Monthly income in Retirement - A Perfect Solution?

[SARS]

If you wanted a specific example of an expensive annuity, this was posted in another thread

I think others have already made all the points I would have, so not much to add, except that a 1% fee may seem high but you need to review the whole product (product structures such as guarantees, bonuses, duration, MVAs etc; premiums - eg per benefits paid; charges - including commission and any surrender charges; financial institution strength etc etc) in it's entirety when reviewing any insurance products and trying to determine if they are expensive or not.

[EmaxisSlim Cultist]

Everyone made some great points here, so forgive me for being argumentative, but I need to confirm my own reasoning.

I think others have already made all the points I would have, so not much to add, except that a 1% fee may seem high but you need to review the whole product (product structures such as guarantees, bonuses, duration, MVAs etc; premiums - eg per benefits paid; charges - including commission and any surrender charges; financial institution strength etc etc) in it's entirety when reviewing any insurance products and trying to determine if they are expensive or not.

These products are notoriously hard to parse. They are right up there with offshore funds in that regard. The fees are often layered.

Right, they are taking on the risk instead of you. You get your contractural annuity rate regardless of what happens to whatever they decide to do with the money (unless that's part of the contract). You're effectively buying a known income - a desirable low-risk asset when you've got a lot to lose.

With fixed annuities, the risk is extremely minor, especially when the underlying investment is in American Treasuries. The plans pass the currency risk onto you, as you have to pay for Yen conversion. At that point, you might as well purchase your own treasuries. Laddering EE bonds is a great option for Americans.

I would argue that the security treasuries offer is perhaps better than trusting in an annuity company.

Finally, one point to clarify, but term life insurance pays out when you die. Annuities are "investment risk insurance" that pay out while you're alive. Completely different products.

Annuities also payout upon early death. That is the aspect that is comparable to term life.

This is why it is often argued that Individual investment + Term life are better options.

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For an American, a ladder of EE bonds (Through treasury.com) + Term life would have lower risk and high returns than standard fixed annuities.

For Non-American term life + a bond fund would off be comparable. Though notes can be purchased through a broker.

There is an argument for simplicity with annuities, but that comes at a high price. But, so does paying for a financial advisor, which many here would not advocate for.

[SARS]

Annuities also payout upon early death. That is the aspect that is comparable to term life.

Some do, some do for a fixed period at the start, some don't. Hard to generalise. It's also hard to generalise whether a product is right for someone or not without completely understanding their circumstances, goals 等.

The one point I can generalise about is the very competitive nature of the Japan insurance market and especially the savings product market.

[fools_gold]

With fixed annuities, it is similar but the investments are mostly Treasuries and high-quality corporate bonds. Less yield. Unless I am misunderstanding something.

I think you are. With a fixed annuity you give the insurance company your cash and they promise to pay out a certain amount of money over a certain amount of time. It's a contract between you and the insurance company. They're not investing on your behalf.

There is definitely an investment on their end, that's how these firms earn income.

Yes, but they're not investing on your behalf. Your post suggested that the difference between variable and fixed annuities is that fixed annuities invest in lower-risk assets such as bonds. Actually, the real difference is in who bears the risk. The payout of a variable annuity depends on the performance of the assets held within the plan, for example mutual funds. In this case, the customer bears the risk. With a fixed annuity, the insurer takes your money and promises to pay a fixed amount. They assume the risks of any investment.

Annuities also payout upon early death. That is the aspect that is comparable to term life.

This is why it is often argued that Individual investment + Term life are better options.

I thought the death payout from a basic fixed annuity is usually just what's left in the plan at the point of death. So, if you're 5 years into a 10 year term fixed annuity, the remaining 5 years' worth will be paid out to any beneficiary. If it's a lifetime annuity, there may well be no payout at all. Term life insurance isn't really necessary in retirement unless you have debts or dependents to pay for.

For an American, a ladder of EE bonds (Through treasury.com) + Term life would have lower risk and high returns than standard fixed annuities.

For Non-American term life + a bond fund would off be comparable. Though notes can be purchased through a broker.

There is an argument for simplicity with annuities, but that comes at a high price. But, so does paying for a financial advisor, which many here would not advocate for.

You're going to need a hell of a lot of bonds to get any kind of meaningful income. Your original plan to automatically sell your investments at a 4% SWR sounds better to me.

[zeroshiki]

So I asked this the last time this issue came up. What are good annuities that people here would recommend?

[fools_gold]

So I asked this the last time this issue came up. What are good annuities that people here would recommend?

I'd like to hear about some too. I've been looking around at fixed annuities, but it all looks a bit grim with interest rates so low at the moment.

This guy goes over the kinds of plans available and makes some recommendations https://my-best.com/5091

Here are the interest rates offered by Nissei https://www.nw-life.co.jp/product/annui ... te.html#a2

Our workplace plan has an interest rate of 1.25% for a Yen-denominated plan which looks pretty good in comparison.