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Tag Archives: annuities

Retirees and Immediate Annuities

Retirees who withdrew a lump sum from their retirement plans would seemingly benefit from an immediate annuity.  In theory the sum can be changed into monthly, quarterly or annual payments “that represent a portion of principal plus interest” and will last over a lifetime.  But this has risks: a) getting a lifetime of regular payments doesn’t counter inflationary issues; b) you don’t know if you’re going to live long enough to get your money back; c) since the interest rate is fixed when you buy it, you run the risk of getting low rates for good.  Those who are more elderly may have less concern about inflation or liquidity but then they really need to ask whether they will benefit at all from such annuities.

Other options therefore include choosing a “period certain” or “term certain” as this guarantees payment to beneficiaries for a certain amount of time if you die earlier than expected.  The “joint and survivor” option makes payments to the spouse until s/he dies and the “refund” will return all or at least some of the principal to your beneficiaries.
There are so many different packages out there that you need to analyze what is best for your circumstance.  A balanced portfolio of mutual funds will ensure a comfortable retirement income.


Annuity Fees

It’s important that the client reads the small print before signing an annuity contract.  There can be various additional fees that might not be so clear.  These include:  the fee incurred for an early withdrawal which usually starts at 7 percent and then drops a percent each year until the seventh year; mortality fees of… Continue Reading

Where to Get an Annuity

Annuities can be purchased via insurance companies, agents, stockbrokers or banks.  To get the best deal vis-à-vis fees and quality, shop around carefully.  Here is what you need to do:  Learn about the insurer and then compare contracts. Since there are so many discrepancies in these areas, it is important you do all your homework… Continue Reading

Taxes of Payouts

Payouts will be taxed in different ways depending on whether you have a qualified or non-qualified annuity.  In the first case, this is basically some kind of retirement plan and will be privy to all tax benefits/penalties Congress established.  Benefits include: no payment of income tax on withdrawal of nondeductible/after-tax amount imputed into the plan;… Continue Reading

Withdrawing Annuities

There are two ways of withdrawing your deferred annuity: a one-time payment or monthly payment.  Monthly payments are more common.  The amount of money you will receive depends on: size of your contract; your life expectancy; if payments continue after your death; if you have chosen the minimum requirement payment options.  If you opt for… Continue Reading

Types of Annuities

There are different types of annuities, dependent on: how the money is paid in; withdrawn and how it is invested.  The most basic ones are: single-premium (where you make the investment in one go); flexible-premium (series of payments); immediate (payments begin once annuity has been funded – popular with retirees); deferred (receive payouts a long… Continue Reading

How Investors Benefit from Annuities

Investors can benefit from annuities in the following two ways: saving money for a long-term project and a guaranteed income for a set period of time.  Annuities are great for funding a retirement or for large education fees when it is set in the child’s name under “Uniform Gifts to Minor Acts.”  When the money… Continue Reading

Understanding Annuities

  An annuity is a when you get a certain amount of money paid to you “for a fixed or contingent period,” often for your entire life  “either in prior installment payments or in a single payment.”  There are different types of annuities as well as a variety of tax aspects, dependent on what the… Continue Reading