The negatives that you describe here fit two types of Boglehead-disfavored annuities (indexed annuities and variable annuities) almost to a T. That's precisely why most Bogleheads (myself included) would not recommend indexed or variable annuities, except in a few special situations where they can be appropriate...... I see no instances where an annuity would be optimal. .....the lack of liquidity, the high fees, the lack of step-up in basis, the nearly usurious rider fees, the surrender charges, and on and on--seems to me one would be better off with nearly any kind of investment portfolio than locking oneself into such a contract because of the word "guarantee".
In my view, a MYGA can be entirely appropriate as a fixed income asset within an IRA. I believe that a tax-deferred account like an IRA is an excellent place to hold fixed income assets.I do not see how even a SPIA or a MYGA could be appropriate inside a tax-deferred account.....
I've chosen to construct a "ladder" of MYGAs within my IRA that will become fully liquid annually in an amount adequate to cover my RMDs. Each MYGA is within the guaranty fund limits of my state.
I personally prefer a "defined maturity" asset like a MYGA to a bond fund, because of the certainty that the full accrued amount will be available, without market value adjustment or surrender charge, at the time I need to take a RMD.
And I believe that MYGAs have a much more attractive risk-adjusted yield than two competing "defined maturity" assets, which are defined maturity bond ETFs (such as the iShares iBond) or bank CDs.
Here are a few resources for you if you want to understand more about annuities:Happy to be redirected so I can see the arguments and not make you repeat here...
1. MYGAs are available from a number of agencies that write nationwide and offer a wide selection of products. My favorite website for MYGA education and product selection is Blueprint Income, because of breadth and depth of information on the site. Here's a link to the MYGA information page: https://www.blueprintincome.com/resourc ... -annuities (Note that Blueprint refers to MYGAs as one of a class of "fixed annuities").
2. There's a long Forum thread that has been running for over 3 years about MYGAs, with over 2,600 posts in the thread. If you have personal questions about MYGAs, you can post there and you'll get a response. viewtopic.php?t=334589
3. Just over a month ago, there was an online Boglehead Zoom presentation entitled "All About Annuities". The presentation was captured on YouTube, and here's a link to the video. https://www.youtube.com/watch?v=MDXfw6d7tIc&t=272s
Statistics: Posted by Stinky — Sat Jul 13, 2024 11:14 am — Replies 40 — Views 4110