Do your own annuity. Buy three interest bearing bond funds . High yield, short term ,and a money market fund. Divide the investment equally then set up monthly withdrawals for the term you need. Instant annuity without commission or surrender charge should you wish to change strategy.I am 64 and have a goodly amount of investments. I am diversifying my fixed income holdings a bit more. And one of the things I want to do is have a bit of a bridge between now and Social Security at 70. My younger wife is still working for another year or so. I purchased MYGAs last year to pay for her health insurance until she hits Medicare age and I am starting Medicare this summer.
This is one of the things I am thinking of doing. Please don't nit pick--I know there are alternatives, and I am probably already doing some of them. But any big holes?
Right now I can get a 5 year MYGA for 5.5% A rating. 10% withdrawal yearly with no penalty. Put in $250000. Take $25000 summer 2025, 25000 again summer 2026, 23900 summer of 2027 (at that point I would have $239360 principal left), $22730 summer of 2028, and I start SS summer of 2029. That leaves one more year of not taking a withdraw from the MYGA (I only need 4 years--yes I could go with a 4 year one, rate not as good but I am considering that too) so the last year let the 5.5% interest accrue.
That leaves $215830 after the MYGA matures. Either cash out and put in funds, or another MYGA, or a SPIA--depending on circumstances in the markets.
So I have "used up" $34170 of principal and had $96630 in payout over the 4 years, with $215830 left.
The other decision is whether to do this in my IRA or taxable account. IRA will be fully taxable while taxable account only interest taxed. I would be leaning toward the IRA.
There must be a catch. Am I blind to something obvious?
Really not sure why anyone would ever buy an annuity.
Statistics: Posted by Cah — Fri May 24, 2024 10:35 pm