The actual process of converting a sum of money into a stream of income and the point at which annuity payments begin. For example, with Social Security the sum of money that has hypothetically been accumulating over one’s working years would be annuitized when the person chooses to begin receiving Social Security benefits.

The Business Week Cover Story on Retirement--Life-Cycle in Theory but Status Quo in Practice

Business Week just ran a timely cover story on the post-financial crisis retirement landscape.  Portions of the feature present a remarkable contradiction. While there is a clear endorsement of...

Waiting to Annuitize Makes Sense in Current Interest Rate Environment

In general and all other things being equal, it is better to hold-off on annuitizing an existing annuity contract if possible in the current environment. First and foremost we are in a low interest rate environment, so current annuitization locks-in those low rates. Second, there is the possibility of missing out on future growth of the contract value. Yet another good annuity-related article from the Chicago Tribune. Source: Chicago Tribune Full Story

Australian Financial Services Executive Advocates Compulsory Annuitization

The head of an Australian financial service firm's life operations, Richard Howes, is an advocate of compulsory annuitization . Howes believes that 30 percent of retirement funding should be compulsorily assigned to guaranteed income streams--in other words to annuities. Howes also suggests that the relatively slow take-up of annuities in the Australian market is a result of investors who have been conditioned by a uninterrupted 20 year bull market in equities. Howes spells-out the case for...
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The Worst Time in Living Memory to Retire?

A recent article discusses the challenges that retirees and near retirees face in the UK: "Dr Ros Altmann, one of Britain's top pensions experts and author of the Planning For Retirement report, says: 'The old idea that the stock market can always be relied on to deliver longterm strong returns has left millions facing an impoverished old age." While the UK has compulsory annuitization , there are many aspects of England's financial system and demographic profile that are similar to the United...
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Consider Annuities to "Build a Pension and Salvage Your Nest Egg"

An in depth and very worthwhile article in the Wall Street Journal discusses annuities in the context of the financial crisis. Surging demand for annuities--particularly fixed--is a natural reaction to the volatility and pain experienced over the past couple of years. That said, would-be buyers need to inform themselves and consider the pros and cons associated with the entire landscape of options. Topics addressed in the article include: 1) The notion of creating a personal pension 2) Annuity...