No. of Recommendations: 2
Here's an interesting article from Financial Planning magazine ( a publication geared towards financial advisors and annuity salesmen.) I'm always amazed at the creativity that these professionals display in designing ever more complicated, high-commission schemes to separate retirees from their life savings.

Another approach is to deconstruct the traditional annuity by layering a low-cost insurance guarantee on top of a separately managed account. In March, Pershing LLC launched such a hybrid retirement income product, which pairs a managed account solution with a lifetime income guarantee offered by The Phoenix Companies. The product, known as Lockwood Investment Strategies Longevity Income Solutions, or LIS2 for short, will ensure that investors won't outlive their assets, says Len Reinhart, the former president of Lockwood who worked on the product design and now consults for Pershing Managed Account Solutions.

LIS2 features a 5% annual payout, after fees, which begins when an investor is 65 years old. The 5% rate is applied to the initial investment for a fixed dollar amount that stays the same each year. For example, an investor who puts $1 million into the product would get $50,000 each year for the rest of his or her life. The Phoenix Companies buys 10-year puts as hedges for the guarantee, which assures consumers of their fixed payout regardless of the underlying funds' performance.


I bet you could index that $50,000/yr. for inflation if the insurance company wasn't skimming off 2%-3% in fees. <LOL>

Print the post  


The Retirement Investing Board
This is the board for all discussions related to Investing for and during retirement. To keep the board relevant and Foolish to everyone, please avoid making any posts pertaining to political partisanship. Fool on and Retire on!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.