Annuitize or Not Annuitize ?

Oct 13, 2016

  1. mandolin1
    Offline

    mandolin1 New Member

    Posts:
    5
    Likes Received:
    0
    I have a TSA with JNL since 1988 . I will be 70 1/2 on July 24, 2017. This account will have $180000. in it on that date and this TSA is accumulating 3% tax sheltered interest. With option #1 , I can annuitize this amount with JNL on July 24, 2017 and JNL will pay me $1187.25 per month for a guaranteed twenty years and even longer should I live longer than twenty more years. This means JNL will be giving me $104000. plus the $180000 over the next twenty years for a total of $284000. This plan is a life plus 20 years certain. Option #2 is to leave the $180000. with JNL and let it earn 3% tax sheltered while I take out a RMD each year and reinvest that amount into a mutual fund. Which of these two options would be the best investment ? I could roll the whole $180000. over into a mutual fund and withdraw only the RMD but Hate to take that much risk on at my age.
     
    Last edited: Oct 13, 2016
  2. Ksutton
    Offline

    Ksutton Guru

    Posts:
    372
    Likes Received:
    24
    State:
    Pennsylvania
    If you don't need it then you could annuitize it and give to a charity / buy something you like ?
     
    Ksutton, Oct 13, 2016
    #2
  3. LostDollar
    Offline

    LostDollar Guru

    Posts:
    2,559
    Likes Received:
    452
    State:
    Kansas
    Are there others besides yourself in your family or life structure you would want to provide financial benefit for-and if yes-does that provide any direction for your choice?
     
  4. mandolin1
    Offline

    mandolin1 New Member

    Posts:
    5
    Likes Received:
    0
    I guess I didn't word that statement like I intended ! :) I have income right now to provide for my lifestyle but something could always happen to me and then my wife would need it. So, I need to make the best investment for a safety net just in case !
     
  5. mandolin1
    Offline

    mandolin1 New Member

    Posts:
    5
    Likes Received:
    0
    Children have families of their own and they are financially doing quite well. Even though I don't need this money to live off due to my life style and other income, my wife may need this investment if something should happen to me.
     
  6. Ksutton
    Offline

    Ksutton Guru

    Posts:
    372
    Likes Received:
    24
    State:
    Pennsylvania
    I'll write you a life insurance policy :)

    ----------

    Or a couple - and fund them with your annuity - leave behind a huge legacy
     
    Ksutton, Oct 13, 2016
    #6
  7. scagnt83
    Offline

    scagnt83 Worldwide Expert of Everything

    Posts:
    6,938
    Likes Received:
    458
    State:
    South Carolina
    First, hopefully you disregard the previous posts about buying life insurance... and about giving it all to charity (unless you have very significant savings/income other than that)

    ------------

    The Life payout with 20 year certain that JNL is offering is actually a very good deal for that payout. It is higher than current payout rates if you transferred the funds into an Immediate Annuity with the same "Life with 20 year certain" option.

    However, that puts your wife at risk if she lives beyond the next 20 years and you do not.

    I would recommend looking at "joint income" options. JNL might not offer it with your current annuity, but it is worth asking them about it. This would pay both you and your wife for the rest of BOTH lives.

    If JNL does not offer a joint option, you can always transfer the funds to an Immediate Annuity that does offer the option. It would give you both around $800/m in a joint lifetime payout. (assuming she is around age 70 too)

    ---------------

    The problem with leaving behind pre-tax money is that the RMDs imposed by the IRS have a goal to make you distribute most of that money and pay taxes on it before you hit life expectancy. So they are forcing you to do the opposite of what your goal is.

    With the Joint Income Annuity, you can take those payments and still reinvest them if you want. But they will still be there for your wife if you pass before she does & the income is needed. Plus, it eliminates having to worry about the RMDs each year. You can actually set up the income annuity to deposit the money directly into another investment if you wanted to.

    --------

    As far as other investments go, if you do not have the risk tolerance for mutual funds, try an Indexed Annuity. It is a savings vehicle that credits you interest based on market returns... but it guarantees that you will never receive less than 0% in any given year. The upside is limited, but that is because there is zero downside. Generally speaking, it will outperform a Fixed Rate Annuity or a CD. It would be comparable to the returns of a bond fund, just with zero downside risk. It is often a perfect fit for retirees with a low risk tolerance.
     
    Last edited: Oct 13, 2016
    scagnt83, Oct 13, 2016
    #7
  8. mandolin1
    Offline

    mandolin1 New Member

    Posts:
    5
    Likes Received:
    0
    Thank you for your advice !
     
  9. mandolin1
    Offline

    mandolin1 New Member

    Posts:
    5
    Likes Received:
    0
    Thank you for your opinions !
     
  10. LostDollar
    Offline

    LostDollar Guru

    Posts:
    2,559
    Likes Received:
    452
    State:
    Kansas
    Re: indexed annuity, what is a minimum cash requirement for that vehicle?
    I have a variant of mandolin's issues, only with considerably less cash. I get to do RMD's with table ii so that is working for me right now. Your comments give me some other things to read about and learn about as I have time-just not sure the cash involved makes other significant effort worthwhile.