Annuity FYI Blog

Some scary statistics came out of ING’s Retirement Research Institute last year.  A whopping 71% of Americans don’t have any kind of formal retirement plan in place.  That’s nearly 3/4 of America that either won’t be able to retire or will have to struggle financially because they didn’t plan ahead.  This is not good news seeing that Americans are living longer than ever and costs are steadily increasing.  This information comes from Financial Planning’s Danielle Reed, in her article “Year-End Reality Check: 71% of Americans Don’t Have a Retirement Plan.”

Of those researched between the ages of 25 and 69, working full-time and earning $40,000 or more per year, 48% of them feel unprepared for retirement.  And that isn’t to say that they don’t have any plans in place.  Seventy-five percent of them are contributing to some type of workplace retirement plan, they are simply worried that it isn’t enough.  This is why many experts want you to compare annuities when planning your retirement.  They are a perfect bridge for the gap between your workplace plan savings and the expenses you will have.

More than 4,000 men and women were surveyed for this study and less than half of them had actually sat down and figured out how much money they will need in retirement.  Not surprisingly, only 28% were working with some type of financial planner to help them ready for retirement.  If more were working with an expert, they surely would have calculated how much they need to live off of in retirement.  By using 401ks, IRAs, pensions, and Social Security in conjunction with annuity products, Americans should be able to finance their retirement well.  We just need to make sure we save enough to use these products and live how we’d like.

Written by Rachel Summit

Follow Finance Mama on Twitter http://twitter.com/#!/financemama

For more than twenty years, research and consulting firm Dalbar has come up with a list of the companies offering the best annuity service.  Their list for 2011 includes both big and small names, but all of the winners have the best customer service in the industry.  This year’s Annuity Service Awards go to AXA Equitable-Equivest, Prudential Financial, Pacific Life, New York Life, SunAmerica Annuity and Life Assurance Company.  Dalbar’s press release, “Dalbar Announces Its 2011 Annuity Service Award Winners in Financial Services,” lists the winners and the criteria for having the best annuity services.  Thousands of tests are done over the course of each year looking into the customer service at these annuity companies.

The industry only averages a 69% friendly engagement when customers initially call the company.  The service award winners are friendly and let their customers know they are appreciated 95% of the time, in comparison.  Annuities are complex products, and making sure that customers understand their product and are comfortable with all aspects is crucial.  Annuity award winners make sure their clients know all of the details from an expert and follow up with them 85% of the time, while the industry as a whole only does it about half of the time.  These companies are also all consistent with their superior treatment of customers and their company practices.  Since this award was introduced 15 years ago, New York Life has won it 12 times and the other winners have all won between 5 and 11 times.

Written by Rachel Summit

Follow Finance Mama on Twitter http://twitter.com/#!/financemama

The FINRA Investor Education Foundation has redesigned their website helping consumers who are at risk of fraud, according to a FINRA News Release.  Their Save and Invest website is not only geared towards the military and their families, but also other investors likely to experience fraud.  The website helps military families manage their money and offers a multitude of online tools, such as variable annuity reviews.  There is also an entire area dedicated to help all consumers avoid fraud and check the background of financial professionals.  One part of the Fraud Center helps consumers by listing popular scams to avoid when it comes to your finances.

There are lots of simple tools and a wealth of information available with this website, SaveAndInvest.org.  The Military Center section of the website helps military families obtain their FICO score and pairs them with military financial professionals.  This section also helps families prepare a budget and deal with changes related to deployment or permanent relocation.  With the many tools available, consumers can calculate retirement needs, research different investment options like annuities, analyze different funds, and check out brokers you are looking to use.  With the website redesign, the FINRA Foundation is confident they will be able to help many more military families and other consumers.

Written by Rachel Summit

Follow Finance Mama on Twitter http://twitter.com/#!/financemama

A recent study from LIMRA showed that 35% of retirees use annuities to finance their retirement, according to USA Insurance’s Insurance Corner.  In the article “Study: Annuities could become larger income stream for retirees,” it is suggested that this percentage is likely to increase rapidly in the future.  Fifty percent of retirees between the ages of 75 and 79 use annuity products to help pay their expenses.  Twenty percent of those under the age of 65 are using annuities, but that’s not to say that they won’t purchase an annuity at some point during retirement.  Immediate annuity rates may be a strong factor in determining which products these retirees use to finance their retirement.

The majority of Americans use pensions and social security as their main retirement income.  But we all know that traditional pensions are becoming obsolete and even if social security stays around, it is not likely to be enough income to carry you through retirement.  Annuities only account for 4% of current retiree income, a number that surprises me.  With excellent fixed indexed annuities and other options out there, I’d expect that 4% to skyrocket over the next few decades.  It’s crucial to protect your assets, which consumers with $250,000 to $499,000 in assets seem to realize more that others.  Half of them already receive annuity payments, many of which are guaranteed for life.  If you have any questions about how an annuity product can finance your future, speak with one of our experts.

Written by Rachel Summit

Financial advisors whose clients hold annuities haven’t had to worry about fielding concerned investors’ calls in this tumultuous market.  According to The Wall Street Journal article “Annuities Provide Safety, At a Price,” author Russell Pearlman says that annuity sales have been increasing due to the difficulty in the financial markets.  Annuity sales went down in 2008, 2009, and 2010; but are expected to increase in 2011.  With the increasing interest in the best annuities on the market, companies like Hartford and New York Life are introducing new and improved products to meet investor demands.  But they have often seen an increase in annuity sales before they can even get their new products on the market.  New York Life’s main fixed immediate annuity has seen a sales increase of 62% since last year at this time.

Both fixed annuities, which guarantee you a specific rate of return, and variable annuities, in which your rate of return varies while you receive tax benefits, have seen an increase in sales.  For an added fee, you can guarantee that you will receive payments over your lifetime even in a declining stock market.  You can also opt for a death benefit annuity where your payments will continue going to your heirs after your death.  Principal Financial Group says that now is a great time for an annuity if you want to maintain exposure in the markets while guaranteeing a specific income level.  The article points out the importance of speaking with an expert and knowing all the complexities involved before purchasing an annuity.  They take a lot of risk out of investing so many investors are sleeping soundly at night knowing that they have a guaranteed stream of income.

Written by Rachel Summit