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Author: DorothyM Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75335  
Subject: Re: annuities 101 please Date: 2/3/2009 9:15 AM
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A life annuity (an insurer's promise to pay you a fixed, unchanging amount per year for life, based on the lump sum you give them at the start) can be appropriate for some retirees who simply don't want to be concerned about the management of their retirement funds. Now, these are expensive, in that you could generate more life income from conservative management of the same lump sum of dollars AND potentially have more $$ to pass to heirs at your death if you die prior to your full life expectancy. But for some, this additional cost is worth it.



I looked at life annuities at Venguard (through AIG) when I retired. I have no children, not currently married, comfortable but not wealthy, little family and no one who would/could bail me out in a crisis. My goal is to come as close as possible to spending my last dollar on my last day on earth.

I considered a $12,000 annual payout, paid monthly which I would use primarily for travel now and perhaps a cushion for later. When I ran the numbers there was nothing compelling about taking the annuity. When AIG went belly up, I almost went down on my knees in thanks that I didn't do it -- I'd have been in hysterics if I'd dumped something like $150,000 into an AIG annuity. For me "When in doubt, do nothing" is a fitting mantra. ;-)
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