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Investing/Strategies / Retirement Investing
|Subject: Re: Pru VA High 5 closing this week||Date: 2/11/2013 10:13 AM|
|Author: tscotta||Number: 71374 of 78027|
Yes, first post, no reincarnation - lol.
Your comments are exactly right and could not agree more but I was operating under assumption that the particular person looking for insight was not looking for guaranteed income today but rather on a deferred basis or at some point in the future.
You are 110% correct, if you need guaranteed income today, I to am led to believe an immediate fixed annuity is probably the most efficient way to get there today. If a guaranteed amount of income is what you are looking for in the future than that is what I was referencing when stating that you might consider the VA.
You are right, in my findings, the variable portion of the VA is the frustrating part and most difficult to understand but some may look at it as just potential gravy on top of the income benefits they can provide.
Based on my orginal comments and my opinions, you should first be looking at this annuity from an income, not investment perspective. I am going to put X dollars in today, my benefit base from a withdrawl standpoint will be X dollars at some point in the future (usually double 10-12 yrs out) and I will get X percentage of income - in this question I am going to have to assume that the VA5 means that the 5 means that 5% of the benefit base will be paid out on a lifetime basis when income is elected to be taken. I have no idea if that is the case but many of the more competitive ones pay out somewhere around 5%. If the variable portion performs better then the guaranteed amounts than the payouts could potentially be higher. One would have to and need to recognize what the realistic chances of this happening are however. The expsensive fee drag, sequencing of returns, timing of purchase, and many other factors are all going to influence and probably provide extreme headwinds in allowing the variable portion to attain levels above the guaranteed benefit bases.
Again, these are not for everyone (including me, not looking for income anytime in the 10-12 yr window) but my mother and mother in law were good fits for them and why I took the time to truly understand them. At some point, many are willing to trade peace of mind for rate of return and if that is the case then it might be worth looking at.
A mentor of mine once told me that expenses and fees are only questioned in the abscence of value. If a guaranteed income stream with minimal risk (carrier default risk is probably the most prevelant risk in these products) is of value to you then they are worth looking at. This is not of any value to me so I am tend to look at these in a different light and beat them up on the basis of being very expensive than someone who might see a different value in them.
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