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
A fairly prominent recent article in the Wall Street Journal discusses the recent attention paid to immediate annuities in the wake of the Obama Administration's "middle class task force" initiatives.
There are some very good scenarios describing the payouts and comparative merits of immediate annuities.
Submitted by tom on
Yet another interesting article from Darla Mercado at Investment News discusses the push among financial advisors to consider annuity purchases in the context of a larger retirement planning process.
Submitted by tom on
The longevity swap market is heating up with many employers / plan sponsors who offer traditional defined benefit pension plans eager to offload longevity-related liabilities to parties who are interested in assuming the risk.
Submitted by tom on
An interesting article in the New York Times regarding the use of collars to hedge retail investment portfolios.
Submitted by tom on
Much has been written and discussed over the past several weeks since the Obama Administration suggested that annuities may play a key role in the financial and retirement planning lives of millions of Americans.
This discussion topic should serve as a thread for thoughts and comments on this somewhat controversial issue.
