Annuity FYI Blog

Scott Burns of the Boston Globe was asked from a couple nearing retirement for some guidelines in their retirement planning.  In “Eliminating debt, assessing spending habits are essential to secure retirement,” the columnist gives his important steps towards retirement.

1. Get debt and spending under control.  Do what you can to eliminate all of your debt.  Lower your spending by taking stock of what you really need.  It might be wise to downsize your living arrangements or sell real estate and rent.
2. You must have a guaranteed monthly income.  An individual lifetime annuity or a joint and survivorship lifetime annuity will help secure the rest of your assets from being drawn down as much.
3. Get investment expenses under control.  The easiest way to minimize these expenses is by becoming an index fund investor.  Be sure to diversify investments across asset classes.  Burns recommends you begin with “domestic fixed-income, expand to domestic stocks, and then branch out to international stocks, international fixed-income, REITs, energy and emerging markets.”
4. Take just as much time to consider your spending as you do your investing.  Every $1,000 that you save instead of spend adds up to $25,000 in retirement savings.  Easy switches like using generic prescription drugs can put you on the path to spend less.

By taking stock of your spending habits, eliminating your debt, using 401k annuities rollovers to guarantee monthly income for life, and making smart investment decisions; you should be able to obtain the comfortable retirement that we all desire.

FINRA released survey results detailing the financial habits of American adults, according to their news release “FINRA Foundation Releases Inaugural Financial Capability Survey.”  The FINRA Investor Education Foundation was researching the ways that Americans spend, save, borrow, and plan out their future finances.  This National Financial Capability Survey was completed by FINRA, the U.S. Department of the Treasury, and the President’s Advisory Council on Financial Literacy.  The leaders of all three institutions met at the U.S. Treasury with some high school students to discuss the results.

With an unknown financial future as a reality for many Americans, results showed that many need more education to compare annuities with other financial products and solutions to retirement.  More than half of Americans do not have money saved for their children’s education.  Over twenty percent use methods like payday loan centers and pawn shops regularly for borrowing money.  Most Americans don’t have an emergency fund for financial emergencies.  Only forty-six percent of those surveyed were able to correctly answer two basic questions about inflation and interest rates.  FINRA believes that more financial education is a necessity for Americans.

The FINRA Foundation is funding thirty-one new grants to provide financial education throughout communities that is unbiased and that works.  A partnership with United Way Worldwide will seek out low- and middle-income Americans that need this education to be on successful financial paths.  FINRA is also expanding the Smart investing@ your library program.  Through a partnership with the American Library Association, this program reaches twenty-three million Americans throughout twenty-six states.  These financial education programs are important to FINRA and the U.S. government so that financial mistakes from the past are not repeated in the future.

Despite closing the MassMutual Retirement Income (MMRI) unit, MassMutual will continue to sell annuities and other retirement products.  Bill Kenealy, of Insurance Networking News, discusses this development in “MassMutual Axes Retirement Unit.”  The MMRI was created in April of 2007 to focus on solutions for advisers looking to meet the guaranteed lifetime income needs of their customers.  This unit had been created as a separate entity to MassMutual’s U.S. Insurance Group to closely monitor investment behaviors and risk issues, but its demise will not stop the sale of annuities and other retirement products for the company.

Guaranteed lifetime income products like annuities will now be sold through other divisions of MassMutual.  The closing of the MMRI unit happened a week after a new platform was introduced by MassMutual’s Retirement Services Division.  The RetireSmartSM platform will be begin in the second quarter of next year.  It is a plan to get important materials to both plan participants and sponsors, allowing them the best possible experience in the marketplace.  All participants will get information in an easy to understand and visually appealing format which is great for often dry or confusing material.  A similar format will be used for the plan sponsors allowing both them and their participants to take necessary actions easily.

In “AIG Learns It’s All in the Name” from FinancialPlanning.com, we learn that taxpayers’ bailout dollars have helped AIG bounce back faster than many expected.  American International Group is one of the few insurance companies that has successfully come back from the financial mess it was in through creative branding.  It’s subsidiary was previously named AIG Annuity Insurance Co. but was switched this year to Western National Life Insurance Co.  That distancing from the tarnished brand name of AIG helped lead Western National to be the third quarter’s number one seller of fixed annuities through banks.  New York Life Insurance Co. does still hold the number one spot for the year, but believes it lost it’s third quarter spot due to low interest rates in the market.

Western National has been able to attract more annuity clients because they are offering higher interest rates than competitors.  They do this by making agreements with banks to lower the commissions they pay to the banks.  In turn, the banks receive more annuity clients after a couple years of clients shying away from the products.  Banks believe that the volume of fixed annuity customers they receive will make up for the lower commissions they are being paid by Western National.  While some other insurance companies may not think it is fair that AIG’s Western National is using government bailout money to cushion it’s higher interest rate offerings, that was part of the purpose for the bailout.  Companies should use that money in a way that they will become successful again and repay the bailout money to taxpayers.

Immediate annuities are a great product for those close to retirement, according to “Investments for 2010 recommended” on TaipeiNews.Net.  With a roller coaster past couple of years in finance, it is difficult for anyone to say what the best investments will be in 2010.  Most people will not know how well their investments performed until well into 2011.  The first steps in financial planning are to set a goal, make a long term plan to meet that goal, and stick with the plan.  Advisers seem to agree that well diversified portfolios are best for nearly all investors.  It is wise to have annuities in those portfolios to protect against longevity risk and help guarantee you have enough money in retirement.

Lifetime income annuities pay out monthly income over your lifetime after an initial lump sum payment.  One of the best products for people that are close to retirement are immediate annuities.  They have no waiting period before the investor begins to receive their monthly payments.  It is always necessary to research the strength of the insurance companies that annuities are purchased from to ensure your income stream is guaranteed for life.  All financial advisers have different ideas and recommendations for their clients.  Set your goals and meet with an expert to determine the best financial course for your retirement happiness.