Annuities are back in the news. And the insurance industry is jumping for joy. Should you?
The Obama Middle Class Task Force is looking to annuities as a way to make retirement just a little more secure. While they have come up with numerous incentives, they should also consider a fixed lifetime tax on all retirement income up to a certain amount. They have discussed this for the first $10,000 of annuity income but they could also extend this incentive to IRAs as well. If the retiree (or future retiree) could determine how much of a bite taxes would take, they could better estimate how much they will actually get when they retire. Currently, the assumption is that retirees will earn less and therefore be taxed at a lower rate. Guaranteeing that rate will enable folks to project better.
Unless you or the insurer passes away! More on annuities at Target2025.com
Showing posts with label variable annuities. Show all posts
Showing posts with label variable annuities. Show all posts
Tuesday, February 2, 2010
Monday, January 4, 2010
Variable Annuities of a Different Sort
Older investors may have a new annuity to examine in 2010. It may be simply a better-for-the-insurer version of the old variable annuity mouse trap. Younger investors also need to take note of this variable annuity product as well.
Annuities come in all sorts of flavors. Single premium annuities are an all-in type that is purchased in a lump sum. Flexible annuities spread the payments over a period of time.
Sometimes these are deferred until a later date whereby the investor can withdraw money all at once or in scheduled payments. Investments grow in a tax-deferred environment. Fixed annuities offer the investor the lowest risk (in part because the insurance company invests in bond funds) which insures your principal is never lost. Immediate annuities are also lump sum investments that begin distributions immediately.
But there is a new variable annuity product coming to market that will attempt to lure a wide range of investors into its trap. Everyone should take notice of what this investment/insurance product offers in large part because the sales pitch is designed to play off your fear of losing what you already have gained.. Question is whether you understand what this trap means to your retirement and whether it is worth paying the high cost.
Paul Petillo is the Managing Editor of Target2025.com
Annuities come in all sorts of flavors. Single premium annuities are an all-in type that is purchased in a lump sum. Flexible annuities spread the payments over a period of time.
Sometimes these are deferred until a later date whereby the investor can withdraw money all at once or in scheduled payments. Investments grow in a tax-deferred environment. Fixed annuities offer the investor the lowest risk (in part because the insurance company invests in bond funds) which insures your principal is never lost. Immediate annuities are also lump sum investments that begin distributions immediately.But there is a new variable annuity product coming to market that will attempt to lure a wide range of investors into its trap. Everyone should take notice of what this investment/insurance product offers in large part because the sales pitch is designed to play off your fear of losing what you already have gained.. Question is whether you understand what this trap means to your retirement and whether it is worth paying the high cost.
Paul Petillo is the Managing Editor of Target2025.com
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