Guaranteed Income Benefit GIB as a way of Investing your 403b?

[Microman]

At my work, they are being taken over by another Hospital.

An option the guy that handles the 403b is always trying to suggest is this GUARANTEED INCOME BENEFIT, where your principle is not guaranteed, but you pay a fee each year additional, and when you choose to get a monthly income for the rest of your life. Say 100k, might get you around $500.00/month.

Heard him discuss lots of things, as the monthly benefit always gets locked in at current or higher rates. And can move principle out if needed but it goes up and down, and not guarateed.

Anyone heard of these?. Sorta/But not like a defined benefit plan, but not nearly as good.

[raz]

I am not a financial adviser, nor do I play one on TV.

That said ...

This guy is a salesman. He (and/or his company) gets commission on every dime that passes between the hospital and wherever you choose to invest your money. He might even get a portion of the 'marketing fees' (12b, I think) skimmed of the top each year. He might also get a bonus for steering people to a particular investment.

That's his motivation for getting you into a particular investment. You really need to see a professional adviser who has no stake in your portfolio. Pay him his fee, and get a serious analysis of your investment options. It is very likely that this GIB is a form of annuity. Annuities can be a decent part of a retirement plan, but they generally carry huge fees (read: profit for the saleman and managers).

[mattkime]

i'd take a good long look at such a product before buying. there is no free lunch.

now i'm going to pull some bs numbers out of my butt but it should be useful for consideration.

the stock market typically gains 10%/year in the long run. your 100k should earn you 10k/year. the plan is providing 6k/year. its costing you 4k/year.

[clay]

ditto all the above. Tread very carefully.

[thermarest]

Yeah, what raz said. If you want something similar but with low fees, no scam and no commissions (but also no guarantee) look at Vanguard managed payout funds.