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Cash all-in for an annuity?
Posted: Sun Dec 17, 2023 7:51 am
by banders
Not sure where to post this so please move if necessary. It's something I think about a lot and feel it's a big topic, though I don't think I've seen any threads on it. In fact, I think it would make a very useful Japan-specific RJ e-book.
I came upon this life-changing site about 5 years ago after 'investing' in various schemes that a well-known investment bank wooed us with on their periodic visits, with their glossy pamphlets and percentage signs, who then took their 3% while our investments went south. So I read Millionaire Teacher and all the information here and started putting our money in iDeCo and NISA. Along with our Apple shares that have multiplied, this has done us well. Wish I'd known all this decades ago.
When I retire, within 10 years, every year I'm going to be accessing the websites to sell my iDeCo Japan stocks, foreign stocks, foreign bonds and NISA bonds and All Country stocks, as well as the Apple stock. In general, tax withholding and NISA accounts.
Already, accessing the sites is a pain. More so when I’m an old git, let alone deciding proportions to sell.
When I look at my brother's situation in the UK - when he retires he's going to get a lump sum in his bank account every month and needn't give it another thought - I can’t help feeling jealous.
So my question is, what if I sell all my investments and pay someone to give me an annuity? Is that financial suicide? (I know it’s an option with iDeCo, but I’m talking lumping all investments together.) What are the options? Is there anyone with that experience here? Nitty gritty, if I had investments that would give me ¥1m year at 4% draw down (I wish - just a round figure) what kind of annuity could I receive until death (percentage-wise, I guess)?
When one spouse dies, their NISA/iDeCo/Stocks would be available to the surviving spouse. How would that work with annuities?
Are there people here in their 80s still accessing their investment sites with clarity?
Even now I find it laborious. I’d like to think when I retire all that’s behind me and I can enjoy life unencumbered with anything but money paid into my bank account. Providing it’s an amount I can live with comfortably. Is that there the rub, I wonder?
Re: Cash all in for a pension?
Posted: Sun Dec 17, 2023 8:02 am
by Wales4rugbyWC23
I imagine it is an annuity you are talking about.
Re: Cash all in for a pension?
Posted: Sun Dec 17, 2023 8:16 am
by banders
Haha. Indeed I am. They're the same thing to me
Re: Cash all-in for an annuity?
Posted: Sun Dec 17, 2023 1:13 pm
by Tsumitate Wrestler
banders wrote: ↑Sun Dec 17, 2023 7:51 am
Not sure where to post this so please move if necessary. It's something I think about a lot and feel it's a big topic, though I don't think I've seen any threads on it. In fact, I think it would make a very useful Japan-specific RJ e-book.
I came upon this life-changing site about 5 years ago after 'investing' in various schemes that a well-known investment bank wooed us with on their periodic visits, with their glossy pamphlets and percentage signs, who then took their 3% while our investments went south. So I read Millionaire Teacher and all the information here and started putting our money in iDeCo and NISA. Along with our Apple shares that have multiplied, this has done us well. Wish I'd known all this decades ago.
When I retire, within 10 years, every year I'm going to be accessing the websites to sell my iDeCo Japan stocks, foreign stocks, foreign bonds and NISA bonds and All Country stocks, as well as the Apple stock. In general, tax withholding and NISA accounts.
Already, accessing the sites is a pain. More so when I’m an old git, let alone deciding proportions to sell.
When I look at my brother's situation in the UK - when he retires he's going to get a lump sum in his bank account every month and needn't give it another thought - I can’t help feeling jealous.
So my question is, what if I sell all my investments and pay someone to give me an annuity? Is that financial suicide? (I know it’s an option with iDeCo, but I’m talking lumping all investments together.) What are the options? Is there anyone with that experience here? Nitty gritty, if I had investments that would give me ¥1m year at 4% draw down (I wish - just a round figure) what kind of annuity could I receive until death (percentage-wise, I guess)?
When one spouse dies, their NISA/iDeCo/Stocks would be available to the surviving spouse. How would that work with annuities?
Are there people here in their 80s still accessing their investment sites with clarity?
Even now I find it laborious. I’d like to think when I retire all that’s behind me and I can enjoy life unencumbered with anything but money paid into my bank account. Providing it’s an amount I can live with comfortably. Is that there the rub, I wonder?
No need to worry. Things can be setup to be quite easy.
1. IDeco, it has a A. Lumpsum, B. Pensions and C. Mixed payout options.
B and C will make things simple for you. No need to login, it will be similar to nenkin, deposited in your account.
2. Nisa and Taxable mutual funds.
You know those tsumitate month purchases? They have the reverse, Tsumitate monthly sales. Again, it will create an artificial pension/dividend.
Single stocks
I would sell them down and make a simpilar portfolio that will not need any maintenance.
........
You base will be pension/nenkin with iDeco and Nisa/taxable humming away at a 3-4% safe withdraw rate you are peachy, with little need to do anything.
Re: Cash all-in for an annuity?
Posted: Sun Dec 17, 2023 2:53 pm
by RetireJapan
I am considering buying an annuity for myself and/or my wife in the future with some of our funds in order to establish an income floor that will fully fund our lifestyle.
Need to do A LOT MORE RESEARCH about this in Japan before then, so expect blog posts and videos on the topic in due course.
Right now I am somewhat neutral on the concept. I think it could make sense depending on what kind of products are available to use here in Japan.
Re: Cash all-in for an annuity?
Posted: Sun Dec 17, 2023 4:20 pm
by beanhead
As Tsumitate Wrestler says, simplifying your portfolio is the first step.
With iDeCo that should be relatively easy. I only have 2 funds in mine and can easily switch to one when I reach 60 or 65. Withdrawal is made to be simple.
NISA/funds in taxable - good brokers allow you to set up auto-sell, which I think is a great idea.
Presumably this is not available for individual stocks. So another reason to keep the Apple and whatever else you have for a while, but when you need to draw down, replace those stocks with funds.
Annuities - very popular in the UK. Most of them you give up the principal when you die, though. I don't know if joint life annuities exist in Japan. These take care of your beneficiary once you are gone, so seem more sensible than just potentially losing money to the insurance company. Japan loves conservative insurance products, so I am sure there is a mature market for all kinds of annuities.
Re: Cash all-in for an annuity?
Posted: Mon Dec 18, 2023 12:47 am
by Tsumitate Wrestler
RetireJapan wrote: ↑Sun Dec 17, 2023 2:53 pm
I am considering buying an annuity for myself and/or my wife in the future with some of our funds in order to establish an income floor that will fully fund our lifestyle.
Need to do A LOT MORE RESEARCH about this in Japan before then, so expect blog posts and videos on the topic in due course.
Right now I am somewhat neutral on the concept. I think it could make sense depending on what kind of products are available to use here in Japan.
Annuities are not bad on paper, but the industry is thick and heavy with scams, high fees, weird hybrid products, and very complicated contracts.
I think you are right to be cautious.
Re: Cash all-in for an annuity?
Posted: Mon Dec 18, 2023 1:01 am
by beanhead
Re: Cash all-in for an annuity?
Posted: Mon Dec 18, 2023 1:21 am
by RetireJapan
That plan (paying in US dollars) is looking a lot more attractive now
Re: Cash all-in for an annuity?
Posted: Fri Jul 05, 2024 12:49 pm
by banders
RetireJapan wrote: ↑Sun Dec 17, 2023 2:53 pm
I am considering buying an annuity for myself and/or my wife in the future with some of our funds in order to establish an income floor that will fully fund our lifestyle.
Need to do A LOT MORE RESEARCH about this in Japan before then, so expect blog posts and videos on the topic in due course.
Right now I am somewhat neutral on the concept. I think it could make sense depending on what kind of products are available to use here in Japan.
Hope it's still on the list.
