Annuities

General Discussion
1

Does anyone understand the benefit of annuities for retirement? I get that they have a guaranteed payout and that’s the attraction. And I get that you put in a lump sum, possibly all at once or in a few payments. But I used an online calculator to see what the initial lump sum would have to be to get $1000 per month after retirement. And the initial investment was over $250k! Seems like if you have that kind of money what the heck are you worrying about? So I feel like I must be missing something.

2

I’m generally a little higher risk, so annuities aren’t attractive to me. I think they make good money for the broker so they push the safety of them. Very appealing. Brokers that I really like don’t like them. If you are risk averse though, might be for you.

I think they would fit in million dollar or more portfolio. Protect a chunk of it, then play with the rest.

3
I’m generally a little higher risk, so annuities aren’t attractive to me. - Lausten
How long do you figure on living? If the cut-off date is 75 but no later than 80, you can spare yourself a lot of anxieties. The longer you live, the greater the risk of crippling medical costs to stay alive.
4
How long do you figure on living? -- Sree
Good point. it is a gamble. I know someone who got all their money back and is still collecting. It was less than the 250K that Cuthbert mentioned, but maybe they are higher priced these days. Still, you gotta figure how much you could have made if you invested instead of bought the annuity, and you could have spent it all at once if you wanted to.
5
Good point. it is a gamble. I know someone who got all their money back and is still collecting. It was less than the 250K that Cuthbert mentioned, but maybe they are higher priced these days. - Lausten
For the average Joe who is not crooked, 250k is a lot to accumulate. Most people - especially, those with kids to raise - live from hand to mouth, from paycheck to paycheck, as mountainman said. With the pandemic, small business owners are wiped out. This leaves fat cat bureaucrats/politicians and professionals with enough money stashed up to consider annuities vs money-market investments. The rest who can survive live off their social security and pensions. You and Cuthbert are the lucky ones who slipped through the cracks of a hellish existence.
6

As usual Sree, your demographic data is inaccurate.

7
You are the lucky ones who slipped through the cracks of a hellish existence.
Oh gosh sree, my heart goes out to you and your hellish existence. I had no idea.

But, but, weren’t you the guy bragging?:

Even my dog could tell the difference between a 100 dollar and a 6 dollar wine.
8

Or were you just commiserating with the down trodden? :wink: