are these worth getting? I have one.The agent either explained it in a non-laymen's term that i didn't understand my advantage or i couldn't really grasp how it benefits me
Are annuities "worth it"?
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If you don't understand it, then you probably shouldn't own it.
Don't just buy because "everyone" has it. It has to make sense. Annuities might be right for some. But one has to have a specific objective and some specific annuities in mind to really answer the question you pose.
Don't just buy because "everyone" has it. It has to make sense. Annuities might be right for some. But one has to have a specific objective and some specific annuities in mind to really answer the question you pose.
The smart money guys on TV and mags always said no. That you could do better yourself.
That said if all you really care about is getting x number of dollars a year when you retire no questions asked it could be for you
I am going to say very generally that you get a below avg return but it is guaranteed.
In some cases you are tied to the market but the returns are capped. ie if the market goes up 25% you may only be up 5% but you downside is capped
In some cases your kids don't inherit the money, the company gets to keep it.
As the other guy said know what you are buying and know who you are buying from.
That said if all you really care about is getting x number of dollars a year when you retire no questions asked it could be for you
I am going to say very generally that you get a below avg return but it is guaranteed.
In some cases you are tied to the market but the returns are capped. ie if the market goes up 25% you may only be up 5% but you downside is capped
In some cases your kids don't inherit the money, the company gets to keep it.
As the other guy said know what you are buying and know who you are buying from.
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immediate annuities give you the biggest bang for the buck.vairiable and index annuities give the biggest bang for the buck to the annuities saleman.they can be loaded with hidden comminsions and other charges. if you dont understand it do not purchase!
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During the recent falls my annuity lost a lot of value. But it guarantees my payout!
It could lose all it's value and it would still pay me X dollars per month at maturity.
It could lose all it's value and it would still pay me X dollars per month at maturity.
Annuities might be acceptable in a stable low inflation environment,but with a real inflation rate of >6% and with the Federal Reserve printing money like there is no tomorrow,you are bound to be paid with next to worthless funds.
You are much better off buying gold and silver coins or bullion.
Do it soon before "they" ban it.
http://www.shadowstats.com/
You are much better off buying gold and silver coins or bullion.
Do it soon before "they" ban it.
http://www.shadowstats.com/
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Goo input by clarkflower, oilmutt and spock1.
As you see, the devil is in the details. But, in general, if you are a little sophisticated, annuities are probably a poor choice.
The way it works is that you give an investment/insurance company a lump sum at period zero (now). They then give you monthly payments back. The payment amount amortizes your lump sum. The discount rate is predetermined at period zero.
So, there are three things to consider...
1. Discount rate (that is the interest rate at period zero adjusted for risk). Are the interest rates expected to rise in the future above the discount rate? If so, skip it.
2. Length of annuity... This is where different types of annuities come into play. Is it fixed length or does it terminate at death? Are there transfer options? How long do you expect to live? (it's a stupid question but is a bedrock of risk pools used by actuaries)
3. Are there any fees (you betcha, of course there are).
As you see, the devil is in the details. But, in general, if you are a little sophisticated, annuities are probably a poor choice.
The way it works is that you give an investment/insurance company a lump sum at period zero (now). They then give you monthly payments back. The payment amount amortizes your lump sum. The discount rate is predetermined at period zero.
So, there are three things to consider...
1. Discount rate (that is the interest rate at period zero adjusted for risk). Are the interest rates expected to rise in the future above the discount rate? If so, skip it.
2. Length of annuity... This is where different types of annuities come into play. Is it fixed length or does it terminate at death? Are there transfer options? How long do you expect to live? (it's a stupid question but is a bedrock of risk pools used by actuaries)
3. Are there any fees (you betcha, of course there are).
I always looked at annuities as a good investment for the person or institutions selling them. There are better investments IMO.
Right now i'm 42y.o.,2 kids,need about 23 years to retire.Want to send kids to college.does that help any in this decision? If not,what's a better option?
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I have my statement here,it says,Policy plan:whole life ins. ,Base plan Death benefit-$50,000. Policy date Mar 3,2012.Premiums are paid to Apr3,2012. Monthly Premium 82.00.annual Policy premium $923.50.Total Death benefit on Mar.3 2012 is 53,305.Policy cash value on Mar 3,2012 976.90
There are different types of annuities. There are single premium deferred annuities, guaranteed payout annuities, variable annuities etc.
I know of some people who by-passed the annuity way and bought, very low load, Universal Life Insurance Policies when interest rates were high. They have paid in the max of cash contributions, allowed under tax law on these policies and are guaranteed an annual fixed rate of interest on the cash build up in these policies while still having insurance coverage like a paid in full life policy.
Some people bought these policies when interest rates were high and the minimum guaranteed annual rate of interest is 6% plus policy dividends based on the company performance. They don't have to withdraw the dividends or interest unless they want it....and only pay tax on the amount withdrawn.
So the policy cash value increases each year less the annual premium for the cost of insurance. They are only taxed on the amount of dividends and interest that they withdraw from the policy.
I don't think that they can sell these policies anymore since the tax benefit was a great advantage and the tax laws changed. However, anyone who bought these policies were "Grandfathered" in and they are policies that are in force.
I know of some people who by-passed the annuity way and bought, very low load, Universal Life Insurance Policies when interest rates were high. They have paid in the max of cash contributions, allowed under tax law on these policies and are guaranteed an annual fixed rate of interest on the cash build up in these policies while still having insurance coverage like a paid in full life policy.
Some people bought these policies when interest rates were high and the minimum guaranteed annual rate of interest is 6% plus policy dividends based on the company performance. They don't have to withdraw the dividends or interest unless they want it....and only pay tax on the amount withdrawn.
So the policy cash value increases each year less the annual premium for the cost of insurance. They are only taxed on the amount of dividends and interest that they withdraw from the policy.
I don't think that they can sell these policies anymore since the tax benefit was a great advantage and the tax laws changed. However, anyone who bought these policies were "Grandfathered" in and they are policies that are in force.
Originally Posted By: oilmutt
.they can be loaded with hidden comminsions and other charges. if you dont understand it do not purchase!
That is exactly what I heard! Loaded so you know they are going to really push you to buy it
.they can be loaded with hidden comminsions and other charges. if you dont understand it do not purchase!
That is exactly what I heard! Loaded so you know they are going to really push you to buy it
Originally Posted By: daves66nova
Right now i'm 42y.o.,2 kids,need about 23 years to retire.Want to send kids to college.does that help any in this decision? If not,what's a better option?
I don't think thats helps 1 bit. You could be a doctor, a McDonalds worker..
To answer correct you need to know the whole picture. How old are the kids? Will they want state schools? What state are they in?
Current savings-Insurance- how much do you and the wife make now-expenses-House,equity-payment?-401k?
How do you want to retire.
Right now i'm 42y.o.,2 kids,need about 23 years to retire.Want to send kids to college.does that help any in this decision? If not,what's a better option?
I don't think thats helps 1 bit. You could be a doctor, a McDonalds worker..
To answer correct you need to know the whole picture. How old are the kids? Will they want state schools? What state are they in?
Current savings-Insurance- how much do you and the wife make now-expenses-House,equity-payment?-401k?
How do you want to retire.
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Originally Posted By: CivicFan
In general, I would rather buy a portfolio of dividend paying stocks than buy an annuity.
In general I would agree but if he is just hanging in there and this recovery stalls and reverses he could be in trouble with that. Market crash and div cut.
He could even do 1/2 and 1/2. Really all our answers are somewhat useless do to lack of information about the person asking the question.
Also to add to the questions above How secure is your and the wifes job's?
In general, I would rather buy a portfolio of dividend paying stocks than buy an annuity.
In general I would agree but if he is just hanging in there and this recovery stalls and reverses he could be in trouble with that. Market crash and div cut.
He could even do 1/2 and 1/2. Really all our answers are somewhat useless do to lack of information about the person asking the question.
Also to add to the questions above How secure is your and the wifes job's?
I work at the R.R.,wife doesn't work. I make around 23.68 hr. Kids are 3 and 6y.o..We all live in PRK.As far as where for colleges,that's up to them when they decide.my job is pretty much secure.I do have a 401(k) at work (Vanguard).
I've been taken to the cleaners so many times by brokers selling me funds, Stocks, Bonds, Annuities, and so on, I've given up. There is always a hidden catch, a "load" or management "fee". Or some other way to bilk me out of my money.
FYI, the government produced CPI inflation rate is not realistic. Locally, our government publishes an 8% national inflation rate as the basis to charge commercial rent. AND, they have the facts to back that up.
Following these standard guidelines, I have been 100% successful at losing money over the last 30 years. 100%. Yet, my wife, who is a DIY investor has done quite well.
If I were to follow her model, I'd invest only in things I really know about, companies I like and programs I trust. She picked Honeywell, Ford, Apple, and a number of other companies she liked.
Where I listened to my Ameriprise "advisor" and he diversified my investments, most of which were willing to take the shirt off my back along with my money. Thank goodness I also have a local savings account that is solidly earning 0.2 percent per year.
FYI, the government produced CPI inflation rate is not realistic. Locally, our government publishes an 8% national inflation rate as the basis to charge commercial rent. AND, they have the facts to back that up.
Following these standard guidelines, I have been 100% successful at losing money over the last 30 years. 100%. Yet, my wife, who is a DIY investor has done quite well.
If I were to follow her model, I'd invest only in things I really know about, companies I like and programs I trust. She picked Honeywell, Ford, Apple, and a number of other companies she liked.
Where I listened to my Ameriprise "advisor" and he diversified my investments, most of which were willing to take the shirt off my back along with my money. Thank goodness I also have a local savings account that is solidly earning 0.2 percent per year.
Originally Posted By: daves66nova
I work at the R.R.,wife doesn't work. I make around 23.68 hr. Kids are 3 and 6y.o..We all live in PRK.As far as where for colleges,that's up to them when they decide.my job is pretty much secure.I do have a 401(k) at work (Vanguard).
There are investment advisors who get paid by the hour and make no com. They just tell you what to do.Fee-Only Financial Advisors Home - NAPFA - The National ...www.napfa.org/Cached - Similar
You should call SOC and have them project what you will get at 65.
I'm just going to throw this out where you work for the RR. My friend,an air marshal moved to where in-state college fee's are great and the schools are good.
I agree with this man above:I've been taken to the cleaners so many times by brokers selling me... I've given up. There is always a hidden catch, a "load" or management "fee". Or some other way to bilk me out of my money.
That most of these guys will steer you to where they make the most.It's all about them.
If you want to keep going we need more. Your expenses, house payment, when it will be paid off, the soc.
We need to know what your nut will be when you retire, the goal. How much you will have coming in from SOC. Will you sell a paid off house and downsize.
Then you decide how you can make the goal.
Think football, third down. Do we need 1/2 yard or do we need 20 yards.
One calls for a run, the other a more risky pass.
If you need 6 inches why pass 40 yards into double coverage? Warren Buffett said (something like) I won't trade a night sleep for something I don't need.
I work at the R.R.,wife doesn't work. I make around 23.68 hr. Kids are 3 and 6y.o..We all live in PRK.As far as where for colleges,that's up to them when they decide.my job is pretty much secure.I do have a 401(k) at work (Vanguard).
There are investment advisors who get paid by the hour and make no com. They just tell you what to do.Fee-Only Financial Advisors Home - NAPFA - The National ...www.napfa.org/Cached - Similar
You should call SOC and have them project what you will get at 65.
I'm just going to throw this out where you work for the RR. My friend,an air marshal moved to where in-state college fee's are great and the schools are good.
I agree with this man above:I've been taken to the cleaners so many times by brokers selling me... I've given up. There is always a hidden catch, a "load" or management "fee". Or some other way to bilk me out of my money.
That most of these guys will steer you to where they make the most.It's all about them.
If you want to keep going we need more. Your expenses, house payment, when it will be paid off, the soc.
We need to know what your nut will be when you retire, the goal. How much you will have coming in from SOC. Will you sell a paid off house and downsize.
Then you decide how you can make the goal.
Think football, third down. Do we need 1/2 yard or do we need 20 yards.
One calls for a run, the other a more risky pass.
If you need 6 inches why pass 40 yards into double coverage? Warren Buffett said (something like) I won't trade a night sleep for something I don't need.
Originally Posted By: daves66nova
I have my statement here,it says,Policy plan:whole life ins. ,Base plan Death benefit-$50,000. Policy date Mar 3,2012.Premiums are paid to Apr3,2012. Monthly Premium 82.00.annual Policy premium $923.50.Total Death benefit on Mar.3 2012 is 53,305.Policy cash value on Mar 3,2012 976.90
That sounds like a whole life insurance. You have a death benefit, and it also has a cash value that grows with time.
I thought your question was about annuities, especially deferred annuities, since you mentioned that you still had quite a few more years of employment.
I am reluctant to give any advice without seeing the alternatives. To decouple the annuity portion of your life insurance, you would need to know the term insurance information for a $50,000 policy. Then you could take the difference, and see if the cash value grew at the rate you prefer.
I have my statement here,it says,Policy plan:whole life ins. ,Base plan Death benefit-$50,000. Policy date Mar 3,2012.Premiums are paid to Apr3,2012. Monthly Premium 82.00.annual Policy premium $923.50.Total Death benefit on Mar.3 2012 is 53,305.Policy cash value on Mar 3,2012 976.90
That sounds like a whole life insurance. You have a death benefit, and it also has a cash value that grows with time.
I thought your question was about annuities, especially deferred annuities, since you mentioned that you still had quite a few more years of employment.
I am reluctant to give any advice without seeing the alternatives. To decouple the annuity portion of your life insurance, you would need to know the term insurance information for a $50,000 policy. Then you could take the difference, and see if the cash value grew at the rate you prefer.
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