Income annuity — BEWARE!
I’m age 65, hoping to retire at 67. My financial advisor recommended I convert some of the money I have in the market into an income annuity to protect some of my investments and provide monthly income in addition to my social security and pension upon retirement. The premium would be approximately $200,000.00 to receive $12,000.00 yearly until death or $222,000.00 to receive $12,000.00 yearly with beneficiaries. Good idea or not?
Terry Says
Here’s how to check to see if your “advisor” is ripping you off!
Go to www.ImmediateAnnuities.com. Put in the amount you have to invest ($200,000), your age and state of residence. Then click to see how much money you could get every month for the rest of your life for that amount!
Next, you can add another factor. Suppose you want to have this income last over your lifetime and that of your spouse. Just add his age and click “two lifetimes.” You’ll get less, of course, each month because now the annuity covers two lives.
BUT, I’m betting this is not what your advisor is trying to sell you — and that he is going to make a big commission on the product (even though it won’t be disclosed) AND that you will be tied up for at least 10 years. I absolutely HATE this type of sales pitch. It’s likely for an “equity-linked” annuity. Feel free to show this response to him/her!
And if you do decide to go with an immediate annuity limit yourself to no more than 20 percent of your assets — because that will be a FIXED monthly check, starting now — and inflation could ravage the spending power of that fixed amount. Thankfully, your SS benefit will be increased as inflation increases.
