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|Subject: ??? about annuities - Warning: long||Date: 2/20/2011 11:12 PM|
|Author: DorothyM||Number: 68512 of 76395|
Please have a look at this and perhaps suggest a short/quick response for me to my friend. I want only to give him a bit of good advice and then will separate myself from the matter. He's a big boy and can take care of himself. I have enough to do to take care of myself (and 2 cats) ;-)
I got an email from a friend (single, no children) this evening -- I don't know how much money he has but I know he inherited "some money" from a partner who died about 15 years ago (much older than my friend) and perhaps a bit from his mother. I suspect that he's taking money (as much as he needs) out of his stash (don't know if it can accurately be called "savings"). He did not have anything in IRAs (Roth or Traditional) and I'm not sure if he had money in a 401K. Lives in a co-op apt. w/ VERY reasonable maintenance. Mid-60s, laid off from support job with law firm, no pension. He might have enough that he's taking 2% or he might be taking 8% - no way of knowing.
Hi Dorothy, Since I value your opinion on these matters I wonder if you might tell me your thoughts on what I have been thinking of doing. I have been considering an immediate guaranteed life income annuity, and just wondering if you have any strong thoughts about annuities. AARP has been advertising one with NY Life, which is about 5%. Guaranteed life income (15 years) with payout of balance to beneficiary if I die before the amount I put in has not been paid.
Just wondering if you have any strong negative thoughts on annuities or positive. It would be the best I could do to set up kind of my own pension for life. Of course, it will not be inflation proof, but it would still be guaranteed income for life.
I strongly suggest you talk to Vanguard and NOT AARP. www.vanguard.com
Seriously I would not go with any other company.
I have considered an annuity but haven't yet done so because of interest rates being so (Note: I learned this from this board. Thanks.)
My 2nd response:
One of the suggestions I've heard that I like is to set up a "CD Ladder" -- This gives you all the advantages of an annuity without the risks. After you look further we can go into the alternatives such as the ladder. (Note: I learned this from this board. Thanks.)
Hi Dorothy, and thanks for the quick response. I have been checking around with Fidelity, NY Life (the one being promoted by AARP), Dreyfus and JP Morgan. For the most part they all seem to be coming in at around 5% and I will have another go round on Wednesday with another advisor, and then I think I'll have heard enough on annuities.
There are about 3 types that are of interest, (fixed, variable and guaranteed) and I have been leaning toward the guaranteed fixed income variety. In addition to the fixed annuity, Fidelity, is also offering an inflation protected variable annuity that they say will not ever go below the initial rate of say 5%. If the market, over the course of a year, goes up, then the rate on the annuity goes up and can not go down again. Say it goes from 5% to 6%. 6% then becomes the new rate and it cannot go back to 5%. With this particular "model" there is an annual fee of about 1%.
Sooooo, one more sit down on Wednesday with an advisor and then we'll see. I am not entirely committed to this, but it would be really nice to have a stream of guaranteed income for life in addition to Social Security. The annuity I favor is a life time guarantee of income and also guaranteed for 15 years. If I die before the 15 year period is up, the balance of what has not been paid out to me, on my initial investment, will go to my estate. If I live beyond the 15 year period, then I "win the bet," continue to collect income, but nothing more will be paid out once I'm gone. [Note: (Note: I learned enough from this board to know that what sounds too good to be true is too good to be true. Thanks.)
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