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Old 02-07-2010, 08:59 AM   #1
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OK, I know most would advise against annuities, but my employer is offering to buy one as an incentive to leave early. My questions are: 1) If you HAD to choose an annuity company, which one? 2) Is there an easy formula or calculator to determine return? Thanks in advance for your understanding of a newbie (posting in the right place?) and advise.

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Old 02-07-2010, 09:19 AM   #2
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Hi rockeye, and welcome!

I'm not competent to answer your questions, but we have folks who are. I'm sure they'll be along soon.


"Comprehensive health insurance is an idea whose time has come in America." President Richard M. Nixon, February 6, 1974
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Old 02-07-2010, 09:25 AM   #3
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First of all, there are many different types of annuities. Some are okay for the right person in the right situation; others are pretty much terrible for everyone regardless of circumstance.

So first of all: What kind of annuity is this? I'm guessing it would be an "immediate annuity" or an SPIA that will provide monthly income upon retirement. (This, IMO, is a type of annuity that can make sense as a partial retirement income solution for some folks in the right situations.) If so, there are several places on the Web to "price" these -- usually you enter your age and gender along with an amount to buy, and they spit out the monthly payments you'd get for life.

You need to consider your needs and make sure you're comparing apples to apples when it comes to things like income for surviving spouses and inflation adjustments (if any). Generally this is a pretty bad time to buy one because the monthly payout is largely tied to long-term, high-quality bonds. The lower their current market yield, the lower your payout.
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)
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Old 02-07-2010, 12:25 PM   #4
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Assuming an annuity is the only thing on offer (you are not being offered the choice of a lump sum), I would pick carefully. You want a very strong, solvent insurer. My preference runs to large, AA-/Aa3 or better rated mutual companies. Examples of these companies include: TIAA-CREF, NY Life, MassMutual, NorthwesternMutual and Guardian, although there are certainly others.

I would stick to a SPIA. VAs, etc. are overly complicated and not worth the trouble.
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