Author Topic: Athene Ascent annuity...question for my recently widowed mom  (Read 4317 times)

GuinnessPhish

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Dad died in February. 

Mom lives in NJ.  Currently she has a bit over $100k in her checking account, and she is looking for appropriate options to put the bulk of that money.

Her financial advisor has recommended that she put a good portion of that into an Athene Ascent annuity.

Anyone have any opinions on this?

dandarc

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #1 on: June 02, 2016, 01:45:10 PM »
https://www.annuityeducator.com/forms/athene-annuity/Athene-Ascent-Quick-Reference-Guide.pdf

Do you understand this document?  Does your mom?

So this is a single-premium indexed annuity.  Generally a bad idea to mix insurance and investing, but this may or may not be appropriate for your mom.  Given that a financial advisor is pushing it, I'd guess not, but not enough information here to really judge.

PhillyWill

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #2 on: June 02, 2016, 03:32:26 PM »
+1 to not signing a contract that you (or your Mom) doesn't fully understand. That said, this type of product does have a purpose and can be a good fit for the right person. Basically, the insurance company is going to invest the money on your mother's behalf. Then, they will pay out part of the gains and insulate her from part of the losses. They are taking on some of the market risk, but the gains will be less than what she could earn by investing on her own. Think of it like buying your own pension. Beyond that every contract is different. If she's seriously considering an indexed annuity, she should be comparing different options point-to-point rather than buying whatever her advisor likes to sell. Full disclosure, these contracts offer a significant payout to financial advisors who sell them. Just sayin'.

I did a quick search to find a couple of general-info articles dealing with terminology and typical features:
http://www.marketwatch.com/story/behind-the-indexed-annuity-curtain-2013-01-14
http://www.aikenstandard.com/article/20140928/AIK0403/140929425/1031/AIK04/on-the-money-equity-indexed-annuities-are-popular-but-complex
http://www.annuityfyi.com/blog/2014/10/understanding-the-complexities-of-fixed-indexed-annuities/

I hope that's helpful.

BTDretire

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #3 on: June 03, 2016, 03:17:47 PM »
I know nothing about the Athene Ascent annuity, but I think the agent is going to get a very healthy commision
for selling the annuity.
 I would be willing to bet a donut, that it will take her two years just to get back to even, even if the market does well.
I would rather have control of the money,  annuities can be expensive to get out of.

 Check in over at Bogleheads, someone there might give you more info.

 If I wanted a safe interest payment I might would look into a portfolio of maybe 10 different prefered dividend paying stocks. Don't choose just the highest yield, buy on company strength. Also diversify among sectors and
don't pay over par.
 Here's a start,
http://www.dividendyieldhunter.com/preferred-stocks-paying-monthly-dividends/
  This advice is worth at least as much as you paid for it.
 
« Last Edit: June 03, 2016, 03:35:45 PM by Qmavam »

bobechs

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #4 on: June 03, 2016, 05:54:39 PM »
The advantage to your mom is that a life annuity (any life annuity- not this one uniquely) benefit is guaranteed (if the issuer continues to exist) for her life and that her principal is returned to her, if she lives as long as expected by the actuaries, plus a modest return on the principal invested.

The disadvantage is that in return for that guarantee the issuer is very conservative in investing and paying out returns on the principal, to insure that they do not lose money on the transaction.  The other disadvantage is that there is no residual amount to pass on to heirs.  This is primarily a disadvantage to heirs, since the beneficiary will not be around to rue the day, if they come up short of what could have been earned with a more aggressive investment strategy during a shorter than expected lifespan.

Annuitys do have a bad odor associated with self-serving advisor recommendations.  To compare this plan with some others try this (admittedly a sales tool):

https://www.immediateannuities.com/

Since you have chosen to disclose nothing about her but her state of residence, if we further assume that she is 70 years old and wants to start the payments immediately, it looks like she would draw around $587/mo - $7044/yr -on $100,000.  This is called 'cashflow' in the calculator because a big chunk of it is not interest.  It is return of capital.

Remember, as a presumptive heir you will get nothing of this $100,00 no matter how long (or not-long)she lives.  Unless she draws the money and just doesn't spend it, of course.

GuinnessPhish

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #5 on: June 09, 2016, 11:30:03 AM »
So, some more details:

My mom is getting around $6000 a month from social security, pension, and VA survivor benefits.  She lives in an adult community in a single family home, mortgage about $1500 a month.

Currently, she has $179,000 in a checking account.  This is why she is trying to figure the right move for a large chunk of that.

I suggested to her that she open up an index fund account with vanguard, with even just $10,000, to get a feel for that.

I see no reason for her to invest in an annuity which will eventually pay her around $500 a month.  I also see no reason she should pay a large chunk of money toward the principal of her home, as it is a fixed rate mortgage around 4.5%.

Thoughts?

dandarc

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #6 on: June 09, 2016, 11:34:47 AM »
If the $6K is enough for her lifestyle, yeah, doesn't really matter what she does with this money.  Certainly not an annuity in that case - she already has 3 annuities more than covering her living expenses.

Your Vanguard Index fund is a good suggestion.  Which fund would be a matter of discussion with her, but anything to get her away from the advisor is a good thing.  Keeping this money out of an annuity will afford her better flexibility and potentially better returns.  Just needs the discipline to not touch it unless she has planned for / really needs it.  Which, presumably she has as the cash has been sitting in a checking account - doesn't get much more available to spend than that.

SyZ

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #7 on: June 09, 2016, 11:59:16 AM »
Sensitivity aside ... I guess I'm confused why an older person with $179k in the bank, only a $1.5k mortgage, and $6k coming in a month needs more money? Or is worried about going broke? Like, the reason the annuity doesn't sound good is because there's no need for any advantage it might provide

Frankies Girl

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #8 on: June 09, 2016, 12:47:23 PM »
She sounds like she doesn't need an annuity. She is not dependent on that cash; it's extra cushion for the unexpected/emergencies/long term medical/hospice care really. I really dislike annuities when someone already has a guaranteed pension for life and no money flow issues. I think the adviser is pushing this due to their own commission and not because it is in your mother's best interests.

With $179K in a savings account, I'd honestly take like $150K of that and throw it in the market and leave the 20-something thousand as her cash buffer that is super easy to access (and probably will make her feel better to have that on hand and lessen the shock of investing the $150K if she's very timid about investing in general).

I would not go with annuities at all since it sounds like her pension/SS is more than enough to cover all of her expenses. If it was me, I'd put my older parent in Vanguard Wellington (VWELX for the $3k minimum, but I'd go all in on their admiral level -(VWENX), as it is a moderate, balanced asset allocation for someone that just wants to earn a decent percentage without too much risk. It is a true "set it and forget it fund" and is a top performer in the investing world. The expense ratio is a very low 0.26% for the investor class (minimum investment $3K) or 0.18% for their admiral level (minimum $50K) and the allocation is comfortably moderate at approximately 64% stocks, 33% bonds and 3% cash (and it is managed and rebalanced automatically - there is truly nothing she has to do with this at all). It is closed sometimes to new investors, but if you catch it at the right time, you can get in when they are open - which seems to be the case right now as far as I can tell.

https://personal.vanguard.com/us/funds/snapshot?FundId=0021&FundIntExt=INT


(and very sorry for the loss of your father, hope you're all holding in there and coping as well as you can)
« Last Edit: June 09, 2016, 02:17:17 PM by Frankies Girl »

pbkmaine

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #9 on: June 09, 2016, 02:08:58 PM »
+1. Or Vanguard Wellesley Income as a more conservative choice.

GuinnessPhish

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #10 on: June 09, 2016, 02:46:08 PM »
Thanks so much for the suggestions.  Mom is considering this, and happy to have me explain why an annuity really makes no sense for her.

Any other fund or investment suggestions?

pbkmaine

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #11 on: June 09, 2016, 02:48:04 PM »
How old is Mom?

Dicey

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #12 on: June 09, 2016, 03:41:40 PM »
Another question to work out with mom is what her plans are for the money. Does she want to spend it on an around the world cruise or pass it to her children and grandchildren? If the answer is the former, an annuity is a terrible idea. If her answer is the latter, an anniuty is a terrible idea.

If she wants to pass the money on, she needs to invest as if she was your (or your children's) age. Low-cost, wide diversification, the usual mustachian stuff.

Another point to ponder is long-term care. If she's worried about that an annuity is probably a terrible idea.

Also, if she's worried about inflation, I'd see which of her income streams include COLAs and do some forward calculations to ease her mind.

Personal story: My parents were in a similar boat. Mom always thought they were going to run out of money (they didn't). When I sat down and worked the income numbers with her, I pointed out that she had adult children with families who worked full time but didn't have as much coming in as they did. She looked at me and replied in all seriousness that they could go out and earn more money but that she and my dad were too old to do that. Perception can be a bitch when dealing with older folks. Good luck with your mom and enjoy her while you have her.

MDM

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #13 on: June 09, 2016, 04:36:05 PM »
Dad died in February. 

Mom lives in NJ.  Currently she has a bit over $100k in her checking account, and she is looking for appropriate options to put the bulk of that money.

Her financial advisor has recommended that she put a good portion of that into an Athene Ascent annuity.

Anyone have any opinions on this?
Sorry for the loss of your Dad.

Your story looks much like mine.  Unfortunately, it was some years ago and mom didn't want advice from children, so she took the advisor's advice and purchases annuities.  When she decided managing her own finances wasn't worth the effort, I got to see just how bad the advice was for her (and likely good for the advisor).

See http://money.cnn.com/retirement/guide/annuities_basics.moneymag/, including "Financial planners and insurance salesmen will frequently try to steer seniors or other people in various stages toward retirement into annuities."

Also this article.  Short version: annuities don't even save on taxes in the long run.

Dicey

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #14 on: June 11, 2016, 11:08:18 PM »
Had a session with the financial planner today. Got a few more points for you to share with mom.

If you buy an annuity, any annuity, you:
1. Permanently lose access to your principal. (Yup, kiss it goodbye.)
2. Annuity income stops at death. (Nothing to pass on)
3. Income depends on the annuity company's ability to pay. (If they belly-up, she's screwed)
4. Previously mentioned, but worth repeating: Inflation.

Hope this helps.

GuinnessPhish

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #15 on: June 19, 2016, 06:47:14 AM »
Mom is about to turn 72, and is in good health.  Long term health care has already been paid for.

Another Reader

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #16 on: June 19, 2016, 08:53:35 AM »
There will be higher taxes on the distributions from Wellesley and Wellington because they will be in a taxable account, but they have both been well managed long term performers that have been relatively resistant to market gyrations.  Equity index funds would have lower taxes because of low turnover and no bond income, but I think the more stable balanced funds might outweigh the tax considerations for your mom's peace of mind.

An annuity for a 72 year-old with more than enough income to support her is a very good deal for the insurance company and a very bad deal for her.  An indexed annuity is especially bad for any customer.  If you can talk her into moving all of her money away from this "adviser," that would be in her best interest.
« Last Edit: June 19, 2016, 08:56:44 AM by Another Reader »

Dicey

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #17 on: June 19, 2016, 08:57:07 AM »
Mom is about to turn 72, and is in good health.  Long term health care has already been paid for.
What, no ongoing premiums? Also "paid for" and "LTC" aren't necessarily a complete thought. Even the best of LTC policies pays only a fraction of the actual costs. More details would be helpful.

GuinnessPhish

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #18 on: June 22, 2016, 02:41:49 PM »
No ongoing premiums for the long term health care.  Premiums stopped on her policy when my dad passed.

His benefits were around $9000 a month.

GuinnessPhish

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #19 on: August 02, 2016, 10:28:19 AM »
Just an update...

I convinced my mom to move $50,000 into a vanguard fund...the Wellington Fund, admiral shares.  She opened the account at the end of June, literally like a day before Brexit.

After the intitial shock of Brexit, which brought her down about $1500 or so, after the first full month of July, her fund's value has increased $917 as of today.


GuinnessPhish

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #20 on: April 14, 2018, 03:20:48 PM »
I wanted to provide an update to this situation, and also to ask more questions, so I decided just to keep it in this thread as the pertinent details are listed above.

So, my mom went to her "financial adviser" to have her taxes done.  During the course of her meeting, she was convinced that the reason she owed some additional taxes to the fed this year was because of her dividends and capital gains on her vanguard accounts (Wellington and VTSAX).  They got her to close the Vanguard accounts, even "helping" her by making the phone call.  So, she cashed out, up about $11,000 on the $70,000 she had invested, so now she's on the hook for the taxes for this next year.

Her adviser, is once again suggesting another annuity!

I've convinced her that she made a mistake, and that she shouldn't have closed the vanguard accounts, and that she is under no obligation to sign the contract for this new annuity. 

She already has three Athene annuities:

A non qualified indexed annuity (MultiChoice IncomeXtra), started 8/2011, that has accumulated value of $31,923.32.

An IRA indexed annuity (MultiChoice IncomeXtra), also started 8/2011, with an accumulated value of $46,722.73.

Another IRA indexed annuity (MultiChoice IncomeXtra), started 9/2011, with an accumulated value of $9,776.19.


She also has ANOTHER annuity this adviser sold her, in which she liquidated her Fidelity Investments Roth IRA account invested in Fidelity Government Money Market and purchased an annuity from American Equity Investment Life Insurance Company, initial premium, $20,869.87, surrender charge period 10 years.


So, in summary, she already has four annuities that she absolutely doesn't need, as she receives monthly pension, social security, and VA benefit checks totaling $6000 a month, with expenses of around $2000 a month.  And now this adviser wants to sell her another one.

Obviously, this adviser has only his own best interest at heart. 

I'm curious to hear any ideas anyone might have.  Should my mother start taking out her free withdrawal amount to draw down the balances of these accounts?  Should she initiate a formal complaint with the state?  Any advice appreciated.

Thanks!



GuinnessPhish

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Re: Athene Ascent annuity...question for my recently widowed mom
« Reply #21 on: April 15, 2018, 10:34:08 AM »
Another question:

She'd like to put the money she had funding her Wellington and VTSAX back into vanguard, but vanguard requires a 30 day waiting period in order to buy back in.

Is there some other fund that she should consider in the meantime, or should she just wait until next month when she can put the money back in those funds?