Why get a deferred longevity fixed annuity?

[JeffRome2023]

I see the reasons for a fixed immediate annuity and am considering purchasing one (I am in my mid 60s). But a friend was suggesting I purchase now a fixed annuity that will start to payout when I am 75 or 80. I like the idea, but why not just wait until I am 75 and buy a fixed immediate annuity? No one knows what interest rates will be then so that is not a reason. Is the payout likely to be enough to make up for investing the money for another 10 years and then buying the immediate annuity? Thanks!

 

[scagnt83]

I see the reasons for a fixed immediate annuity and am considering purchasing one (I am in my mid 60s). But a friend was suggesting I purchase now a fixed annuity that will start to payout when I am 75 or 80. I like the idea, but why not just wait until I am 75 and buy a fixed immediate annuity? No one knows what interest rates will be then so that is not a reason. Is the payout likely to be enough to make up for investing the money for another 10 years and then buying the immediate annuity? Thanks!

Deferred annuities can guarantee very competitive growth from now until the desired payout year.

For example, there are a few that offer large initial bonuses on the income calculation. Up to 15% or 20% day 1 bonus.

Then it credits a guaranteed 7%-10% each year on the income calculation, until you decide to start income.

It would take a large amount of investment risk to match the guaranteed growth you get from many Deferred Annuities with a Guaranteed Lifetime Income Rider.

 

[DHK]

Deferred Income Annuities also defer the RMD's on that qualified money, if funded with IRS qualified retirement assets.

 

[walthamny]

With a deferred annuity if you die before the income payments start usually the original investment is returned to the estate. If you were to invest the money obviously if you die before you would likely have more than the original returned to the estate. If 10 seniors who are 65 years old bought an annuity to pay income at age 85, likely some of them will die before age 85 and the annuity company would be smiling. They pass on that smile in the form of higher income payments at age 85 than what would be available if you had waited until age 85 to annuitize. Now there are so many other riders/options with annuities so it is never as simple as this but you can get the point.

 

[JeffRome2023]

How long are the RMDs deferred? And does it have to be in the form or a QLAC? Are there other options?
Are there extra costs to a QLAC vs a deferred income annuity?

Finally, would I have to choose the Refund at Death option to ensure if I die before the distribution age, my beneficiary will get the money back?
Thanks!