Annuities Question
Just how do these things work?
Am being solicited to invest and the returns seem, to me, to be unbelieveable (from 8.5 to 10 percent).
Won't get an answer from the salesperson that I would accept or trust.
Am being solicited to invest and the returns seem, to me, to be unbelieveable (from 8.5 to 10 percent).
Won't get an answer from the salesperson that I would accept or trust.
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You can do better than that without much risk.
Currently I'm getting 12 to 15%.
Look some more they are out there.0 -
From what I know, you can take a large sum of money and give it to, for example, an insurance company and you, with proper paperwork/contact/etc have just bought an annuity. How it is structrued can vary, but basically you get a guaranteed monthly income for life paid to you by the insurance company whom you purchased the annuity from.
More details than that of course, but if that is what you are looking for that is the short answer. I believe most states (probably all states) will guarantee your annuity up to $100,000.00 in the event your insurance company goes bankrupt.0 -
Just make sure your salespersons name is not "chris11".[:D]
quote:Originally posted by HAIRY
Just how do these things work?
Am being solicited to invest and the returns seem, to me, to be unbelieveable (from 8.5 to 10 percent).
Won't get an answer from the salesperson that I would accept or trust.0 -
Do the math. You'll find that the high percentage yield you think you are getting on your annuity includes a portion of your initial "investment" being returned to you in each payment. It's not like a CD where you get your investment back at the end. An annuity with a true yield of 5% plus another 5% return of capital equals 10% coming to you and it's that 10% the seller quotes to you. That's okay if that's what you want, just don't expect to get your investment back when the term of the annuity expires, or have anything to pass on to your heirs if it is a lifetime annuity. Why not? Because you have been getting your investment back a little at a time already. But it makes the annuity look like a great "investment" when the seller quotes those big percentages. 0 -
quote:Originally posted by glabray
Do the math. You'll find that the high percentage yield you think you are getting on your annuity includes a portion of your initial "investment" being returned to you in each payment. It's not like a CD where you get your investment back at the end. An annuity with a true yield of 5% plus another 5% return of capital equals 10% coming to you and it's that 10% the seller quotes to you. That's okay if that's what you want, just don't expect to get your investment back when the term of the annuity expires, or have anything to pass on to your heirs if it is a lifetime annuity. Why not? Because you have been getting your investment back a little at a time already. But it makes the annuity look like a great "investment" when the seller quotes those big percentages.
Thank you for posting that angle. It seems simple enough but I had never looked at it in quite that way before.0 -
Hairy......Annuities are for suckers....I have the inside track on cornering the market in kosher pork bellies, but you'll need to send me a minimum of $35,000 by day after tomorrow.....Use Western Union..... 0 -
CAN be good for deferring tax, low risk. Yes, you can get higher returns on other investments. With higher risk. Shop carefully, check fees. 0 -
quote:Originally posted by hicap47
Hairy......Annuities are for suckers....I have the inside track on cornering the market in kosher pork bellies, but you'll need to send me a minimum of $35,000 by day after tomorrow.....Use Western Union.....
Thanks but no thanks. Got burnt buying and selling AT&T stocks; don't need another lesson.0 -
It's Bush's fault.[:D][:D][:D][:D]
TAKE A JOKE HAIRY!!!!
8.5 to 10% isn't all that unreasonable. If they invest your money in an index type fund, that would be the minimum I would expect to gain, with 12% over the long term closer to the average. It sounds like a more risk-averse portfolio with a lower than "average" return. The main advatage is that it grows tax free until you take money out of it generally. an annuity is usually attached to an insurance policy and used as an investment vehicle for retirement, which in your case would make no sense because you're already retired (though the retarded part the jury is still out on if you ask me.[:D][}:)][;)]) there are some annuity variants and payment and premium schedules so you may wanna ask him the nuts and bolts specifics.0 -
Hairy, this topic is a bit too broad for any quick answer here, but I can get or give you some additional information "off forum" if you wish.
The quick answer still involves a few variables. You can establish one with either a lump sum payment that stops with that amount, or you can go for a periodic payment type where you pay into the fund on whatever schedule you choose to use. The increases are likely going to be tax free during the accumulation phase and then taxed at removal, depending on a couple of variables.
You can get guaranteed return rates, but they will normally average less over time than other forms. You can get variable rate types, but you need to be able to leave them alone for a long enough time period to be able to allow it to adjust to any variations you might see in the markets. They will usually make more for you, but only if they have time to work. If you are looking shorter term or time period, I'd probably take the fixed return.
They often have a guarantee of a liquidation value of the current market value or what you have put in, whichever is greater, until you start to withdraw the funds. Then it gets a bit trickier depending on your choices.
How you wish to take the money out is one of the real tricks you have to decide how to handle. You can take the whole thing out in some funds, but the tax implication could be nasty depending on what else you have that can be used to offset the money in the year of withdrawal. You can withdraw (annuitizing or annualizing) a fixed amount each year for a fixed number of years, regardless of your survival, and an heir gets to collect the remaining years of the fixed number of years. You can get one that lets you withdraw for the remainder of your life and it stops when you die. Some of the latter types of policies keep all remaining funds if you die early, and some have a guarantee of a payout to your heirs of at least the remaining "cash" value you have accumulated to date in the annuity.
Even the size of the withdrawal can be a variable. You can set it up like a reverse mortgage that will eventually run out, withdraw just a portion or all of the "interest" earned each year, or some combination in between.
Hope this helps a bit.[:)]0
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