Been a long time lurker and highly respect the opinions of many here. I posted this to the Annuity board but thought I would give it a try here as well. Here's the scoop.... My folks were just sold a 5yr Fixed Annuity at their local bank, Feet Boston. I've read through the contract and we have 20 days to back out. I plan to call the bank tomorrow to see why they've recommended this approach. They are both 77 yrs old and have approx. 80K CD's that are coming due. They have no other assets other than a home and social security income. Their house is paid in full. They're locked in for 5 yrs at 5.1% return. The Annunity is from GE Capital. They were told their money was safe and backed by insurance similar to the FDIC. I showed them all the disclaimers in the paperwork noting that it was not FDIC insured. Cleary printed the following "Not FDIC Insured, "May lose value", No bank Guarantee". They were also told that their were no fees or commissions paid so the implication was that the bank was only offering it because it was in my parents best interest. Just doesn't feel right to me but am trying to educate myself on the pros and cons. I would be interested in why the bank felt they need the annuity. I do not think they will have a good answer.The questionis is what do your parents want from the money? Emergency fund, medical expenses, maybe some help arround the house etc. If yes then forget the annuity.If they want the income the rate does not seem that good. Look arround for a CD. Also look at goverment bonds and goverment agency bonds. I think you could go to a full service broker and ask what they can do in the bond/CD area. I do not think the expense would be more than dealing with the bank. If an annuity is what they want price it at Vanguard and other large mutual funds or brokers. Banks are probably higher costs than these outlets.
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