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.

Rethinking Retirement Planning

There is an interesting and worthwhile article in Financial Planning that discusses the post-financial crisis retirement landscape. The author draws a picture of a new set of retirement norms for Baby Boomers and the generation following Boomers. Issues addressed include: Longevity . The financial crisis' impact on retirement planning . Sequence of returns risk . Social Security . Use of annuities. Employment in retirement. Recreation in retirement. Source: Financial Planning Full Story

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Mark Hulbert on Fixed Annuities

Mark Hulbert is the author of the Hulbert Financial Digest, a popular monthly newsletter that tracks the investment performance of roughly 180 different investing -related newsletters. Hulbert wrote an article on fixed annuities in the business section of the New York Times. In a balanced and informative piece, Hulbert touches on topics that include the following: Annuities and the financial crisis. Annuities in the current interest rate environment. How effective fixed annuities are in...

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AARP Offers Tips on Retirement Spending and Annuities

AARP has published a tip sheet called Money Matters that offers advice on spending down one's assets in retirement. The tip sheet addresses a number of areas, including: When to claim Social Security . Asset Allocation . Annuities. Withdrawal rates. The role of one's home in retirement planning . For each topic, AARP offers a description of common or current practices, conventional wisdom and their general guidance. With respect to annuities, AARP notes that most people pay very little...

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Annuities Account for 61% of Bank Brokerage Revenue

The Bank Insurance and Securities Association compiles and index of securities brokerage and annuity-related revenue of 20 U.S. banks. The BISA-Singer Bank Brokerage Index shows that 61% of the second quarter 2009 revenue of participating banks came from annuity sales. Annuity-related revenue was $95.3 million for the second quarter, a decline of 15% from the previous period. Source: Financial Planning Full Story

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Annuity Taxes and Section 1035 Exchanges

There is a great article in Smart Money that discusses the tax implications of annuity ownership. The article also provides solid detail on swapping an existing annuity on a tax free basis through a Section 1035 exchange . A good reference for tax and Section 1035 questions. Source: Smart Money Full Story

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