32yr Old $300K SPIA --Carriers?
- Thread starter ScottLFB
- Start date
- 15,041
Will anyone do an income rider for a 32 year old?
Scratch that. The earliest withdrawal attributed to the withdrawal rider is 59 1/2 for the annuity I was thinking of, so the rider would have no bearing on immediate income needs, even though immediate withdrawals from the VA could satisfy the income requirement, subject to surrender charges and market changes. These early withdrawals would not be "protected" by the withdrawal rider, and the account could hypothetically exhausted before the rider payout became available.
- 15,041
That is what I thought. Basically she is left with "build a diversified portfolio and take income from it." Now, there is nothing wrong with that strategy, but it doesn't seem like that is what she wants.
She is 32, can she work some to replace at least a portion of that 60k until conditions are better or she qualifies for some products more suited to her goals?
You have many different options available to you, the last of which should be to lock up that much of her money at that age in SPIAs. I guess it could be appropriate for some of the money, but it should be a diversified, if not conservative, portfolio that she can take income from. If she only wants 60K from this money per year, you can ladder CDs or Bonds to try and not dwindle away at that number too much, and wait until interest rates are better at which point this is a more simple problem. You also aren't accounting for inflation by just putting all of this money in SPIAs (unless you have some sort of COLA, but I doubt that with the rates you're getting).
- 15,041
If you put it in CDs you are going to eat up the principal to get that much income.
- Thread starter
- #17
I guess what I forgot to mention was that this 4-bucket strategy of $300K each is the side she is trying to keep totally safe, out of the market, and start her income stream with. She has another advisor helping her with the other $800K that she's trying to make a diversified portfolio with to be involved in the market. I agree that with SPIA rates down it's not an ideal time to put the money in them, but it's the only safe way to start an income stream now without getting hit with the 10% pre-59 1/2 penalties. Munis, VAs, and stocks are all going to give her the possibility of not keeping her premium "safe" and that's all she is concerned about with this part of the money.
**Thanks for the input though**
**Thanks for the input though**
- 15,041
Document, document, document!
If she has any dependent, look at life insurance to replace the money going into the SPIA. This will bite you hard if she anytime in the next few years.
If she has any dependent, look at life insurance to replace the money going into the SPIA. This will bite you hard if she anytime in the next few years.
- 10,806
Yeah, I forgot about the age issue with the rider, but it wouldnt matter since you can add it on later. (you can for both pru and jnl)
imo, go with JNL for distributions, Pru for accumulation.
But since this is NQ, LFG is a contender with their I-for life rider; it basically gives a step up in basis during distribution through a patented design, so it will minimize taxes for NQ distributions...
But a VA is only appropriate for her accumulation bucket, not distributions, so I guess its not an options for the OP.
- - - - - - - - - - - - - - - - - -
Here is the problem.
Her overall financial plan needs to be a comprehensive and coordinated approach.
Since she has not come to you asking for a specific product, then its obvious that the other advisor is not offering this.
At her age, the secure income portion of her portfolio should most likely be in bonds, preferred stock, and dividend paying common stock.
What this does is it gives her an income stream that is generated from earned dividends.
Depending on the choice, the dividends can even be guaranteed.
Yes, the value of the income portfolio could go down, but that does not mean that the income received from the income portfolio will necessarily go down. You can tailor it so that you will always be provided a minimum required income per year.
There are some very excellent Bond funds out there, the corporate bond market is doing well, and while some individual munis have been getting downgraded, there are still plenty of tax advantaged muni funds that are still stable and performing well (taxes, performance, & stability will vary a bit by region).
I guess what I am saying is that at her age you are handling the wrong bucket of money if you only do annuities.
She should be looking at VAs & EIAs to help save for retirement. She should also probably contribute to a Roth account.
The other advisor who is doing her market portfolio should most likely be involved with her income; and if he does not know this, then she should find another advisor.
If I where you, I would try to have a talk with her about taking a more comprehensive approach.
- - - - - - - - - - - - - - - - - -
Not true.
Putting her money in a SPIA is not making it safe, its eliminating future use of it; not a good thing from a time value perspective.
The problem is that it seems she has no real guidance other than her own with this planning.
Yes, she needs a safe income stream. But that does not mean that her "safe money" (or all of it) should necessarily be in the income bucket.
A VA with an accumulation rider gives her guarantees... an EIA gives her guarantees... WL/UL gives her guaranteed money... Bonds can give guaranteed money....
Last edited:
Really? Pru has such crappy sub accounts though. The VA is essentially the HD Rider and that's it. JNL has been regarded for years by Morningstar for having great sub accounts, and IMO they truly do. Not to mention the fact that you can use their rider with any asset allocation you want.
I had a stat once about VA sub accounts' hitting their benchmark averages, Pru was one of the worst.
I do like the Lincoln suggestion since this is non-q money. I admittedly am not as well versed on that product as I should, but I rarely do non-q annuity business, especially on the variable side.
