How do I plan for retirement?
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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.
Too Rich for Annuities?
Submitted by Anonymous on
It is my opinion that annuities are not everyone, but there are those with a certain amount of assets that can benefit significantly by using annuities. Others, it seems, with greater wealth may not need an annuity. In fact, it could be wasteful.
What are your thoughts on this?
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Seminars and "free lunch"
Submitted by Anonymous on
Several times a year my wife and I are invited to some hotel or meeting area for a complementary lunch or dinner, followed by a "seminar" on some kind of annuity product. I don't attend because I am not interested in the hard sell and I know there is no such thing as a free lunch, but these events seem popular. Have others had good experiences at these events? Poor experiences that they should warn others about? Isn't there any other way to get educated about annuity products?
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How to Value Your Social Security Benefit
What is the present value of a $2,521 Social Security benefit to a woman who starts receiving the benefit at age 66 and has those payments last until she passes away at age 90? The answer is $412,896. This figure likely surprises many people. The reality, though, is that $412,896 is the amount you would need to purchase an annuity--if, that is, an annuity like this actually existed--that offers the $2,521 payment. It is also important for people to understand that the $412,896 should be...
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The Pitfalls of Using Group Annuities as a Wrapper for 401k Plans
A very good article in Forbes magazine discusses the many downsides of using group annuity contracts as a wrapper for 401k plans. This is not to be confused with 401k or defined contribution plans that offer an annuity option within their plans or an annuity option outside of the plans to participants who are retiring or leaving the company. In fact, most of the group annuity wrappers provide no ability to annuitize . The practice is especially common among 401k plans offered by smaller...
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