Too Rich for Annuities?
POSTED Mon, 07/06/2009 - 11:24 | POSTED BY Anonymous
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tom wrote on Thu, 07/09/2009 - 10:53:
It is true that a certain level of net worth will make it difficult for an annuity to add any value.
A person with $10 million net worth at age 65 more than likely has no use whatsoever for an annuity. Assuming prudent management of their assets, the high net worth person can generate sustainable income from their own assets and can essentially self-insure longevity risk.
Annuities are complex and come in many different flavors, but at their essential value comes in the form of guaranteed income and protection against longevity risk.
There is an involved financial planning exercise that must take place in order to determine how an annuity fits in a person's financial profile. Again, though, the annuity will likely be used to create a source of stable income and protect against outliving assets.