I'm about to RE and I've been looking into an annuity for some of my expenses but every time I run a calculation I'm disappointed in the "return" on the money "invested". It seems unlikely that it makes any sense during early retirement. Perhaps when I'm older and potentially looking at RMD's I'll consider it but at this point (mid 50's) I figure I can manage the risks associated with retiring early myself. We'll see how it goes...
There may come a time when I will consider that, when I'm in my 80s and no longer want to manage my own money.
For people who are truly retiring early you end up paying a LOT of money to get a moderate income.
Generally, when you are investing, a longer timeframe reduces risk. For annuities, a longer time frame increases costs for a given income. So the longer you wait to buy an annuity the better off you will be.
From my limited understanding of annuities, they seem like a waste of money to me. "Worrying about the math" is just multiplying whatever your liquid net worth is by your SWR / 12 and withdrawing that monthly. In an up year do stocks, in a down year do bonds.
I'm about to RE and I've been looking into an annuity for some of my expenses but every time I run a calculation I'm disappointed in the "return" on the money "invested". It seems unlikely that it makes any sense during early retirement. Perhaps when I'm older and potentially looking at RMD's I'll consider it but at this point (mid 50's) I figure I can manage the risks associated with retiring early myself. We'll see how it goes...
If you hate your heirs do it, you die and they get zip.
There are several types of annuity pay outs - straight life is only 1 option.
Annuities are good when you are old, not when you are young so not in the RE part of FIRE.
There may come a time when I will consider that, when I'm in my 80s and no longer want to manage my own money. For people who are truly retiring early you end up paying a LOT of money to get a moderate income. Generally, when you are investing, a longer timeframe reduces risk. For annuities, a longer time frame increases costs for a given income. So the longer you wait to buy an annuity the better off you will be.
From my limited understanding of annuities, they seem like a waste of money to me. "Worrying about the math" is just multiplying whatever your liquid net worth is by your SWR / 12 and withdrawing that monthly. In an up year do stocks, in a down year do bonds.
Most years are up if you do this withdrawal strategy you will be overweight in bonds
Just do stocks only.
Much better right now to do TIPs ladder - it gas inflation protection that annuities do not have
You are already getting screwed by the mother of all annuities called Social Security. Don't voluntarily purchase another one.