Annuity question and How do Amerprise agents sleep at night

[RockOn]

Originally Posted by brewer12345

RockOn, if you want an annuity, buy one. Don't waste your time trying to convince the rest of us its a good idea.

Very good advice.

I'm not really trying to convince anyone it's a good idea. Obviously most of you already know annuitites are not part of your retirement plans. I just wanted some help on how safe they are and a confirmation that the returns I calculated were correct. Both were answered.

From what I see annuities can be set up to work exactly like many defined benefit plans. Should one always take the lump sum option because 1) one could always die and all the payouts would be gone; and, 2) there might be single company risk? I wonder if all the defined benefit pension people on the site would give up thier pensions for a lump sum and a 60/40 4% SWR plan. I really doubt it. That's what doesn't make sense about all of this to me. The only drawback to the annuity as compared to a defined benfit plan is the risk of the insurance company not paying off, a private company plan may not pay off either and this has happened many times already, the government pension plans are safer.

But I'll let it go at that. I might buy an annuity, but not for a few years. I have to get my kids through college first and then see where I am. From what I read 60 seems to be a good time to take the serious look, the payouts are higher (clearly more than 4%) and there is less time for the insurance company to get in trouble.

[FinanceDude]

Originally Posted by clifp

Moving somewhat back to the original topic.
Who typical insures Amerprise's annuities?

The company behind them is Riversource........

It seems to me that a variable annuity the man protection is the underlying value of the sub-accounts? is that true and if so are VA safer?

The account value of the sub-accounts is the real value, because that's what you would get if you wanted the lump sum, NOT the "income base" or "living benefit" base.......

Finally, Bill has another annuity with Amerprise I believe is worth roughly $150K it is almost 4 year old and the surrender charges are about 7K. I'm not going to press him to do anything but when he comes out to visit me at the summer, I may start nudging him to do something else.

He will be out the $7K if he moves it. I guess it might depend on him if he feels like he wants to "take the hit" and move it. If he has made money in this contract, and he's more than $7,000 ahead, maybe. What I can tell you is that if I told him to take a hit on it, even if I didn't put him in another investment, I would be in deep doo-doo with my Compliance department.........sounds crazy, but it's true..............

I guess I would be cautious on that.........

In general, should you wait to move until the surrender fees go away? Also if you make an exchange from one annuity to another to you still have to pay the surrender fees?

If it was me, even if the annuity wasn't all that great, I would wait. You have to make up 4.5% just to get back, that may take time. However, if he agrees that he's ok with it, then maybe it would be ok. And YES, you have to pay surrenders on 1035 exchanges..........

One thing I DEFINITELY would do is to have him call the annuity company and ask how much of a surrender-FREE amount he has. Most annuities have an amount that gets bigger every year that you can take out without a penalty. Maybe in his case, he could take out $60K penalty-free. You could help him set up an account at VG and transfer that amount IRA to IRA. That should work pretty easily. Then every year, one day after the contract anniversary date, move the next piece. That way, he doesn't take a surrender, and you are helping him move over time to VG.............