Has anyone bought an immediate annuity and are you happy with it?

Posted on March 30th, 2008 in Annuity Insurance

desertcricket113 asked:

I need a pension and have no heirs but am concerned about these insurance companies failing

Tags: Heirs, Immediate Annuity

This post has 2 comments

Thor
April 2nd, 2008
Personally I dislike annuities in any form because their commissions and fees are so high that makes their return too low.

Remember, particularly at first, the money you are getting is mainly your own money being given back to you. I do understand the desire for a consistent income. But also, as with any “fixed income” even a pension, over time inflation makes that payment less and less in real dollars as you age.

There are better ways to manage investments to provide income. I think an income and growth fund that invests in bonds and high yield stocks is a great choice, and was one of my choices for my father.

But if you are a real novice investor an annuity might be okay for you.

Annuities get their tax deferred status from being an insurance product. My state does back them against failure to some extent but not dollar for dollar. You might need to check with your state insurance commission.

I would suggest as an alternative you might read Ray Lucia’s book on investing for retirement. His “buckets of money” concept is one that will produce a higher return over time but it involves carefully managing your money.
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I had listened to him on the radio for a number of years about investing and he was also promoted by the consumer advocate I like as well.

Good Luck.
iluv2tradestks
April 4th, 2008
Your question has wisdom. Annuities are sometimes a good investment, but in this climate, annuities are risky. You usually have to lock in for 6 years, and at the end of the six years, you won’t know the financial shape of the insurance company. AIG is the largest insurance company, was rated AAA and it went bankrupt. Your best bet are CD’s or money market mutual funds. If you are looking immediately today, look at CD’s. You might get a better rate at a credit union. If your savings is more than $250k, split it up between more than one institution.