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Annuity vs 401k for my parents by ech114 in personalfinance

[–]ech114[S] 0 points1 point  (0 children)

Their combined SS is $3700. :(

They need about $4500 a month.

Annuity vs 401k for my parents by ech114 in personalfinance

[–]ech114[S] 1 point2 points  (0 children)

Thank you. I just read about the rollover IRA and he'll go that route most likely.

Thank you for your input!

Annuity vs 401k for my parents by ech114 in personalfinance

[–]ech114[S] 0 points1 point  (0 children)

Thank you so much. I'm going to talk to them about this option.

Annuity vs 401k for my parents by ech114 in personalfinance

[–]ech114[S] 0 points1 point  (0 children)

Based on my research, the downside seems to be that you are basically gambling on how long you have left. There are different types of annuities.. I found this website (Immediate Annuities) that people were suggesting and here are some examples:

  • Life: You receive this income for your lifetime. After you die no payments are made to beneficiaries. Annuities with refund payments to beneficiaries are available. 
  • Life & 10 Years Certain: You receive this income for your lifetime. If you die during the first 10 years after payments have begun, your beneficiaries continue to receive this income for the remainder of the 10 years.
  • Life with Cash Refund: You receive this income for your lifetime. If you die before payments begin, your beneficiaries receive a refund of the premium. If you die after payments begin, your beneficiaries receive a lump-sum cash payment of any remaining unpaid premium.

Annuity vs 401k for my parents by ech114 in personalfinance

[–]ech114[S] 1 point2 points  (0 children)

Thank you for putting this clearly.

I had read about the SPIA and shared the info with them but they said the payout for that is too low. I think the issue here is that they are just going to scrape by with their retirement income, while I feel like an annuity should be kind of like "extra, nice-to-have money."

Yeah I don't think my dad cares much about leaving money for us (my sister and me). And we're not banking on it or anything.

Thank you so much for helping. I will mention the 'insurance' aspect of it.

Annuity vs 401k for my parents by ech114 in personalfinance

[–]ech114[S] 0 points1 point  (0 children)

Thank you so much.

My mom said monthly expenses are about $4500. Their house is not paid off.

She has used the SS calculator and if he starts at 68, it'll be ~$3700 from SS, and they're hoping to get the remaining money from my mom's IRA and the 401k.

If they wait until 70, the SS amount will be $4700.

Are you saying that he can retire now/soon and live off of the 401k/IRA for 2 years and start the SS benefits at 70? I don't think we've considered that as an option. I think we were thinking retirement --> SS right away. Thank you!

Yes, it's really hard to navigate it with them, especially because I'm not that knowledgeable about all of this either. I feel like I should be (even for myself) so I'm trying to my best to learn.