Hey @Amanda_Laney!
Congrats to your parents for killing it and retiring early!!! At 56, your parents likely have 30 years of life left! That’s a looong time to invest.
If you look at a retirement calculator, assuming they get a 10% return from the market (about the historical average over any 30 year period) and take out $140,000 per year at 80 the nest egg will be worth about $7.4M.
Now let’s change that 10% to 4% (if that’s what an annuity will return after fees). In that scenario they actually go broke at about 79.
The reason is that $140K/year is actually more than the “safe withdrawal rate” of 4%. They want to live on about 5.4% of their nest egg each year. That’s not CRAZY, but I think long term any reasonable projection would put them in worse shape with the annuities. Although, since it’s over the “safe” withdrawal rate, there may be volatility that could erode their nest egg before the long term average has time to kick in.
THAT SAID, these are big numbers and I am not a professional with access to their whole situation, so I think it’s worth shopping around for a high quality financial advisor/planner to help them. Anyone that jumps to the conclusion of annuities I’m a little cautious of. They could be primarily an insurance salesman. I’d want to find a “fee only” CFP. That means their fee would be a flat rate (probably 1% or less) of assets under management, with no other fees charged. If their financial advisor is getting a kickback when they buy an annuity that’s a big conflict of interest, and likely a sign they should seek help elsewhere.
Your parents sound like they’d be a good fit for my friends at Define Financial. They’re fee only, specialize in working with 50+ people who are “work optional”. I don’t have any financial relationship with them, but Taylor the owner is a friend of mine, so take that conflict for what it’s worth