Getting Ready for Retirement

[capablewife]

My husband (currently 58) and I (currently 57) are trying to build a product portfolio that will allows us to retire in 5 years (when he is 63 and I am 62). He is currently working full time and I am not, but have my SS credits. Together we have over $100,000 in IRAs; also participating in his employer's 401(k) that should add another $60,000 by the time we retire. We were hit hard in the last market downturn, including our house value, dropping from $350,000 to $180,000.
Given our goals and plans, I wish to preserve as much of our principle as possible. I have been introduced to the Allianz222 Annuity by a local agent and while I think I have a basic idea of how this works, I am hoping to get some information about the fit for our situation and the items I should consider before purchasing.

I already know that there is a surrender charge for a long time (15 years?), so we probably will not invest all our cash, but what else should we consider? I will be talking with 3 different planners this year, too for professional help.

 

[xrac]

It would seem to me that the most important thing you can be doing in the next five years is to be stashing every dollar into savings that you possibly can. I will allow others to answer on the annuity.

 

[my3sons]

My husband (currently 58) and I (currently 57) are trying to build a product portfolio that will allows us to retire in 5 years (when he is 63 and I am 62). He is currently working full time and I am not, but have my SS credits. Together we have over $100,000 in IRAs; also participating in his employer's 401(k) that should add another $60,000 by the time we retire. We were hit hard in the last market downturn, including our house value, dropping from $350,000 to $180,000. Given our goals and plans, I wish to preserve as much of our principle as possible. I have been introduced to the Allianz222 Annuity by a local agent and while I think I have a basic idea of how this works, I am hoping to get some information about the fit for our situation and the items I should consider before purchasing. I already know that there is a surrender charge for a long time (15 years?), so we probably will not invest all our cash, but what else should we consider? I will be talking with 3 different planners this year, too for professional help.

5 years does not give you a lot of time to be aggressive as far as your rate of return and I'm not familiar with the Allianz product. I will tell you there are equity index annuities available that have a GLIR (guaranteed lifetime income rider) These riders, when provided by a reputable company allow you to maximize growth, no chance of loss, with the benefit of never outliving your money. This is not annuitization. You have the option to opt out if you choose. Life of the Southwest has a good one. My mother was in a similar situation (timeline) and she went with them

 

[DHK]

My husband (currently 58) and I (currently 57) are trying to build a product portfolio that will allows us to retire in 5 years (when he is 63 and I am 62). He is currently working full time and I am not, but have my SS credits. Together we have over $100,000 in IRAs; also participating in his employer's 401(k) that should add another $60,000 by the time we retire. We were hit hard in the last market downturn, including our house value, dropping from $350,000 to $180,000.
Given our goals and plans, I wish to preserve as much of our principle as possible. I have been introduced to the Allianz222 Annuity by a local agent and while I think I have a basic idea of how this works, I am hoping to get some information about the fit for our situation and the items I should consider before purchasing.

I already know that there is a surrender charge for a long time (15 years?), so we probably will not invest all our cash, but what else should we consider? I will be talking with 3 different planners this year, too for professional help.

Without going into a lot of detail, here are some things that I would be considering:

1) How is your asset allocation in your 401k accounts? If your goal is capital preservation, I would encourage you to re-allocate your current balance and future contributions to the money market fund within your 401k.

Note: This is not securities advice, nor am I licensed to give asset allocation advice. If you desire specific advice regarding your holdings within your 401k plan, you will want to talk to either your plan's investment advisor firm... or a Registered Investment Advisor in your state.

2) Another idea on your current 401k... does your employer allow for an in-service distribution? This is a distribution from your 401k to an IRA while you are still working for your employer. Just check with your plan custodian or HR to find out.

3) Surrender charges are voluntary... meaning that they only apply if you plan to take out more than 10% in a given year. (Lower if there are additional living benefits that could skew your income guarantees.) Basically, DON'T let surrender charges get in the way of deciding if the product is a good fit... because it just might.

4) I would probably not put all your assets into one single annuity contract. There are concepts called "split" annuities and "laddered annuities" that may be much more beneficial to you over the long-term.

5) Do you have life insurance? When one of you passes, the surviving spouse will get the HIGHER of the two SS benefits, but not both. Having a life insurance policy in place will help close the gap upon the first spouse's death.

6) Do you plan to stay in your home? Or do you plan to move? This is a lifestyle decision that will also have an affect on your financial security.

7) How is your health? Will you have health insurance in place from your employer (or privately) until you both reach 65 and can enroll in Medicare?


Lots more to consider. Look for the advisor/planner that is helping you to address more than "just the money". Retirement planning is about FUNDING the quality of life you want from your existing assets. Find one that is asking and knowledgeable about most of the things that I've mentioned here, and you'll probably do okay.

 

[VolAgent]

I would say Xrac's advise is the best so far, you need to be saving more.

Assuming I read your post correctly, you will have approximately $160,000 in retirement savings at retirement age. Plus the value of your house if you decide to cash out. The old assumption is that it was safe to pull 4% from your retirement accounts. That is probably too aggressive now and should be lower, but let's use 4%, that means you could take $6,400 a year, $533 a month, from your retirement accounts. Is that plus your social security going to be enough to maintain your lifestyle?

 

[benefitguy]

160,000 to live on for the next 15years? And what happens if one of you get critical illiness or chronic illiness? medicare doesn't cover everything and you could drain your savings. I am so sorry you are in that sisuation, talk to a good insurance agent, think about buying a life policy that covers living benefits at no extra charge. a couple of companies come to mind. Natonal life group ,transamerica , american national, aig. Good luck