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.

Dollar Vulnerability Presents Interest Rate and Inflation Risk

Politico recently reported on the possibility of a concerted attack on the U.S. dollar which, if valid, could have a meaningful impact on annuity owners and other recipients of fixed income . The story suggests that Arab oil sheiks are conspiring with the Chinese and Russian governments to eliminate the U.S. dollar's role as the reserve currency in the global oil trade. The dollar's role in the oil trade serves as a linchpin for its relative strength and role as the world's overall reserve...

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Fees, Portability and Fiduciary Risk Continue to Present Hurdles for In-Plan Annuity Market

"In-Plan" annuities refer to the use of annuities within defined contribution pension programs such as 401k plans. The concept is relatively new, but the timing should be a perfect the concept to gain traction: The financial crisis has devastated the portfolios of many retirees and near-retirees. Millions of baby boomers will add to the 70 million or so U.S. residents over the age of 55. People are starving for stable, guaranteed sources of income in light of market volatility and increasing...

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AXA and ING Developing New Generation of Retirement Products with Guarantees

AXA and ING are in the process of launching a new generation of retirement products. Money Management reports that the two companies are developing a new line of retirement income products that provide more flexibility than traditional annuities. The products, which include AXA's "North" product line, are essentially traditional investments with an underlying safety net that is created through a hedging program. "Unlike old-style annuities, the client can withdraw from the product at any time (...

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How to Get Rid of a Variable Annuity

Submitted by tom on Tue, 09/29/2009 - 20:53

This question was originally presented as a FAQ.

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UK Advisor Suggests Inflation Could Result in Poverty for Annuity Owners

A director of one of the U.K.'s larger annuity brokers suggests that inflation could result in poverty for many U.K. annuity owners. In a piece titled "The Great Annuity Scandal," Steve Hunt expresses his concerns about annuity owners who are unaware of the risks they may face over the next several years: Inflation may not be a problem now, and who knows when it will return, but return it will - that is a given. The vast majority of annuity sales are level (and a great many single life). At...

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Annuity

Inflation

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Annuity Sales