MYGAs vs CDs

[DHK]

If a repeat of 2008 happens and the $100k in the IRA turns into $50k, then we stop drawing from that account and put it on temporary "lockdown" . That means that we need to have enough in checking, savings, or insurance cash value to to make it the next 12 months until the CD matures and we can take free withdrawals from the annuity.

And ideally, someone like Nancy Pelosi would suspend the RMDs for the year so you wouldn't have reverse-dollar-cost-averaging from your portfolio (assuming it's in securities). Otherwise, making a sale and distribution from the account at that level could be devastating in the rebound.

 

[Justin Bilyj]

And ideally, someone like Nancy Pelosi would suspend the RMDs for the year so you wouldn't have reverse-dollar-cost-averaging from your portfolio (assuming it's in securities). Otherwise, making a sale and distribution from the account at that level could be devastating in the rebound.

Aka Sequence of Returns...

 

[DHK]

In my opinion, Yes and no. (I'm probably nit-picking here.)

"Sequence of returns", as it is often discussed, is a forensic study of a portfolio after it went through a series of returns - positive & negative. Then it usually shows the same returns in reverse order to see what the ending values would've been. Generally it's shown over a 30 year time frame.

It's merely a talking point and/or point to make to advisors to get them to see the value of non-correlated assets in retirement income planning. If we could predict returns, then non-correlated assets wouldn't be necessary or a valid consideration.

"Reverse dollar-cost-averaging" is done every time a sell has to be made of securities during a down market for income or RMD purposes.

 

[Justin Bilyj]

In my opinion, Yes and no. (I'm probably nit-picking here.)

"Sequence of returns", as it is often discussed, is a forensic study of a portfolio after it went through a series of returns - positive & negative. Then it usually shows the same returns in reverse order to see what the ending values would've been. Generally it's shown over a 30 year time frame.

It's merely a talking point and/or point to make to advisors to get them to see the value of non-correlated assets in retirement income planning. If we could predict returns, then non-correlated assets wouldn't be necessary or a valid consideration.

"Reverse dollar-cost-averaging" is done every time a sell has to be made of securities during a down market for income or RMD purposes.

Just curious Dave, what was the average age of someone who took out a CD at a bank/institution you've worked at?

 

[DHK]

I rarely opened CDs, even back then (01-04). That could've been because I was at a grocery store branch, and I bet more seniors would've gone to a more traditional bank branch to do things like that.

I do remember one guy in his 50's who had a bunch of small IRAs with CDs. He had like 5 of them, each opened with about $2,000 over a 5 year period or something (the limit at the time). I think rates were about 3-5% at the time. Money market & savings rates were about 2%. Different times back then.

 

[Justin Bilyj]

Here's the latest CD postcard I got in the mail. I wonder how hard it would be to get something for a MYGA through compliance?

 

[VolAgent]

In my opinion, Yes and no. (I'm probably nit-picking here.)

"Sequence of returns", as it is often discussed, is a forensic study of a portfolio after it went through a series of returns - positive & negative. Then it usually shows the same returns in reverse order to see what the ending values would've been. Generally it's shown over a 30 year time frame.

It's merely a talking point and/or point to make to advisors to get them to see the value of non-correlated assets in retirement income planning. If we could predict returns, then non-correlated assets wouldn't be necessary or a valid consideration.

"Reverse dollar-cost-averaging" is done every time a sell has to be made of securities during a down market for income or RMD purposes.

This is kind of funny. Assuming you don't need the money, which should be the case if you are trying to avoid the RMD, and assuming you can otherwise pay the tax, no one should ever have to worry about RMD and reverse cost averaging.

Again, two assumptions there, but for people who are wanting to avoid a RMD due to reverse cost averaging then it should be true.

 

[DHK]

Here's the latest CD postcard I got in the mail. I wonder how hard it would be to get something for a MYGA through compliance?

It wouldn't be hard. Advertise the rate, put an expiration date on it, put policy form numbers in the fine print, your information and any other state requirements, and I bet it would be approved within 48 hours (depending on the company).

 

[scagnt83]

Most MYGA carriers already have compliance approved postcards that you can use. No need to redesign the wheel.


Justin, is this question for your own personal production? Or is it for an article you are writing for another agents website?

 

[Justin Bilyj]

Most MYGA carriers already have compliance approved postcards that you can use. No need to redesign the wheel.


Justin, is this question for your own personal production? Or is it for an article you are writing for another agents website?

Fidelity never had a good postcard last time I checked. And this is for me, thank you for asking.