Annuity

An annuity comes in many forms, but a simple definition is that an annuity is a contract that converts a sum of money into a series of periodic payments for an agreed upon period of time. An annuity can be thought of as a financial vehicle that converts a pool of money into a stream of income. Annuities are most useful in addressing the financial planning needs of people in or approaching retirement. Annuities are unique in the financial world because they can provide protection against the risk or outliving one’s assets (longevity risk) by guaranteeing income payments in perpetuity or any other selected amount of time. Annuities can be viewed as a type of personal pension plan. Social Security is similar to an annuity in that money contributed over the course of one’s working years is converted into a series of periodic payments that provide income during retirement.

View Retirement Planning Calculators with a Heavy Dose of Skepticism

Consumers and financial advisors are encouraged to view retirement planning calculators and software as useful but limited tools. Consider, for example: All models are based on assumptions, so poor assumptions can lead to faulty results and decisions. Any model result is probabilistic. In other words, there is no certainty with the output. Be conservative when assessing the validity and likelihood of results. Hire a fiduciary as your "pilot." The person driving the model results should have...

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At what age is an annuity the most useful for an individual?

In a very general sense, annuities are most often used by individuals who are approaching retirement or in retirement. Annuities can be very useful for people who need to create secure

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Equity-Indexed Annuities Can be a Shell Game for Consumers

The first time I visited New York I was taken in a sidewalk shell-game within 45 minutes of being in the city—no kidding. Shell games involve trying to guess where a card or any other item might reside after being shuffled among various covers by a dealer.

There are basically three reasons why I lost $40 within 45 minutes of arriving in NYC: 1) I was naïve; 2) I was overconfident in my card-spotting abilities, and; 3) there was a large amount of asymmetric information—in other words, the “dealers” (to use a polite term) had a heck of...

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Indexed Annuity

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returning to work

Submitted by Anonymous on Mon, 04/13/2009 - 16:43

many people who thought they would be retiring in the short term, are now realizing that due to losses in their current portfolio, they have to to back to work.

what can the younger generations learn from this and how can annuity products play a role for future retirees?

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Buyers beware

Submitted by Anonymous on Mon, 04/13/2009 - 16:40

Most of the stories I read are about annuity sales gone wrong and vulnerable retirees losing significant amounts of their nest egg because they didn't understand the product(s) being sold to them.

1. what are warning signs that people can look out for?
2. anyone have experiences where their annuity purchase was successful?

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