Apologies in advance. I am brand new to MF and unfortunataly a financial novice. I am almost 50 and planning to retire in ~10 years. I am extremely conservative, focused on priciple preservation and accept the upside limits that come with that. I have no debt, am fully maxed out in 401K, don't qualify for Roth and in a reasonalby high marginal tax bracket with very little opportunity to reduce my tax burden. In addition to a mix of mutual funds and fixed income products in my 401K, I am invested in Jumbo CD's which are laddered.I am now considering the purchase of an Equity Indexed Fixed Annuity from Midland National Life (14 yr) and would begin to annuitize in my early 60's. However, I am very leery, as I have heard for years the horror stories on annuities, especially variables (high fees and commissions, unscrupulous finanical advisors on commission, etc.) If anyone out there has any opinions on Equity Indexed Fixed Annuities in general or this Midland specific product, I would be most grateful. I accept that in return for safe principle I am limiting my upside, but also getting tax deferred growth (I am currently invested in CD's....). I am also interested in opinions on annual point to point annual vs. monthly and if indexing which index to peg performance against. Again, thanks in advance and any insights greatly appreciated!
Dueceman1, in 2010, everyone qualifies for a Roth "Conversion" or a "partial" Roth Conversion, no income limits for this year. Pay the tax now (can be spread over 2 years) or pay it later at possiblly higher tax brackets...most agree taxes will be on the rise to cover our "party animal" congress and white house, another story. The future tax savings on income received at retirement from your retirement accounts could be substantial. It should, at least, be a serious consideration. Get your bean counters to work for you on that one. Equity index annuities can be a great vehicle for retirement with monies that you no longer wish to have at "market" risk. Especially, if you intend to leave a substantial portion of assets to future generations...check out the EIA's multi-generational beneficiary arrangements combined with the Roth IRA's. May be more than enough rason to do the Roth conversion. Can make your children and grands super wealthy. Zero downside unless you bail-out (surrender account values) before the 5-7-10 yr., etc., (varies by plan) surrender penalty period. It's easy to get the research on this. Just be careful about professional "biases" on each side of that fence. Brokers hate EIA's, insurance guy's love 'em, sometimes too much. A well-informed CPA or "fee-only advisor referee might be your best bet with the final analysis just to make sure the numbers work in your favor. The money spent with him/her should be a great investment in your future and your sleep. I am a firm believer that "most" savvy retirees will need some equities exposure to the market for inflation protection, depends. Congrats on a great job for being on target for your retirement.
You do not belong in MF if you are not an equity proponent. I have been in equities since 1959 and have enjoyed every rise and fall of the market. As to indexed annuities, ask the sales rep what the commission is on the item you are considering and what the rating is of that insurance company by various raters. What's their financial strength? etc.I have owned equity annuities since early 1990s and like Guardian as a top company and the investment as a reasonable performer. Since my other annuity is in an IRA, I have been making mandatory withdrawals from it at rate greater than required.
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