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URL:  http://boards.fool.com/bond-and-f-i-faqs-part-4-d-25173460.aspx

Subject:  Bond and F-I FAQs: Part 4 D Date:  2/14/2007  2:33 PM
Author:  Lokicious Number:  19774 of 35930


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Someone Is Always Trying to Sell Me a Lifetime Annuity. Should I Buy?
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• Lifetime annuities have been aggressively hyped, by the insurance industry and some financial planners and advisors, because of the high stake typically taken out for “costs,” compared to many do-it-yourself investment options.

• Naturally, this has led those who view such costs as excessive to dismiss annuities as “bad-buys.”

• However, under certain circumstances, putting some or all of remaining assets into a lifetime annuity may be a desirable or necessary option.


Are all annuities lifetime annuities?

• Lifetime annuities should not be confused with buying an after-tax variable annuity as a tax shelter and simply putting money into the same assets (i.e., stock and bond funds) you would have in a taxable account, usually for a higher expense ratio, with an age restriction for when you may start withdrawing assets.
---Since stock dividends and capital gains are taxed at your marginal rate when you withdraw the money, whether such after-tax variable annuities are worth it is unclear, but that isn't a “fixed-income” issue.

• There are “fixed-income” options for after-tax annuities, usually with a rate guaranteed for a period of time, such as 5 years, that can then be rolled over to a new rate.