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Lump Sum

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Treasury Department Focuses on Longevity Risk with Retirement Income Guidance

The Treasury Department just released a proposed set of regulations that could have a meaningful impact on the retirement income market in the U.S.

The Treasury’s guidance package builds on feedback received in response to the request for comments issued by the Labor and Treasury Departments last fall.

The proposed regulations appear to be squarely focused on longevity risk.  The basis for this concern—particularly as it pertains to the middle class—is summarized in the following chart:

Calculating the Value of a Pension Buyout Offer

One way to evaluate a pension buyout involves determining what your future pension payments are worth today and then comparing that value to the buyout offer.

In other words, compare the lump sum pension buyout offer to what would you have to pay today to buy and annuity that locks-in a future stream of income that lasts for the rest of your life.

Five Questions for Don McNay

Don MaNay is a financial columnist, a Huffington Post contributor and an expert in the field of structured settlements. 

Don’s financial guidance is refreshingly straightforward, filled with good common sense, and geared towards a Main Street audience.  His most recent book is titled Wealth Without Wall Street: A Main Street Guide to Making Money. 

We had an opportunity to speak to Don about his financial practice and his most recent book.  

Calculating the Extra Yield Provided by a Life Annuity

A common question is how annuities compare to other financial products that seem similar such as bonds, certificates of deposit (CD) and money market funds.  After all, each of these products promises to provide some type of fixed return in exchange for your investment. 

Looking at a simple life annuity can help answer this question and may also highlight what makes the life annuities unique among all financial products. 

Wealth Preservation through Annuities, or Why Mike Tyson Should Have Purchased an Annuity

According to a 2009 article in Sports Illustrated, 78 percent of former NFL players have gone bankrupt or are under financial stress within two years of their retirement, and 60 percent of former NBA players are broke within five years of their retirement.

Structured Settlements and Annuities

Structured settlements are often a reference point for my friends and relatives who are involved in the legal profession.  Conversations typically involve an acknowledgement of basic annuity awareness as a result of experience with structured settlements in a court of law.

Annuities and structured settlements do share a core similarity: they both can be used to convert a lump sum of money into a series of periodic payments that are disbursed over time.  It is not correct, however, to assume that annuities and structured settlements are one and the same.

Liberty Life

Liberty Life Insurance Company is a subsidiary of RBC Insurance Holdings (USA), Inc. It was founded in 1905 and is based in Greenville, South Carolina.

Liberty Life Insurance Company offers life insurance, critical illness cover, cancer expense insurance, travel insurance, and annuities to individuals in United States. A brief overview of products offered by Liberty Life Insurance Company is as follows:

American General

Founded in 1926 by Gus S. Wortham, American General Life Companies is one of the first multi-line insurance companies in the United States. Today, American General is part of the American International Group, Inc. (AIG) and provides insurance products for individuals and businesses.

Their range of products for individuals includes life insurance, health insurance, long term care insurance and annuities. Below is an overview of the products offered by American General Life Companies:

Full List of Annuity Types

The full menu or “laundry list” of annuity products and features builds off of the basic list discussed in the previous chapter.

Where relevant, each description below will include a brief comment on how the entry relates to the basic list of annuity types.

The following is a list that links to each of the annuity types discussed in this chapter:

What is an Annuity

An annuity is a financial product that converts accumulated savings into guaranteed income.  In a very basic sense, annuities:

  • Turn a sum of money into a series of payments or a “stream of income.” 
  • Guarantee the stream of income over a specific timeframe.

 

Retirement Income Industry Association Spring Conference 2012

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