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Author: BruceCM Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75378  
Subject: Re: annuities 101 please Date: 1/31/2009 7:03 PM
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Not safe enough for many people. Bonds DO fail.

Individual bonds may default, but bond indexes do not fail.

But to the OP

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.

But if you elect to go this way, you owe it to yourself to shop around, rather than going through a single 'advisor'. Check the web sites of Vanguard, T.Rowe Price and Fidelity. Because a life annuity is a life annuity, what you're looking for is the best payment from the same lump sum, from an insurance company with at least an A rating from either A.M. Best rating company or Weiss Insurance rating service (now owned by 'The Street.com'). You can Google to these to learn more about how insurance companies are rated.

And avoid the 'add-ons', such as a 'death benefit' or a 'period certain', or inflation adjustment. Yes, these sound nice, but you'll be paying dearly for them.

BruceM
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