My parent's financial planner is trying to sell them a variable annuity. They have asked for my advice, and after a review of the information provided, I have some serious questions about this plan.
Facts: Parent's have $180,000 of investable assets. About 50% of that is in an IRA. Dad is 70 and in moderate health. Mom is 63 with many medical problems, but a long life expectancy.
My parent's need $12,000 extra a year on top of social security. They would like to have money left over for the kids ($100,000 is his dream).
Financial advisor is trying to sell them a variable annuity with a guaranteed income and death benefit. The fees are about 3% with a penalty for early withdrawal. I think this is very high and I don't understand why you would put IRA assets into a variable annuity because there is already tax deferral in the IRA.
Also, the advisor suggested they put ALL of their assets into the the variable annuity, which I think is crazy. What I am looking for from the group is advice/suggestions on the following two topics:
1) Arguments against the suggested all-in variable annuity strategy
2) Alternative suggestions to meet the above stated goals
I have a meeting with this advisor on Friday, July 24th, so the earlier feedback the better. Thanks in advance.
Facts: Parent's have $180,000 of investable assets. About 50% of that is in an IRA. Dad is 70 and in moderate health. Mom is 63 with many medical problems, but a long life expectancy.
My parent's need $12,000 extra a year on top of social security. They would like to have money left over for the kids ($100,000 is his dream).
Financial advisor is trying to sell them a variable annuity with a guaranteed income and death benefit. The fees are about 3% with a penalty for early withdrawal. I think this is very high and I don't understand why you would put IRA assets into a variable annuity because there is already tax deferral in the IRA.
Also, the advisor suggested they put ALL of their assets into the the variable annuity, which I think is crazy. What I am looking for from the group is advice/suggestions on the following two topics:
1) Arguments against the suggested all-in variable annuity strategy
2) Alternative suggestions to meet the above stated goals
I have a meeting with this advisor on Friday, July 24th, so the earlier feedback the better. Thanks in advance.