What other annuities are taxed deferred besides 401k? I am just wanting to put more towards retirement.
Answers | 7
There are also indexed annuities with little-to-NO-fees (Athene's Performance Elite has averaged about 7% over the last 10 years), that will allow you to participate in market gains, yet have the downside protection from market losses.
Always consult with a professional before making any decisions. I'm here to help...just reach out.
On Annuities, the ones that our folks use (many do not use Annuities) are Income only. Reason being is they are simple and boring-no contribution rate,points, caps, or spreads (you can add these if you feel the need).
Here is a simple example;
Single, 60 yr old retiring in 1 yr. Contribution $100k- Gets $5,500/yr for life or 5.5%
Pro-5.5%/yr lifetime income
Con- giving up $100K
Rates vary. use the link for more information
By itself few people can live on $5,500/yr. To be fair $100K does not get you very far either. Unless we use it for cash flow.
We can take that same $100K. Invest it in one of our cash flow strategies and generate more than 20%/yr or $20K/yr in cash flow. This is not a fixed amount and there are various ways to do it. In any given 12 month period, the downside is receiving only 20%. The upside is receiving over 30%. On a monthly basis, some months may be $0 or negative. We try to set this up with a yearly advance draw down. Meaning, if you need 20K and you can wait 12 months for it. We set aside 20K in your account within the 12 month period. The $100k plus any other profit is generally reinvested to get you the next 20K in 12 months. We can customize both the amount and time frame. Obviously, we both need to be on the same page and the terms must be feasible for both of us. We use discretionary authority.
We are not fans of growth Annuities. They do give peace of mind and many folks enjoy their benefits. Keep in mind that as an Investment manager, we can far exceed the ending cash balance of any growth Annuity.
Using the same $100K
An Annuity with a 10% growth rate means very little by itself. Add back in the contribution rate (at 50%, only half of your $$ are working for you thus reducing the rate to 5%). Next are points, caps, & spreads which further reduce your return.
Always look at the bottom number. $100k growth Annuity at 10% that doubles to $200k in 24 yrs (assuming you do not make early withdrawals or borrow against it which adds more fees) is equal to a CAGR (Compound Annual Growth Rate) of 3%/yr. Yep-now subtract the rate of inflation?
Using the same $100k, an Investment Manager can turn this into $1.6 Million during the same 24 yrs. Which do you prefer? Those of you with questions are welcome o contact us directly for more information. No obligation. Lastly, we monitor our clients on a yearly basis. Any year that does not meet our mutually agreed upon terms results in us receiving no compensation. This is our value proposition. Keep more of your $$ in your Owners Equity pocket.
It's not what you make, It;s what you keep that determines your lifestyle.