What amount can I expect to get back from an annuity on a monthly or quarterly basis if I contribute $400 monthly for the next 8 years and open the account with $10,000?
I am 58 years old now and would like to open up a deferred income annuity so I get regular monthly or quarterly income starting from age 68 or 69. However, I would like to open up the account with the minimum amount of $10,000 and contribute around $400 on a monthly basis for the next 8 years. If I go with a company that has a current S&P rating of AA++, what could be my monthly or quarterly earning when I would start getting the annuitized amount at age 68 or 69? I would like to pass on the remains of the fund to my son when both me and my wife pass.
This can't be answered precisely because it depends on the interest rate being credited to the annuity between now and when you start taking income. A little quick math says that if that rate is 3% (just guessing) then in 8 years, assuming $450 monthly contributions, the account value would hypothetically be $61000. If at that age you are 68, and the insurance actuaries estimate you have a life expectancy of 21 years, and you annuitize at an interest rate of 3%, you could expect a lifetime payment of about $326/month. This is all purely hypothetical, of course! I don't know what rate the insurance company will actually use, but if you assume 3% this is probably close. Note that once you "annuitize" an annuity, there is no longer an account balance to transfer to your heirs. When you annuitize, you are giving up the account balance in return for lifetime income, so your son would not receive anything. You can annuitize with a "10 year certain" or "20 year certain" which reduces the payment a little bit, but will guarantee the payments continue for at least that long, even if you and your wife both die.
Anytime when a question related with an annuity pops up, I become alert. Please don’t get me wrong; annuity has an important role in planning one’s retirement income. However, the reason annuity got its bad rap is either the person recommended it didn’t have your best interest in heart or you didn’t do your homework to check out all facts, or both.
I like the way you think ahead that using a deferred annuity for your retirement income and leave a legacy to your wife and children. However, there’re many simple ways to achieve both goals without the limitations/restrictions of an annuity. For example, most annuities have a surrender period. Thus, by investing new money to the annuity each year, you essentially extend that surrender period for another eight more years. What’s that mean to you? When you do take the money out in 8 years, you are still subject to a surrender charge, which means the insurance company will take a portion out of your pay each time.
In addition, the company you’re interested in currently has a good credit rating, but can you guarantee that it will stay that way for the next eight years? Also, what other choices have you considered or compared with this one?
Selecting a right annuity takes time and energy. It’s best to have a sit-down meeting with a CFP® or RICP® professional for an independent review. Until you’re absolutely certain the new annuity meets all your objectives, I wouldn’t rush to purchase one. Best!
I would urge you to meet with a New York Life agent. NYL have the highest ratings from the rating agencies, and is the largest mutual life insurance company in the US.
NYL is also the leader in the industry for both Income Annuities and Deferred annuities. Please note that these contracts are not the same, however, both can provide you a lifetime income.
Also ther eis a better way to leav money to your son. That is with life insurance.The annuity will have some taxes, to you, and to your son. If you leave life insurance, you can do it tax free.
We are happy to talk more offline if you like.