Annuity options for 65 yr old

[bps]

I am primarily a P&C agent so I'd like to get some input on a client who is looking at annuity options. He's currently 65 and plans to retire when he's 70, and start social security then. He's thinking that he'd like to put about $150,000 into an annuity. Between social security, a smaller annuity he currently has, and this annuity, he feels like that would take care of his monthly income needed, and he could leave the rest of his retirement money invested, and there for emergencies and medical needs.

He'd like to take $1,000/mo from this annuity starting when he's 70 so he's looking for good accumulation for a few years. One thought is to put around $60,000 in a 5 yr FIA, and $90,000 in a 10 yr FIA. Have looked at American Equity as an option. Does this sound like a reasonable plan, and do you have recommendations for what company/product to use?

 

[Newby]

I am primarily a P&C agent so I'd like to get some input on a client who is looking at annuity options. He's currently 65 and plans to retire when he's 70, and start social security then. He's thinking that he'd like to put about $150,000 into an annuity. Between social security, a smaller annuity he currently has, and this annuity, he feels like that would take care of his monthly income needed, and he could leave the rest of his retirement money invested, and there for emergencies and medical needs.

He'd like to take $1,000/mo from this annuity starting when he's 70 so he's looking for good accumulation for a few years. One thought is to put around $60,000 in a 5 yr FIA, and $90,000 in a 10 yr FIA. Have looked at American Equity as an option. Does this sound like a reasonable plan, and do you have recommendations for what company/product to use?

If he puts it all in a 10-year he can still pull $15,000 a year (or 10% of the balance) out each year. So $1000 per month is no problem.
I would get with an annuity brokerage and lean on them for expertise because it changes all the time. But Alliance annuities have performed really well for me.

 

[scagnt83]

You should really look at guaranteed income riders on FIAs. You can guarantee 6%-8% growth on the income account. Often get a 2%-6% bonus on account value year 1. And the income payout would be in the 4%-6% range. And he keeps access to the account value until it is depleted by income payments.

Long story short, it will provide a significantly higher income vs. using MGYAs. And it will be guaranteed.

Athene, Great American, American Equity, AIG, Allianz are all strong options for FIA income riders. You will need an upline, none of those contract direct.

If he can draw from other sources for 2 years, Athene has a very strong 7 year FIA rider, but you have to wait the 7 years to begin income.

 

[Allen Trent]

I am primarily a P&C agent so I'd like to get some input on a client who is looking at annuity options. He's currently 65 and plans to retire when he's 70, and start social security then. He's thinking that he'd like to put about $150,000 into an annuity. Between social security, a smaller annuity he currently has, and this annuity, he feels like that would take care of his monthly income needed, and he could leave the rest of his retirement money invested, and there for emergencies and medical needs.

He'd like to take $1,000/mo from this annuity starting when he's 70 so he's looking for good accumulation for a few years. One thought is to put around $60,000 in a 5 yr FIA, and $90,000 in a 10 yr FIA. Have looked at American Equity as an option. Does this sound like a reasonable plan, and do you have recommendations for what company/product to use?

Only item I would add is that if the other retirement money you mention that he wants to leave for emergencies is really “retirement” money like IRA or 401k, his plan should likely change to use the retirement money to live on & this annuity money as the safety net emergency money. I say this because the IRA 401K money must have RMDs taken out each year starting at age 72 & because IRA/401k money is fully taxable & not as good to leave to beneficiaries.

See above ideas from Scagnt83.

 

[scagnt83]

Only item I would add is that if the other retirement money you mention that he wants to leave for emergencies is really “retirement” money like IRA or 401k, his plan should likely change to use the retirement money to live on & this annuity money as the safety net emergency money. I say this because the IRA 401K money must have RMDs taken out each year starting at age 72 & because IRA/401k money is fully taxable & not as good to leave to beneficiaries.

See above ideas from Scagnt83.

Ditto. Use Qualified funds (IRA/401k) as annuity funding first. Then non-qualified if needed to supplement it.

 

[The Log]

Looks like NWL might be your best option. He could pull out 12,865 per year at 70 (after 5 years of roll up).

 

[Tahoe Ray]

Looks like NWL might be your best option. He could pull out 12,865 per year at 70 (after 5 years of roll up).

True, but then you have to deal with them...

 

[The Log]

True, but then you have to deal with them...

They are about 700 / year higher than the next on my list. If he is willing to take that paycut and it looking for a better name then Nationwide might be the way to go. Still gets the end client to the 1k per month that he is looking for.

 

[Tahoe Ray]

If he is willing to take that paycut and it looking for a better name then Nationwide might be the way to go. Still gets the end client to the 1k per month that he is looking for.

So do Oxford, Sentinel, Protective, and others. If I were OP, I would certainly quote NWL but they have to know what they're getting themself into.

 

[LostDollar]

Ditto. Use Qualified funds (IRA/401k) as annuity funding first. Then non-qualified if needed to supplement it.

Caveat, not an agent.

That approaches a question I had recently. Can one use a combination of 401k and after tax savings to purchase one annuity? ie neither 401k or after tax savings alone would meet a minimum annuity purchase requirement so one would either have to find another annuity source or be able to combine fund sources.