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.

Panel of Experts Discuss Annuities in 401k Plans

The use of annuities in 401k plans is an issue receiving quite a bit of attention lately. Experts, policy makers and industry analysts understand the clear need for guaranteed income options for people who have their savings built-up in 401k plans and individual retirement accounts (IRAs): “I think one of the top goals of the new (Obama) administration is to find a way to annuitize or at least guarantee or secure some sort of income in retirement,” said Mr. Davies. “That's really the final...

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Annuity

Annuitize

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The Fixed Indexed Annuity Study from Wharton Professor David Babbel

There is in fact a study from Professor David Babbel that compares the performance of fixed indexed annuities to portfolios of stocks and bonds and it is fascinating.

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Sequence of Returns Risk

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Fixed Indexed Annuity

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David Babbel

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Hartford CEO to Retire--Company to Receive TARP Funds

The CEO of the Hartford Financial Services Group, Ramani Ayer, will step down from the post by the end of 2009. Mr. Ayer has been with the Hartford for 36 years and has been CEO for 12 years. He has been the chief architect of the company's aggressive pursuit of variable annuity business. The Hartford has been one of the most active companies in the variable annuity space over the past several years. This line of business has been particularly painful for the company in light of fallout from...

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House Bill Would Impact Taxes on Annuities, IRAs and Longevity Insurance

A House bill introduced by Representative Earl Pomeroy, D-N.D., would affect the tax treatment of certain annuities and income from IRAs. H.R. 2748, the Retirement Security Needs Lifetime Pay Act, would create a tax exemption for 50% of the income drawn from a non-qualified annuity. The exemption would be capped at $10,000 per year. The bill would also create a 25% tax exemption for income payments from an individual retirement account (IRA). Last, the bill would exclude the value of longevity...

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Individual Retirement Account

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Advanced Life Deferred Annuity

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Retirement

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Longevity Insurance

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Individual Retirement Account

Income

Advanced Life Deferred Annuity

Required Minimum Distribution

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Retirement

Taxes

Longevity Insurance

Reverse Mortgages -- A Source of Income in the Wake of the Financial Crisis?

Do reverse mortgages deserve a second look in light of the financial crisis? Similar in some ways to annuities, reverse mortgages have received little attention from conventional financial planners and investment advisors. Part of this reluctance involves lack of familiarity with the products, part of it involves lack of financial incentives to discuss the products, and part involves genuine, well-founded skepticism regarding product value. The reality, though, is that home equity is a major...

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