12:56:49 GMT -5 azucena said:

What's your goal for an annuity? I think that's important to understand.

My actuarial life insurance work crosses paths with annuities so while I don't claim to be an expert, I personally feel like annuities cost too much. You're paying for the insurance companies commissions, expenses and profits. You can likely earn more by investing on your own.

MYGAs are just the latest iteration of annuity marketing. Many of my life insurance company clients are rolling these out as brand new with full marketing splashes.

There are so many kinds of annuities though. It's like lumping universal life with term life.  I wouldn't say annuities are ever money makers, but if the goal is X amount of guaranteed income forever an SPIA or MYGA may fit the bill.

the myga I found paid 5.5% for 6 years, and if i did 500k to it, could get over 50k a year out w/o penalty years 2-6. then could do 80/20 with remainder of money and would have like a 4.5% wr. on the rest of it, get about 400k back year 7 and use that until soc sec kicks in at 70. so could retire in 2026.

maybe a pipe dream!

[Rukh O'Rorke]

Nov 11, 2024 17:57:58 GMT -5 Rukh O'Rorke said:

Nov 11, 2024 15:16:06 GMT -5 minnesotapaintlady said:

There are so many kinds of annuities though. It's like lumping universal life with term life.  I wouldn't say annuities are ever money makers, but if the goal is X amount of guaranteed income forever an SPIA or MYGA may fit the bill.

the myga I found paid 5.5% for 6 years, and if i did 500k to it, could get over 50k a year out w/o penalty years 2-6. then could do 80/20 with remainder of money and would have like a 4.5% wr. on the rest of it, get about 400k back year 7 and use that until soc sec kicks in at 70. so could retire in 2026.

maybe a pipe dream!

I very nearly pulled the trigger on this one, but with just 300k vs 500k. would still be a good portion of the annual budget, although not enough if the market really tanked.

But then I remembered serious mentioning liquidity concerns. I thought I don't need that much liquidity, maybe if the stock market dropped 50% I would rebalance? But then if I do stay in my house and do the update - I may want a big bunch of money rather than a loan or peicemealing things. So then I would need that liquidity!

hitting 59.5 and not having the penalty on withdrawals can be a little dangerous! Infecting my thinking a bit!