What is the rate of return for this annuity?

[muckamuck]

What is the name of your state? Alaska

I got a quote for a 20-year certain annuity from Vanguard. It includes all fees. If I invest $300,000 they will give me $2,008.77/month for 20 years ($482,105 total). What is the rate of return for this annuity?

[JETX]

Gee.... does your mommy allow you to cross the street by yourself... or does she still hold your hand???

[url]www.google.com[/url]
Try it.... it has LOTS of good information!!!

[Some Random Guy]

try [url]http://www.tcalc.com/tvwww.dll?CalcLoan[/url]

An annuity is similar to a loan that you make to them. But, are you 100% sure that you are guaranteed to receive this payment for 20 years at 2008.77, or does the fine print say that things can chage?

Also, why can't vanguard provide these answers? If they don't trust you with th efigures, why should you trust them with 300,000?

[muckamuck]

Random Guy,
Thanks for the link.

Vanguard says the return is about 5.2%, I just want to be sure. The calculator at [url]http://www.tcalc.com/tvwww.dll?CalcLoan[/url] seems to confirm this, but it's really a complicated calculation because you are earning interest each day and taking principal and interest out each month for 20 years and I'm not sure if I'm inputting the correct variables.

I haven't read the fine print of the Vanguard contract, I just have a quick quote of their website.

5.2% doesnt sound like a lot and I should be able to beat it by just investing the money in a balanced fund of stocks and bonds. However when I go to other calculators that tell you how much of your savings you can spend, they won't let you take out anywhere near $24000/year at the beginning. Of course they are adjusting for inflation each year which I don't really need to because my pension and SS are adjusted for inflation. I understand that the buying power of the $24K will be eroded each year, but that's something I willing to live with. I could get an annuity that adjusts for inflation and lasts a lifetieme, but I would be 74 before it starts to pay more than the 20 year certain annuity assuming 3.5% inflation.

I'm 64 and have health isssues (heart disease and diabetes) so I think I will be lucky to live past 84.

It'sa big decision, fortunately I have about 90 days to make it.

[JETX]

Originally Posted by muckamuck

Random Guy,
Thanks for the link. Unlike the a**hole who calls himself JETX, you actually made an attempt to answer the question. That guy needs to get a life, apparently he doesn't have anything better to do than post nasty comments in these threads. How sad he is

So, I guess the answer to my question is yes....