Anonymous
08/10/2013 20:20
Subject: Re:Should my mom buy an annuity?
Anonymous wrote:There are instances in which deferred annuities may be a good idea. For example, I may put some of my retirement finds into a deferred annuity in my early 50s as a retirement planning tool. It will be money I have absolutely no need for, though, for 10-15 years. Statement like "all deferred annuities are ripoffs" are made by ill-informed individuals.
However, it's not appropriate for someone in your mother's situation. One of the keys is that though the payout could begin in 3 years, the surrender charge, bonus recapture and MVA apply for 10 years. That means that she'll be penalized for taking payouts. Not good for someone who is talkign about investing all of her retirement assets.
As a rule of thumb, deferred annuities are not a good idea. If you've sat down and run the numbers and fully understand the product and the charges and think it makes sense, that's fine, but if an elderly retiree or unsophisticated investor is being pushed towards a deferred annuity at least nine times out of ten it is likely not a good idea.
Anonymous
08/10/2013 16:38
Subject: Re:Should my mom buy an annuity?
There are instances in which deferred annuities may be a good idea. For example, I may put some of my retirement finds into a deferred annuity in my early 50s as a retirement planning tool. It will be money I have absolutely no need for, though, for 10-15 years. Statement like "all deferred annuities are ripoffs" are made by ill-informed individuals.
However, it's not appropriate for someone in your mother's situation. One of the keys is that though the payout could begin in 3 years, the surrender charge, bonus recapture and MVA apply for 10 years. That means that she'll be penalized for taking payouts. Not good for someone who is talkign about investing all of her retirement assets.
However, it's not appropriate for someone in your mother's situation. One of the keys is that though the payout could begin in 3 years, the surrender charge, bonus recapture and MVA apply for 10 years. That means that she'll be penalized for taking payouts. Not good for someone who is talkign about investing all of her retirement assets.
Anonymous
08/09/2013 22:45
Subject: Should my mom buy an annuity?
13:45 back ... just to clarify/correct ... I meant to say diversified funds (plural) such as Vanguard.
With $1M to invest I would not buy any individual equities but you can come up with a good diversified investment in 4-5 Vanguard funds including bond fund, stock funds, etc., mixing large cap, small cap, dividend growth, etc.
Some would say go index funds, others (such as the Vanguard advisor newsletter) would say go to actively managed VG funds to avoid some of the pitfalls of the index funds. Either way they (for example) are well managed funds with fairly low expense ratios. Just wanted to clarify that I would not put the $1M in one diversified fund.
With $1M to invest I would not buy any individual equities but you can come up with a good diversified investment in 4-5 Vanguard funds including bond fund, stock funds, etc., mixing large cap, small cap, dividend growth, etc.
Some would say go index funds, others (such as the Vanguard advisor newsletter) would say go to actively managed VG funds to avoid some of the pitfalls of the index funds. Either way they (for example) are well managed funds with fairly low expense ratios. Just wanted to clarify that I would not put the $1M in one diversified fund.