Fixed Index Annuity-54 years old

[lrodptl]

My wife and I are 54. We presently have about 400k in our 401Ks,150K in savings,150K in stocks. We'll own our house in 2 years (present value around 450K)and will have no other debt. Presently we contribute about 2000 a month to our 401Ks. We also contribute about 200 a month to our 11 and 12 year old daughters' 529 funds. The plan is to allot most of the money we will have monthly from the paid off mortgage to the 529 for my last 4 years I plan to work. I will have a pension of either $1400 a month or $275K buyout. I was not aware of Annual reset FIAs til about 2 weeks ago and will be receiving a 61K check next week for a trust dissemination. Any thoughts if a monthly allotment to an FIA is a good idea. I lost half my 401K in 2008 and have still not quite recovered. Thanks.

[Petunia 100]

My wife and I are 54. We presently have about 400k in our 401Ks,150K in savings,150K in stocks. We'll own our house in 2 years (present value around 450K)and will have no other debt. Presently we contribute about 2000 a month to our 401Ks. We also contribute about 200 a month to our 11 and 12 year old daughters' 529 funds. The plan is to allot most of the money we will have monthly from the paid off mortgage to the 529 for my last 4 years I plan to work. I will have a pension of either $1400 a month or $275K buyout. I was not aware of Annual reset FIAs til about 2 weeks ago and will be receiving a 61K check next week for a trust dissemination. Any thoughts if a monthly allotment to an FIA is a good idea. I lost half my 401K in 2008 and have still not quite recovered. Thanks.

I would not touch an FIA under any circumstances.

You're in good shape. This is probably a good time to review your current asset allocation and see if it still makes sense for you at this stage of life.

Leave your pension as a pension; that, plus SS benefits are all the annuity you need. Upon retirement, roll your 401k monies into a traditional IRA. Choose a quality, low-cost custodian (such as Vanguard). Invest it sensibly (such as 50% stocks, 50% bonds) and draw down at the rate of 4% per year.

What to do with your 61k from the trust? Add it to your taxable investments, or pay your mortgage in full now.

If you are unsure you are doing the right things, then seek out a fee-only Certified Financial Planner in your area.

[smk]

generally complex insurance products that are designed to replicate investments should be broken down into their components and compared to a lot fee option to see how much you are paying for them. when pricing is opaque, you might start with the assumption that it is a bad deal until proven otherwise. an inflation protected annuity may be an interesting option in later years for you as it is more of a true insurance product.

sounds like you may have more in stocks than you are comfortable with. i would input my finances into a program like ESPlanner and run it with all TIPs as investments and see what it calculates for you as a lifestyle. you can add incremental risk from there in monte carlo mode to see if you are comfortable with the downside living standard.

there are a number of things beside increasing investment risk you can try first to improve your situation. playing around with the timing of pension funds/social security for example. if you need advice, a fee only planner is a good idea if they are up to the same standards (asset/liability management) as ESPlanner