I have just a few quick minutes here to dash off a few of the tips Mike Ford of SOFA shared as first presenter at the highly-informative Elder Law seminar at Glencroft Retirement Community in Glendale.
The biggest takeaway: If you’re looking for a safe, steady stream of funds to last your lifetime, fixed annuities are a good middle-of the-road choice between totally safe but low return bank products and riskier but potentially-higher return securities (stocks, bonds, etc.)
He also pointed out that folks are often surprised at how little they can really withdraw of their savings each month once they retire and still have enough to last their lifetime. While it used to be 4 percent, it’s now 2.52 percent.
The major drawback with fixed income annuities is the withdrawal charge. For most annuities, the penalty phase doesn’t start until you take out more than $10,000 in each year, but then it can be upwards of 10 percent. So, for example, should you withdraw $20,000 one year, you’d have to increase your input of funds to that account by 33 percent to get back to your original balance after you do that withdrawal. In other words, only put in that annuity the money you know you don’t have to withdraw beyond the free withdrawal fund limit each year.