- 15,041
Re: Annuities Forum
You're going to have to give more information. How much money are we talking about? Will the person contribute more? Also, you say annuitize in 20 years, do actually mean annuitize, or take income? Also, what state are you in? Finally, I noticed you said fixed or variable? Does your B/D not allow indexed, and are you severely limited on your variable options?
You're going to have to give more information. How much money are we talking about? Will the person contribute more? Also, you say annuitize in 20 years, do actually mean annuitize, or take income? Also, what state are you in? Finally, I noticed you said fixed or variable? Does your B/D not allow indexed, and are you severely limited on your variable options?
G
Guest
Guest
Re: Annuities Forum
Index annuities are poison for your pocketbook
<*Prev*Next*>
RIP-OFF ALERT:*For years, I have warned people about something known as index annuities. They're one of the hottest products in the investment and insurance landscape, but they're poison for your pocketbook.
Index annuities really took off after the stock market got decimated a few years ago and marketers saw the opportunity to take advantage of people who were worried about outliving their money.
Of all the things you could for your wallet, buying an index annuity at any age is just about the*worst*thought possible.
Money*magazine recently ran a long-form feature about all the problems that have befallen those people who are sold these things. The story also dug into why index annuities are pushed so hard to the great detriment of buyers. The simple reason is a massive commission goes to the insurance salesperson who sells it!
Index annuities are sold with the promise that you can earn a return based on the stock market in good years, along with the guarantee that you'll*lose no money in bad years. That's very attractive to someone who is 65 and worried about having enough money for the rest of their life. It's a lure that makes people think, "Hey, I can play the market with no risk on the downside? What could be wrong with that?!" Actually, so much is wrong here, though chiefly 2 things come to mind:
These plans come with massive fees. There's what's called a "surrender charge" that can hang with you for 15 years. If you buy in and then need to get out before 15 years, that surrender charge can be tens of thousands of dollars or more.
In most of the convoluted contracts for index annuities, the insurance company can decide to change how much these policies earn each year. So they can offer you upfront a great deal and pull a sucker move on you by changing the payout. Then you're stuck unless you want to pay that huge surrender charge.
The number of complaints filed with state insurance regulators about people who sell index annuities around the country is huge. But state regulators often cannot or will not do anything to help those who were sold on false promises.
Here's a final word of warning: The pitch for index annuities often starts with an invite to a free lunch or dinner seminar to learn more. Believe you me, that is the most expensive meal you will ever eat. If you are past 60, index annuities are a danger to your financial health, your financial security and your long term ability to live independently. Kick that insurance person who tries to sell you that junk straight to the curb! *
From clarkhoward.com
Index annuities are poison for your pocketbook
<*Prev*Next*>
RIP-OFF ALERT:*For years, I have warned people about something known as index annuities. They're one of the hottest products in the investment and insurance landscape, but they're poison for your pocketbook.
Index annuities really took off after the stock market got decimated a few years ago and marketers saw the opportunity to take advantage of people who were worried about outliving their money.
Of all the things you could for your wallet, buying an index annuity at any age is just about the*worst*thought possible.
Money*magazine recently ran a long-form feature about all the problems that have befallen those people who are sold these things. The story also dug into why index annuities are pushed so hard to the great detriment of buyers. The simple reason is a massive commission goes to the insurance salesperson who sells it!
Index annuities are sold with the promise that you can earn a return based on the stock market in good years, along with the guarantee that you'll*lose no money in bad years. That's very attractive to someone who is 65 and worried about having enough money for the rest of their life. It's a lure that makes people think, "Hey, I can play the market with no risk on the downside? What could be wrong with that?!" Actually, so much is wrong here, though chiefly 2 things come to mind:
These plans come with massive fees. There's what's called a "surrender charge" that can hang with you for 15 years. If you buy in and then need to get out before 15 years, that surrender charge can be tens of thousands of dollars or more.
In most of the convoluted contracts for index annuities, the insurance company can decide to change how much these policies earn each year. So they can offer you upfront a great deal and pull a sucker move on you by changing the payout. Then you're stuck unless you want to pay that huge surrender charge.
The number of complaints filed with state insurance regulators about people who sell index annuities around the country is huge. But state regulators often cannot or will not do anything to help those who were sold on false promises.
Here's a final word of warning: The pitch for index annuities often starts with an invite to a free lunch or dinner seminar to learn more. Believe you me, that is the most expensive meal you will ever eat. If you are past 60, index annuities are a danger to your financial health, your financial security and your long term ability to live independently. Kick that insurance person who tries to sell you that junk straight to the curb! *
From clarkhoward.com
- 8,707
Re: Annuities Forum
How mny times are you going to post that Clark Howard drivil.
How mny times are you going to post that Clark Howard drivil.
- 2,455
Re: Annuities Forum
This all comes from folks who don't understand them and how they work.
The surrender fees are there for the benefit of the masses of people who have money with the insurance company.
They are designed as a retirement vehicle. Why would you want to take money out? Just like through your saving years you can't touch your 401k without a penalty. I suppose that is a crock too (401Ks).
What are they going to say next..............CDs suck too?
I like Clark but some of the crap these people talk is just stupid. He needs to stick to how to save money at the Dollar store type commentary.
This all comes from folks who don't understand them and how they work.
The surrender fees are there for the benefit of the masses of people who have money with the insurance company.
They are designed as a retirement vehicle. Why would you want to take money out? Just like through your saving years you can't touch your 401k without a penalty. I suppose that is a crock too (401Ks).
What are they going to say next..............CDs suck too?
I like Clark but some of the crap these people talk is just stupid. He needs to stick to how to save money at the Dollar store type commentary.
- Thread starter
- #6
Re: Annuities Forum
He plans to put in $25,000 to start, add $10,000 @ year, and annuitize in 20.
An indexed annuity is a possibility.
The client lives in PA.
He plans to put in $25,000 to start, add $10,000 @ year, and annuitize in 20.
An indexed annuity is a possibility.
The client lives in PA.
- 8,707
Re: Annuities Forum
you started out asking about qualified money....So since your exceeding IRA limits which qualified plan would this be under....not all annuities are filed for every qualified plan...
you started out asking about qualified money....So since your exceeding IRA limits which qualified plan would this be under....not all annuities are filed for every qualified plan...
- 15,041
Re: Annuities Forum
What Norwayguy said. We're not trying to be anal, but these things do make a difference. Also, clarify annuitize. Are we talking taking income, taking distributions, or a true annuitization? And if we are talking annuitization, how does he plan to do it, life only, joint life only, period certain, what?
What Norwayguy said. We're not trying to be anal, but these things do make a difference. Also, clarify annuitize. Are we talking taking income, taking distributions, or a true annuitization? And if we are talking annuitization, how does he plan to do it, life only, joint life only, period certain, what?
- 8,707
is the 25K a rollover and by 10K per year do you mean 5K for each the wife and husband? Otherwise does this client own a business because if not we are headed non-qualified with these amounts.
- 924
I think I'm missing something here too.
Why not go non-qualified? There is not much point at that age of doubling up on the tax deferred aspect. Sure, it would not get a deduction like an IRA, but in the long run the taxes are going to be paid one way or another.
I would rather see someone just get an annuity that allowed follow-up smaller contributions (got one in mind) and let it grow tax deferred. By the time this guy retires, it may be the only bit of money he has socked away -picture means-tested SS and a takeover of private IRAs. Just kidding... sort of.
Why not go non-qualified? There is not much point at that age of doubling up on the tax deferred aspect. Sure, it would not get a deduction like an IRA, but in the long run the taxes are going to be paid one way or another.
I would rather see someone just get an annuity that allowed follow-up smaller contributions (got one in mind) and let it grow tax deferred. By the time this guy retires, it may be the only bit of money he has socked away -picture means-tested SS and a takeover of private IRAs. Just kidding... sort of.
