Annuitization

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

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...

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...

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...