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View Poll Results: Whats your thinking on annuities?
Would never consider one, ever 14 10.45%
Would consider one as part of my investments, if the numbers made sense 102 76.12%
Would put all or most of my money into one if the numbers made sense 6 4.48%
Would put all or most of my money into one because they're one of the better investment options 0 0%
Bought one, like it, would do it again 7 5.22%
Bought one, dont like it, wouldnt do it again 5 3.73%
Bought one, dont like it, but would consider buying one again 0 0%
Voters: 134. You may not vote on this poll

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Re: Annuities and their role in our investing plan
Old 01-29-2007, 01:47 PM   #21
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Re: Annuities and their role in our investing plan

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Originally Posted by brewer12345
Just be aware that the actual insurer you are taking credit risk from is not Vanguard. IIRC, it is AIG. Better be comfy with that before you hand over a stack of Franklins.
Yes, that has always bothered me about these annuities. Who the heck knows just how solvent *any* company might be 30 or 40 years from now? And, the risk of running out of money in 30 to 40 years is the *only* reason I would consider these in the first place.

Quote:
Originally Posted by Vanguard
The fixed annuity guarantee is based on the claims-paying ability of AIG Life Insurance Company and American International Life Assurance Company of New York (in New York State only), which are the insurance companies that issue the annuity.
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 01:56 PM   #22
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Re: Annuities and their role in our investing plan

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Originally Posted by brewer12345
Just be aware that the actual insurer you are taking credit risk from is not Vanguard. IIRC, it is AIG. Better be comfy with that before you hand over a stack of Franklins.
Agreed..........but better to buy from AIG, Pacific Life, ING, or John Hancock than "Southwestern Iowa Reserve Life"...........
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 01:58 PM   #23
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Re: Annuities and their role in our investing plan

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Originally Posted by FinanceDude
Agreed..........but better to buy from AIG, Pacific Life, ING, or John Hancock than "Southwestern Iowa Reserve Life"...........
Or maybe not. Life insurers are extremely difficult for professional credit people to make sense of. How well is a layman going to do?
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:19 PM   #24
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Re: Annuities and their role in our investing plan

I voted that we bought one and would do it again.

To me it is just peace of mind money - I think of it as my back up to social security. I don't feel comfortable recommending this to others though since I know that it was sort of a fear-based investment. It was such a small part of our portfolio - just a little diversification/insurance.
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:28 PM   #25
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Re: Annuities and their role in our investing plan

An interesting site:

http://www.annuityfyi.com/

Another interesting question: did you read the prospectus on your annuity and do you fully understand it? My wifes annuity/pension through her hospital employment runs to about 540 pages. I actually did read it yet find that there are 3-4 areas that i'm not particularly comfortable I 'get'. Mostly involving how we would get the money out if we chose to do so before the annuity is actually engaged.
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:32 PM   #26
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Re: Annuities and their role in our investing plan

Quote:
Originally Posted by Cute Fuzzy Bunny
My wifes annuity/pension through her hospital employment runs to about 540 pages.
We should add this statement to the "How do you know when you're really ER'd?" thread...
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:35 PM   #27
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Re: Annuities and their role in our investing plan

I voted '6'. I got it at a time that I knew NOTHING about investing...now I know just above nothing. I had a CD mature, and the banker suggested the annuity. Me, knowing nothing, salivated at the chance to lock in at 4%. If the bottom drops out of everything else in the future, then I guess I'll be thankful for my guaranteed percentage. But after averaging a fairly high % with all my other investments for the past couple of years, when I think of a"measly" 4%, I get p*ssed.

I don't like the idea of having my money locked in for so long (10 years), at THAT %.

But, as my Pop always said..."Live & Learn"
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:35 PM   #28
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Re: Annuities and their role in our investing plan

Quote:
Originally Posted by Cute Fuzzy Bunny
An interesting site:

http://www.annuityfyi.com/
Heh, they appear to be pitching horrific account churning as a service.
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:39 PM   #29
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Re: Annuities and their role in our investing plan

Umm, who wouldn't select option 2?

I would invest in f*zzy b*nny if the numbers made sense.

Edit: and who put in the rule that rewrites b-e-a-v-e-r c-h-e-e-s-e?
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:44 PM   #30
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Re: Annuities and their role in our investing plan

Quote:
Originally Posted by brewer12345
Heh, they appear to be pitching horrific account churning as a service.


Quote:
Originally Posted by wab
Umm, who wouldn't select option 2?
Do you need me to quote the 3-4 times in the last few days someone suggested that specific individuals or the majority of the board members "would not buy an annuity no matter what"?

It appears at this point that the total number of those is four people while only one would rely on an annuity as their primary investment.

Now heres a good follow on question...for those who voted "no how, no way", how many are doing so because they just hate the product (rationally or irrationally) and how many feel that way because they've taken a good look and come to the conclusion that there is no way that the product would ever meet their needs financially, at any stage of their life?
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:47 PM   #31
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Re: Annuities and their role in our investing plan

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Originally Posted by Cute Fuzzy Bunny
Do you need me to quote the 3-4 times in the last few days someone suggested that specific individuals or the majority of the board members "would not buy an annuity no matter what"?
Are these different than the people who say they wouldn't buy a high-load mutual fund no matter what?
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:49 PM   #32
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Re: Annuities and their role in our investing plan

I checked #2, since I would buy leveraged beever chee3e futures if I thought they made sense for me. But I could just have checked the no way, no how button. It boils down to the thought that I can almost certainly assemble a package of assets that gets me the same payout that the insurer is offering and still keep the residual. If they are offering something so absurdly attractve, I would be hesitant to buy it because my perception of the insurers' credit risk would be greatly increased.
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:52 PM   #33
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Re: Annuities and their role in our investing plan

Quote:
Originally Posted by brewer12345
I checked #2, since I would buy leveraged beever chee3e futures if I thought they made sense for me. But I could just have checked the no way, no how button. It boils down to the thought that I can almost certainly assemble a package of assets that gets me the same payout that the insurer is offering and still keep the residual. If they are offering something so absurdly attractve, I would be hesitant to buy it because my perception of the insurers' credit risk would be greatly increased.
Ditto. I buy high-load mutual funds, too. Well, when they are CEF's trading at a huge discount to NAV, anyway.

Poorly worded poll. Do over!
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:54 PM   #34
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Re: Annuities and their role in our investing plan

Perhaps from your perspective. I got exactly what I wanted out of it. Do your own.

Brewer...do you have any information on what % of insurers have defaulted on paying out annuities from a historic perspective, any data on lost cost of living/buying power due to the 10% caps, or any projections on safety of payout vs credit risk going forward for the industry?
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 02:56 PM   #35
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Re: Annuities and their role in our investing plan

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I got exactly what I wanted out of it.
Wasn't that always the point of all your "studies?"
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 03:01 PM   #36
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Re: Annuities and their role in our investing plan

Quote:
Quote from: Cute Fuzzy Bunny on Today at 02:54:11 PM
I got exactly what I wanted out of it.
Quote:
Originally Posted by wab
Wasn't that always the point of all your "studies?"
Isn't that the point of almost everything?


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Re: Annuities and their role in our investing plan
Old 01-29-2007, 03:01 PM   #37
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Re: Annuities and their role in our investing plan

Quote:
Originally Posted by Cute Fuzzy Bunny
Brewer...do you have any information on what % of insurers have defaulted on paying out annuities from a historic perspective, any data on lost cost of living/buying power due to the 10% caps, or any projections on safety of payout vs credit risk going forward for the industry?
Tiny, at least in recent history. Most life insurers that get into trouble either get bought out or get shut down long before they actually impair policyholders (equity, bond and other holders may get the shaft). I believe that some policyholders got nailed on the Executive Life failure, but I am sure a google search r two would bring up a wealth of sordid details.

Projections? Dunno. Creditworthiness has had ups and downs. The equity market crash put a number of companies in real jeopardy. Go take a look at what happened to Allmerica: sold VAs with overly generous guarantees against equity market declines and they very nearly went into receivership. The same or worse could easily happen to other companies when we hit the next problem (equity market crash, credit crunch, credit derivatives implosion, extended period of very low rates, mortality spike, etc.). Many of the Japanese life insurers were about insolvent a few years ago.

Since we are talking about an expensive product with minimal transparency and which is supposed to be an absolute fail-safe, I think a high degree of skepticism is in order.
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 03:11 PM   #38
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Re: Annuities and their role in our investing plan

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Wasn't that always the point of all your "studies?"
Pretty much the point of almost every "study". Someone wants to know something, and chances are they're going to find out exactly what they thought, or were paid, to find out.

The very minute you find someone willing to fund me to actually find something out, at great expense, who has absolutely zero interest in the actual outcome going one way or the other? Point them to me.

Brewer - good info, thanks.
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 03:25 PM   #39
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Re: Annuities and their role in our investing plan

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Or maybe not. Life insurers are extremely difficult for professional credit people to make sense of. How well is a layman going to do?
Good point.......... The easiest way would be to explain the difference between and annuity and a pension in layman's terms...........
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Re: Annuities and their role in our investing plan
Old 01-29-2007, 04:05 PM   #40
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Re: Annuities and their role in our investing plan

I read somewhere that the British are REQUIRED to put a substantial portion of their retirement accounts into a life annuity at age 70. Does anyone know if that is correct? If so, who insures them and what kind of rates do they get?
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