Investing in a Perspective 11 Fixed or Variable Annuity

My wife and I met with a certified financial planner. Right now we have about $390,000 in a fixed 457 (b) with the city of chicago deferred comp getting 3.22% in the last 12 months. The planner offered different plans ranging from conservative to aggressive growth with a 6% guarantee on my investment. It sound like if I gain or lose for the year I get 6%. I am 65 years old and if I don’t touch the money when I reach the age of 70 1/2 I will be guaranteed the minimum amount of $17, 748 for life no matter what I have left in the original investment. Can I get your opinion on this. The company is Jackson National Life Insurance Company. Thank you. I saw one of your seminars at Northwestern Memorial quite a few years back and you were great. Do you still do them?

Terry Says:  You really need to understand the fine print here.  There is no guarantee that you can take a withdrawal of the principal plus 6% annual interest.  That is a guaranteed value of your “income base” upon which you can withdraw money every year.  And I know these tax-deferred annuities sound like a good deal, and they are — unless inflation ratchets up and you are “stuck” with a fixed income.  Remember, at only 3 percent annual inflation, the value of that fixed check will be cut in half in 25 years!  So, you definitely don’t want to lock a lot of your money up in this deal — f0r sure no more than 25%.   And yes, I will be speaking on Monday, April 7th at the Harold Washington Public Library at noon.  It’s free and open to the public.