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Old 04-12-2013, 08:13 AM   #21
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Originally Posted by Sun456 View Post
If you do a search on annuities in this forum you can get some good info.

I bought some myself, but only after extensive research. A couple of things that you have to realize before making the leap.

1) This is not an investment. It is an insurance product. Investments do not come with guarantees.

2) The company is contractually guaranteeing you an outcome and for that you are giving some things up.

3) You are giving up access to your principal. The products are designed to drain the account through fees.

4) If you are looking for guaranteed income and don't mind buying it with the principal then I think annuities can be a great choice. For me the peace of mind was well worth it.

5) You want to spread the risk between multiple annuity companies. I spread my principal out between 4 companies in order to reduce the risk with any one company.

6) Generally if the annuity gives you a benefit they take something away in another place. So if there is a death benefit you may not get as high of a roll up rate. Look at all the details to understand the give and takes. Decide what is important to you and look for those products that give you more of what you want but be willing to trade off the elements that are not as important to you.

7) Don't buy unless you read and understand the contract. Take notes. Make your own spreadsheet. Compare the outcome with the examples the insurance company give you. Pay attention to any capitalized term. Reference their definition of it. Do not trust what the sales person tells you. They are often wrong.

I own 4 annuities but shopped many more. You have to talk to alot of sales people to get a broad view of the market. No one person carried all the products. It took a lot of time but I'm happy with the result.


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Old 04-12-2013, 08:39 AM   #22
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5) You want to spread the risk between multiple annuity companies. I spread my principal out between 4 companies in order to reduce the risk with any one company.


You might also look at spreading the annuities out over time ie build a ladder.

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Current AA: 75% Equity Funds / 15% Bonds / 5% Stable Value /2% Cash / 3% TIAA Traditional
Retired Mar 2014 at age 52, target WR: 0.0%,
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Old 04-12-2013, 10:06 AM   #23
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Sun456 - Item #4 hits in on the head, that is why I rolled over a 401K account for my single premium annuity 15 years ago. The guaranteed monthly annuity payment is what sold me. Had I not done that, one of the "legs" of my retirement stool would be significantly shorter than it is today.

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