Comments on: Fixed Annuities and Financial Risk http://gotoretirement.com/2009/01/fixed-annuities-and-financial-risk/?utm_source=rss&utm_medium=rss&utm_campaign=fixed-annuities-and-financial-risk A Baby Boomer's Journey from Retirement Planning to Retirement Living Wed, 09 May 2012 17:43:41 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: John http://gotoretirement.com/2009/01/fixed-annuities-and-financial-risk/comment-page-1/#comment-3601 John Mon, 01 Aug 2011 18:37:03 +0000 http://gotoretirement.com/?p=964#comment-3601 You seem to have Fixed Annuity and immediate annuities confused...The State Guarantee Fund is $250,000 in many states. Yes I am an agent and I too dissagree with your misleading comments. As far as the Fixed Index Annuity;I have had clients lock in gains over 49% and that was after not losing the prior year, but earning a ZERO. Compared to direct market investors that lost nearly 50% and then if lucky came back nearly 50%, STILL NOT EVEN WHOLE YET! If you only have a year or two and need to spend all your money then do not go into a Fixed Index Annuity. If you want to have your money growing for a long while then a Fixed Index Annuity cannnot be beat. With the standard Penalty Free access of 10%, that's nearly 10 times what a CD allows. You seem to have Fixed Annuity and immediate annuities confused…The State Guarantee Fund is $250,000 in many states. Yes I am an agent and I too dissagree with your misleading comments. As far as the Fixed Index Annuity;I have had clients lock in gains over 49% and that was after not losing the prior year, but earning a ZERO. Compared to direct market investors that lost nearly 50% and then if lucky came back nearly 50%, STILL NOT EVEN WHOLE YET! If you only have a year or two and need to spend all your money then do not go into a Fixed Index Annuity. If you want to have your money growing for a long while then a Fixed Index Annuity cannnot be beat. With the standard Penalty Free access of 10%, that’s nearly 10 times what a CD allows.

]]> By: Wayne http://gotoretirement.com/2009/01/fixed-annuities-and-financial-risk/comment-page-1/#comment-2643 Wayne Mon, 21 Jun 2010 15:37:42 +0000 http://gotoretirement.com/?p=964#comment-2643 Mr. GoTo: I have an opportunity to buy an indexed annunity tied to the s&p with a guarantee of 5% should the s&p fail to rise in any given year. The "floor" is re-set each year and I get the percentage of any gain. Good for 10 years. Sounds too good to be true. Am interested in your comments given you find them non- appealing for a variety of reasons. the agent selling it claims it is a "fail-safe" way to reap the gains with no risk, a claim I find hard to believe. Thanks for your input. Mr. GoTo: I have an opportunity to buy an indexed annunity tied to the s&p with a guarantee of 5% should the s&p fail to rise in any given year. The “floor” is re-set each year and I get the percentage of any gain. Good for 10 years. Sounds too good to be true. Am interested in your comments given you find them non- appealing for a variety of reasons. the agent selling it claims it is a “fail-safe” way to reap the gains with no risk, a claim I find hard to believe. Thanks for your input.

]]> By: Mr. GoTo http://gotoretirement.com/2009/01/fixed-annuities-and-financial-risk/comment-page-1/#comment-380 Mr. GoTo Sat, 21 Feb 2009 18:36:31 +0000 http://gotoretirement.com/?p=964#comment-380 Greg: I do not think my article is misleading. I don't even talk about equity indexed annuities, which in my opinion are an entirely different product. I have actually studied equity indexed annuities myself because many people have tried to sell them to me. I do not find them appealing for a lot of different reasons. Most experts who are not in the industry tend to agree. Greg: I do not think my article is misleading. I don’t even talk about equity indexed annuities, which in my opinion are an entirely different product. I have actually studied equity indexed annuities myself because many people have tried to sell them to me. I do not find them appealing for a lot of different reasons. Most experts who are not in the industry tend to agree.

]]> By: Greg http://gotoretirement.com/2009/01/fixed-annuities-and-financial-risk/comment-page-1/#comment-378 Greg Sat, 21 Feb 2009 17:43:26 +0000 http://gotoretirement.com/?p=964#comment-378 I have been an agent for 25 years and your article is misleading. You dont even talk about the potential growth of an fixed equity index annuity with an income rider to hedge your bet. An annuity from Aviva or Allianz is a great buy for most people looking for safe income for the future. The federal legal reserve system is one of the best protections for life insurance and annuities avaliable to any financial vehicle in this country. I have been an agent for 25 years and your article is misleading. You dont even talk about the potential growth of an fixed equity index annuity with an income rider to hedge your bet. An annuity from Aviva or Allianz is a great buy for most people looking for safe income for the future. The federal legal reserve system is one of the best protections for life insurance and annuities avaliable to any financial vehicle in this country.

]]> By: Evan http://gotoretirement.com/2009/01/fixed-annuities-and-financial-risk/comment-page-1/#comment-241 Evan Tue, 27 Jan 2009 00:51:53 +0000 http://gotoretirement.com/?p=964#comment-241 Annuities are right for a certain type of people in my opinion. To the type that see annuities as an easy way to contribute to their retirement accounts at no real hassle, then great, but the type that keep up with the economy/stock market could almost certainly beat the returns they could get from a fixed annuity by investing in an index fund. Annuities are right for a certain type of people in my opinion. To the type that see annuities as an easy way to contribute to their retirement accounts at no real hassle, then great, but the type that keep up with the economy/stock market could almost certainly beat the returns they could get from a fixed annuity by investing in an index fund.

]]> By: Frank http://gotoretirement.com/2009/01/fixed-annuities-and-financial-risk/comment-page-1/#comment-240 Frank Mon, 26 Jan 2009 17:44:12 +0000 http://gotoretirement.com/?p=964#comment-240 Good primer on immediate annuities. I can understand the appeal of a steady income, but you're not really avoiding market risk, you're betting that the insurance company can invest your money better than you can. You are also effectively purchasing an insurance policy that you may or may not need. Inside every annuity is a bet by the insurance company that you won't live beyond the average life expectancy for a given age. If you win that bet, an annuity provides an attractive payoff for your premium. One additional risk has effectively eliminated immediate annuities from consideration for me: loss of control. Once you purchase the immediate annuity, you've lost control of those funds in exchange for a guaranteed income. I'd rather decide how to invest the money and decide when and how much I wish to withdraw. Good primer on immediate annuities. I can understand the appeal of a steady income, but you’re not really avoiding market risk, you’re betting that the insurance company can invest your money better than you can. You are also effectively purchasing an insurance policy that you may or may not need. Inside every annuity is a bet by the insurance company that you won’t live beyond the average life expectancy for a given age. If you win that bet, an annuity provides an attractive payoff for your premium.

One additional risk has effectively eliminated immediate annuities from consideration for me: loss of control. Once you purchase the immediate annuity, you’ve lost control of those funds in exchange for a guaranteed income. I’d rather decide how to invest the money and decide when and how much I wish to withdraw.

]]> By: Dave http://gotoretirement.com/2009/01/fixed-annuities-and-financial-risk/comment-page-1/#comment-236 Dave Mon, 26 Jan 2009 01:53:40 +0000 http://gotoretirement.com/?p=964#comment-236 Very good summary of the risks and rewards of immediate annuities! For Baby Boomers, immediate annuities will be the "silver bullet" that will help mitigate market risk, but only if: 1. They are phased in over the retirees lifetime i.e. $100,000 annuities today, $100,000 annuitized in five years, etc. This helps alleviate inflation risk and gives one time to allow beaten-down stocks to grow again. It would work very well for someone who retires in stages i.e. from full-time to part-time to full-retirement. 2. Joint lifetime annuities are a must for couples. Sure, the payments are a bit smaller but why leave your partner broke just because you die first. 3. Shop around and spread your annuity risk over different companies with at least AA ratings. The old saying "don't put all your eggs into one basket" applies here. 4. A guaranteed income stream may help retirees hold off getting Social Security until they are 70, therefore giving them the ultimate inflation-adjusted annuity. Very good summary of the risks and rewards of immediate annuities! For Baby Boomers, immediate annuities will be the “silver bullet” that will help mitigate market risk, but only if:
1. They are phased in over the retirees lifetime i.e. $100,000 annuities today, $100,000 annuitized in five years, etc. This helps alleviate inflation risk and gives one time to allow beaten-down stocks to grow again. It would work very well for someone who retires in stages i.e. from full-time to part-time to full-retirement.

2. Joint lifetime annuities are a must for couples. Sure, the payments are a bit smaller but why leave your partner broke just because you die first.

3. Shop around and spread your annuity risk over different companies with at least AA ratings. The old saying “don’t put all your eggs into one basket” applies here.

4. A guaranteed income stream may help retirees hold off getting Social Security until they are 70, therefore giving them the ultimate inflation-adjusted annuity.

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