Annuity Blog

immediate annuity

How retired homeowners can avoid running out of money

January 14, 2017

The combination of increased longevity and declines in the coverage of defined benefit pension plans means that retirees increasingly risk running out of money because they live too long. Those who have significant equity in a home, however, can reduce or eliminate the risk if they...More


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Should I take my pension as a lump sum or lifetime payments?

December 22, 2016

I'm getting ready to retire from the company where I've worked for many years. I keep hearing conflicting answers as to whether I should take my pension as a lump sum or monthly lifetime annuity payments. What's your advice?More


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For retirees, immediate annuities provide a check for life

November 13, 2016

Feeling a little shaky there, old fellow? The insurance industry has just the thing for you. If you’re old enough and sick enough, and likely to croak before too many years, insurance companies will give you a sweet deal on an immediate pay annuity...More


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A Retirment Income Strategy for Do-It-Yourselfers

October 20, 2016

For my money, here are two of the most critical retirement planning tasks: determining if you’ve saved enough money to retire and figuring out how to deploy your savings to generate a regular retirement paycheck that will last the rest of your life. Given that these tasks aren’t...More


immediate annuity

Annuity Suitability

August 24, 2016

Why do insurers ask for so much personal information when you buy an annuity? (A plain English explanation of ‘annuity suitability’ rules and how they work) More


immediate annuity

Should Your 401(k) ‘Nudge’ You Into an Annuity?

August 3, 2016

After outlining the benefits annuities can provide to retirees, a new research brief by the Boston College Center for Retirement Research highlights a proposal for ensuring that more retirees will reap those benefits: have your 401(k) shift a percentage of your balance into an annuity at retirement unless...More


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A Guaranteed Income Source to Beat Your Investments

March 28, 2016

Recent research by retirement income expert and former U.S. Treasury Department official Mark Warshawsky shows that Immediate annuities generally provide you with more lifetime income than you could get by following the take-out-4-percent-of-savings-a-year rule or a similar...More


immediate annuity

How Retirees Can Avoid Running Out of Money: The Role of Longevity Annuities

March 25, 2016

Retirees are becoming a larger part of the population while their capacity to fund retirement comfortably has been declining. The population 65 and older, which now numbers about 48 million, is expected to rise to about 73 million in 2030. Meanwhile, the portion of retirees with employer-defined...More


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SPIA — The Good Annuity

March 24, 2016

Life insurance agents don’t like selling term life insurance for the same reasons that it is the main, and probably only, type of life insurance you should buy. It is a simple, low-cost, low-commission, financial product. Who wants to sell the most...More


immediate annuity

Put Your Pension To Work

December 9, 2015

Fretting about how to manage your pension is like complaining about the cost of winterizing your beach house. Lots of people would love to have your problem. Only about 18% of private-industry workers have a defined-benefit pension. Less than one-fourth of Fortune 500 companies offered a...More


immediate annuity

Should You Exit the Stock Market?

November 20, 2015

Should the portfolios of older investors include stocks, and if so, what percentage? The issue comes up every time stock prices wobble or fall. If you're in your 70s or 80s, how safe does your money have to be? In part, the answer depends on your circumstances and temperament. But there's one...More


immediate annuity

You've Been Offered a Ton of Money. Should You Take It?

October 22, 2015

If a former employer tempts you with a lump sum for your pension, consider these four points before you jump. It's like the famous marshmallow tests done at Stanford University decades ago, when researchers gave some kids marshmallows and told them if they waited 15 minutes to eat them...More


immediate annuity

This Annuity Calculator Can Estimate Your Retirement Income

October 18, 2015

Plan a comfy retirement with the help of an annuity calculator and other estimating tools. You might be surprised at how much income you can collect in your golden years.The future is full of uncertainty, and sometimes that can make us uncomfortable. For example, it's unsettling...More


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Self-Employed Can Use Annuities to Retire

October 6, 2015

My husband and I are thinking about retirement. In many of your columns, you note multiple sources of income. Pensions are often provided for those working for someone else. What sources of income are available for middle-class people who are self-employed? You also mention distributions...More


immediate annuity

How To Draw Down Your Retirement Savings

September 30, 2015

Saving for retirement is challenging, no doubt. But if you want to know what's really tricky, consider spending that money in retirement.Retirees in the past often relied on a simple rule for retirement income: Draw down 4 percent of your savings every year and you will be all set. But the retirement...More


immediate annuity

Ensuring Your Retirement Savings Last As Long As You Do

September 23, 2015

I'm retired and have about $800,000 invested in a conservative mix of stocks and bonds. Social Security and pension payments cover my basic expenses, but I'm skittish about the market volatility and would like to have a guaranteed source of income that's not subject to...More


immediate annuity

The Brilliant Retirement Idea That Nobody Likes

September 22, 2015

For years, Washington and Wall Street have been co-operating to create a killer retirement solution that could guarantee that millions of worried Americans won’t run out of money in old age. The only problem? Americans just don’t seem to be...More


immediate annuity

Paying for Assisted-Living Requires Safe, Short-Term Investing

September 13, 2015

I am 84, in good health and will be done working at the end of September. I started collecting Social Security at 62 and then went back to work a month later. My wife will be 63 in November and is on disability. We have $190,000 in Vanguard index funds, I have...More


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Immediate Annuities: The Right Retirement Tool for Exiting Farmers?

September 9, 2015

As we talk about transitioning the farm business to new management, we must create income for the outgoing owners. The retirement income plan needs to provide adequate income for rising needs over time, and still last until the spouse of the outgoing owner...More


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Multi-Year Guaranteed Annuity Ladders

September 3, 2015

There's a tendency to postpone investing your money in fixed interest annuities when interest rates are so low—even the highest rate on a five-year MYGA annuity today is only 3 percent (as of August, 2015). But there is an annuity investment strategy that can provide you with higher...More


immediate annuity

Annuity Pricing Sensitivity

August 25, 2015

This is a fairly consistent relationship and one which must be kept in mind when we consider whether it is wise to wait for interest rates to rise before purchasing an income annuity. Interest is only one of the factors determining payout rates, so payout rates will not rise...More


immediate annuity

The New Way to Get IRA Income

August 12, 2015

For years, financial planners have touted the benefits of longevity annuities for retirees. Now a new IRS rule has made these income generators an even better deal. With a longevity annuity—also called a deferred income annuity or longevity insurance—you pay a lump sum...More


immediate annuity

Six Ways to Pay Yourself In Retirement

August 12, 2015

Many retired investors — and those approaching retirement — are confused about how to pay themselves from their portfolios. They generally want three things: enough retirement income to live comfortably, safety from market meltdowns, and the assurance that they won't run out of money. The first...More


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5 Keys to Secure Adequate Retirement Income

August 16, 2015

When you retire, will your money last your lifetime? That's the question facing the baby boomer generation -- and their adult children, who might have to support them as well as plan for their own retirement. A new survey by Northwestern Mutual gave this gloomy picture...More


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Why You Should Spend More Money in Retirement

July 18, 2015

You’ve saved up money your whole career. So in retirement, don’t deny yourself the pleasure of spending it. Not a problem, you think? Actually, it can be. In 2014, 28% of people 65 and older with at least $100,000 in savings pulled less than 1% from their accounts, reports the research firm...More


immediate annuity

Taking a Look at Longevity Annuities In Retirement

July 11, 2015

Longevity insurance has worked its way into retirement plans. Does it belong in yours? MetLife recently launched a qualifying longevity annuity contract, or QLAC, for employer 401(k) s, and a few firms offer individual policies for IRAs. The contracts are deferred income annuities, tailored...More


immediate annuity

New Annuity Options to Plan Around Life's Biggest Unknown

June 25, 2015

How much money you will need to save to enjoy a secure retirement depends on the ultimate unknowable: How long will you live? The possibility of running short is called longevity risk, and the Obama administration last year established rules to foster a new type of annuity, the...More


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Majority of Americans Flunk Social Security Quiz

June 16, 2015

How much do Americans know about their Social Security benefits? Not much, it turns out. And that could have serious implications for their future retirement income. Only 28% of more than 1,500 adults received a passing grade when asked basic questions about Social Security benefits in a true/false quiz...More


immediate annuity

Elder Financial Fraud, Annuities, and Stopping the Scam Artists

June 15, 2015

Senior financial fraud costs billions of dollars a year. It's considered the fastest-growing type of elderly abuse, and it's all about the Benjamins. Elder financial fraud is costing senior citizens in the US over 36 billion dollars every year, and the numbers are expected to climb. When a person illegally...More


immediate annuity

2 Kinds of Annuities That Actually Make Sense for Your Wallet

June 5, 2015

If you think I hate all annuities, that's not exactly correct. There are 2 kinds of annuities I love, but that you'll almost never hear anyone discuss: Life or immediate annuities and longevity annuities. When you retire, you may not have enough money to provide for your monthly needs...More


immediate annuity

Why It's So Important to Know the Annuity You're Buying

June 3, 2015

Annuities offer a fabulous way to generate income for life, and save for retirement. But just like any other money matters, choosing the right annuity is crucial. Everyone's situation is different - there's no one-size-fits-all when it comes to picking an annuity. Before you park your...More


immediate annuity

The Simple Truth About Annuities

May 6, 2015

It’s a pretty big topic so there’s no way I can cover everything today. But I CAN give you a quick take on the subject...and as you’ll see, I view annuities pretty much the same way I see insurance policies. That makes sense since annuities are essentially the reverse...More


immediate annuity

Will my annuity be considered an IRA?

May 5, 2015

Q. If you purchase a qualified deferred fixed annuity with funds from an IRA and it begins paying a lifetime income after age 59 and 1/2 but before RMD age, can you choose to have the payments stay in the qualified plan or in your IRA? Or do you have to take the money and pay taxes on it? I cannot ...More


immediate annuity

Why Variable Annuities Stink

May 4, 2015

Considering a variable annuity? You might want to think again. Research shows that it takes $100,000 in a variable annuity to generate the same income as $60,000 in an immediate payout annuity. Let's take one step back — what exactly is a variable annuity? If you ask those who own them...More


immediate annuity

How Does Market Performance Factor Into the 4% Rule?

April 24, 2015

Q. It is my understanding that if I can take out only 4% of my current portfolio every year, not 4% of my original portfolio plus an inflation adjustment. Is that correct ? A. The 4% rule is based on the portfolio's initial balance; subsequent market performance isn't...More


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How Do RMD's from an Immediate Annuity with COLA Work?

April 20, 2015

Q. Do qualified immediate life annuities that have increasing payments come under the same RMD rules for first and subsequent year distributions as level annuities do? A. I believe so. For the first year you need to withdraw an RMD amount that would have applied to the full premium...More


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How is my income taxed?

April 17, 2015

Q. I have an annuity with an income rider. When I start taking money out, how is it taxed? I understand that any amount I withdraw is taxed. Is that true? A. First, if your annuity was purchased with IRA or 401k monies then all withdrawals are taxed for the life of the...More


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Have we been taken advantage of?

April 10, 2015

Q. I am assisting a 76 year old woman who appears to have been taken advantage of by an insurance salesman. He transferred her annuity which was set to begin paying her $1,500 a month in June to another annuity that begins paying her in August at a much smaller monthly amount of around $1,200...More


immediate annuity

Annuity Commissions and Fees

April 8, 2015

The #1 question I'm most-often asked is, "Why do annuities charge such high fees and commissions?" It's true, some insurance companies pay agents as much as 10% for selling certain annuities.It's important, though, not to lump all annuities together. The bad rap for high fees and commissions really only...More


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Can I Purchase an Age Rated Immediate Annuity?

April 7, 2015

Q. We're both in our late 60's and have health issues. Looking at this realistically, we probably won't be around in 10 to 12 years. Is it possible to get a better rate due to our health? A. The answer is “perhaps.” The only way to know is by submitting your medical records...More


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How Should I Take My Annuity Death Benefit?

April 6, 2015

Q. My father passed away last December and had a non-qualified annuity. My mother is the beneficiary. What are the tax implications if she took the lump sum or had it distributed over the next five years? A. For the benefit of other readers I’ll first define a non-qualified annuity. That’s an annuity...More


immediate annuity

Annuities and Cost of Living Adjustments

April 3, 2015

I'm often asked by customers whether they should buy additional inflation protection to guarantee the purchasing power of their annuities. Most of us have heard about Cost of Living Adjustments (so-called "COLAs") that can be added to an income annuity...More


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What are the Taxation Rules for 1035 Exchanges?

April 1, 2015

Q. Just an FYI to those who wish to 1035 exchange a matured annuity for another: Make sure your exchange is for the full amount!I originally invested $19,000 and my annuity grew over the years. I removed the $19,000 and only exchanged the amount...More


immediate annuity

3 Ways to Guarantee Retirement Income for Life

March 26, 2015

Insurers are rolling out a variety of annuities that they contend address baby boomers' desire for flexibility and choice. Annuities can be a tough sell. Retirees and those approaching retirement worry that they will die long before...More


immediate annuity

Here’s the Retirement Income Mistake Most Americans Are Making

March 25, 2015

Retirees want steady income yet few buy annuities—probably because they don't understand how they work. Here's a plain-English guide. A recent TIAA-CREF survey found that 84% of Americans want guaranteed monthly income in...More


immediate annuity

Is An Immediate Annuity Right For Me?

March 21, 2015

While an immediate annuity does provide for a more secure future, it may not be right for everyone. So how do you know if it fits in your situation? Here are three important factors I consider when discussing immediate annuities with my clients...More


immediate annuity

How Much to Invest in an Immediate Annuity

March 20, 2015

I’m 72 and I have a very small pension. I’d like to buy an immediate annuity to supplement my income. How do I figure out how much I should invest in the annuity? A good way to calculate how much to invest is to add up your regular expenses...More


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4 Reasons Trust Matters – Especially When Shopping for an Annuity

March 18, 2015

Over the years, I’ve communicated with thousands of people about annuity planning, and each time I emphasize the importance of working with a trusted advisor. Yet, this small piece of advice seems to be a whole lot easier to give than to follow. Reason is...More


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Don't Expect Annuity Rates to Increase by Much Soon

March 16, 2015

A September survey by the National Association for Business Economics found that 46 professional economic forecasters are predicting that interest rates at the end of 2015 will be lower than the level the Federal Reserve projects interest rates will be. Annuity...More


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Annuity Mumbo Jumbo – Fast Talk Masks Bad Information

March 10, 2015

Chances are good if you're at retirement age or close to it, you've been pitched annuities. You may have gotten a mailer promising free dinner to attend a “retirement seminar.” Or, you've seen TV ads with senior-age celebrities touting products with improbable...More