Roll Your TSP Into Index Annuity (Part 2)

In part 2 of my video series on Index Annuities, we tackle the guaranteed income options a specific annuity provides. I'll just cut to the chase, this doesn't impress me. In the least. Why? Because in this case, while they offer a  7.2% annual increase in the income base for the first 10 yeas,  your income does not adjust with inflation after that! What pays $10,800 in year 10 will pay $10,800 in year 30 PLUS you have no money left over to leave to your heirs. You have got to understand the difference between the Account Value,  what us professionals call your "walk-away money", and your income benefit account. They are TWO completely different things. And I don't believe many investors are aware of the significant difference between them. Your income base is solely the amount you can draw on each year for the rest of your life.  You can NOT get a lump sum from this amount.  Your "walk-away money" is the amount the insurance company will cut a check to you for.  To determine your income amount off your income base, you need to know your age too and if you're going to have a Single-Life income stream or a joint and survivor life income stream. In the example this insurance company provides, a 69 year old, SINGLE life recipient will receive 5.4% a year off her income base account, thus the $10,800 previously referenced.  However, because she is taking well more out of the account than the annuity is growing, she has exhausted the cash value by year 11.   Now, she will continue to receive the $10,800 annually, but she has NO  money left in the account! Is that made clear to the potential purchasers of these products?  I don't think it is.  And it should be.  Look, I'm not saying you should NEVER buy one of these things.  I'm just saying you need to understand what you're getting into.