Date: Fri, 10 Aug 2007 08:18:30 -0500
From: joetaxpayer
Subject: Re: Annuities
Newsgroups: misc.invest.financial-plan
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M C wrote:
> After reading some of your posts, I have been checking a little into
> today's fixed and variable annuities. What specifically are the
> advantages and logical uses of the immediate annuities and the fixed
> annuities?
>
> What would be a good informational source to compare all annuities? Why
> are variable annuities so much worse?
>
> Are any annuities a good savings vehicle?
> What would be some good companies and their products?
>
> Thanks to all of you for information given in this group.
I wrote a list of 8 'cons' to VAs at http://www.joetaxpayer.com/annuity.html
The Jefferson National VA may be appropriate for specific situations,
especially if one believes the favorable treatment of dividends and
capital gains is going away, and will be taxed at ordinary rates. In
that case, This VA can be thought of as an unlimited, non-deductable
IRA, more or less (of course there are still differences, I'm speaking
to the non-tax deduction going in, full income tax on growth coming
out). Others have insurance wrappers with total fees as high as 3%/yr.
Googling on [Scott Burns Variable Annuities] will return many of his
articles holding this view.
At the other end, an immediate annuity (see
http://www.immediateannuities.com/ ) can be a good way for an older
person to get a high return, with no principle left on their passing. I
have an 80yr old woman who is afraid to spend. She had longevity in her
family, and will likely live past 90. An immediate annuity will give her
$11900/yr on $100K. If she simply put that in CDs at 5%, and withdrew
the same $11,900/yr, she'd run out of money at 90. If she passes before
90, the insurance company benefits, much after, and they lose out.
That's a brief example of how the immediate annuity works.
JOE
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