Annuity FYI Visitor Blog

Symetra Financial’s press release “Five Steps to Retiring On Time” lists annuities as an important tool for retirement success.  A recent survey conducted by Symetra and two partners showed that nearly half of pre-retirees (45 and older) have not determined how much income they will need to take them through the rest of their lives.  Well over half of the pre-retirees didn’t think that they would be able to retire at their ideal retirement age.  With this information, Symetra has issued five steps that they believe can lead you to a comfortable retirement.

First you should “create a plan.”  Determine how much money you will need in retirement, including medical care, inflation, traveling, and other expenses.  Many estimates show that people need about 80% of their pre-retirement income in retirement.  The next step is to “manage and reduce your expenses now, before retirement.”  Cut costs where you can and pay off your credit card debt before you lose your working income.  The third step is to “diversify your investment portfolio.”  While it still will not guarantee a profit or promise no losses, spreading your investments over different products and investment styles is the best way to protect against the market.

Next you should “continually evaluate your investments.”  Changes in your life, health, job, and other areas make it important to reevaluate your goals and risk levels.  The final step is to “consider creating a guaranteed income stream during retirement.”  Annuities are one of the best products to ensure that you do not outlive your savings.  Always check fixed annuity rates and variable rates because you can find great products out there to help you in retirement.  By using a portion of your savings to purchase an annuity, you guarantee a monthly income stream coming in for life.

The FINRA (Financial Industry Regulatory Authority) Foundation has some financial advice for all of us as we move along in a new decade.  FINRA’s news release this week was entitled “FINRA Foundation Issues Seeking Solid Financial Footing for the Next Decade: 10 Tips for 2010.” This advice released by FINRA’s Investor Education Foundation is meant to help people regain financial footing.  The Foundation’s recent ‘Financial Capability Survey’ highlighted the financial mistakes that many Americans are making.  From engaging in behaviors that carry excessive fees to being unprepared for financial emergencies, the FINRA Foundation realizes that many Americans need sound financial advice.  They hope that this new decade will bring better financial decisions to keep us all out of another financial meltdown.

Some of the highlights are as follows.  Research financial products by shopping around.  Whether looking for the best fixed annuity rates or credit card offer, take your time and compare products.  Determine how much money you need to save for retirement well in advance of needing that money.  Make every attempt not to overdraw your bank account because overdraft fees are high and are a waste of your money.  Use 529 plans and other tax-advantaged accounts to save for college education.  Take advantage of the plans the government has in place to help you save more.  Perhaps the most important is to have an emergency fund for at least three months worth of expenses.  Any layoff, emergency, or illness can put you in a bad financial spot without some money saved up to get you through.  FINRA hopes that Americans will follow their financial tips towards a secure decade starting this year.

In the Financial Times article “More providers offer post code annuities,” Josephine Cumbo describes the process of determining annuity rates based on Canadian post codes.  Insurance providers offer better annuity pricing to those living in less affluent areas going on the assumption that they will live shorter lives.  This also applies to investors that are smokers or have medical conditions hinting at a shorter life expectancy.  Canada Life is one company who has adopted this policy.  They offer annuity rates up to 7 percent lower to investors that live in a post code considered to have wealthy and healthy citizens.  Since annuity products pay a stream of income over one’s lifetime in exchange for a lump sum down payment, a longer life expectancy means more years receiving that income stream.

Three other companies who are already using this mapping system are Prudential, Aviva, and Legal & General.  All of the post code mapping systems are diligent about the financial breakdown.  They do not look at the whole city but break down their analysis on a street by street basis in some areas, realizing that there are financial differences within neighborhoods.  Variable and fixed annuity rates ranged anywhere from 3 to 7 percent in the city that was reviewed.  The poorest neighborhoods typically get annuity rates of around 3 percent more than the more affluent neighborhoods.  It is important to fill out the medical questionnaire associated with your annuity purchase for this reason.  Investors living in a wealthy neighborhood who have poor health will receive a higher rate because of the health issue.  Without properly completing the medical questions, that investor would be subject to the lower rates associated with the wealthy neighborhood.

Prudential Financial Inc. has posted a profit for the second quarter in a row, according to “Prudential Posts Jump in 3Q Net: CEO Says It Will Weather the Financial Storm,” by Al Slavin of Best Week. After a large loss posted in the third quarter of 2008, Prudential is pleased to report net income of $1.1 billion in this year’s third quarter.  Individual annuity net sales went from $481 million in the third quarter of 2008 to $4.4 billion in the third quarter of 2009.  That is close to an increase ten times last year’s net sales.

The Chairman and Chief Executive of Prudential attributes their sales success to the belief that they will make it through the financial difficulties facing the country.  They hope to maintain their success and rise above competitors that are still struggling to find footing.  Prudential has a confident mindset and is proud of maintaining quality products and services throughout the economic crisis.  Prudential maintains competitive products and fixed annuity rates.  Speak to an expert about purchasing an annuity from a strong financial company.

From Online PR News, Rafael Onak’s article “Find Solidity in a High Interest Annuity” urges investors to take advantage of the opportunity before it passes by.  High interest annuities offer a guaranteed rate of return while the rest of the equity market is still pretty volatile.  They are available as variable annuities, fixed annuities, or equity-indexed annuities.  Variable and fixed are the most common types of high interest annuities.  You can get a 10 to 14 percent rate of return with variable annuities but the product is the riskier investment.  Fixed annuity rates are guaranteed, but the investor loses the ability to directly manage their account.

High interest annuities grow at a faster rate than other investment products.  They also offer guaranteed income over your lifetime and withdrawal benefits.  Making a 401k annuity transfer to purchase a high interest annuity can give you tremendous tax savings as well.  Annuities grow tax-free until an investor begins receiving payments, unlike CD’s that are taxed yearly.  As with all retirement products, investors should shop around for the best annuities to add to their portfolio and speak with an expert.