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.
Submitted by tom on
8,000+ mutual fund choices available.
For every ten mutual funds an employer offers in defined contribution plans, the rate of participation goes down 2 percent.
Submitted by tom on
Submitted by tom on
I get questions periodically about low or no fee annuities.
There are, in fact, annuity products (including variable annuities) that are being developed for fee only financial advisors (advisors who do not accept commissions on product sales).
Some of the companies that have recently developed or are developing these low fee based products include:
Submitted by tom on
Related to the recent blog post discussing the Panis study on the link between annuities and retirement well-being, there is a paper from the Center for Retirement Research at Boston College that is titled: "What Makes Retirees Happy."
The paper, which can be accessed by clicking here, was written in 2005 by Keith A. Bender and Natalia A. Jivan.
Submitted by tom on
A recent Wall Street Journal article (click here to read--subscription required) discusses annuity products that are available in target date mutual funds.
As indicated in the article, target date funds came under pressure after the financial crisis because of the losses (around 40 percent in some cases) of funds that were intended to be more conservative for near-term retirees.
Companies mentioned in the Journal article include:
