Annuity FYI Blog

Everyone likes to get something for free right?  How about invaluable information that will help you retire without the worry of outliving your savings?  Annuity FYI has just published a new Investor’s Guide to Lifetime Income Benefits in addition to their guides for secondary market annuities and fixed indexed annuities.  Best of all, this Investor’s Guide is completely free.  Email Annuity FYI and you will receive your free guide to help you navigate through lifetime income benefits and find the one that is best for your individual situation.  The guide will also help you determine the cost to add one of these benefits to your annuity and ensure that you understand just how these benefits work.

We all know that life expectancies are going up while savings are going down in many cases.  Eighty percent of Americans will have to delay retirement or live on less than they had planned because they haven’t saved enough.  Purchasing annuities with lifetime income benefits can help many Americans ensure that they don’t run out of money in retirement.  By using a portion of your retirement savings towards a 401k annuity or an immediate annuity with lifetime income benefits, you safeguard your future with lifetime monthly income payments.

Annuity FYI’s Director of Marketing says that the company focuses on keeping up with their customers’ demands as those demands change.  Security in retirement is of high importance right now and this free Investor’s Guide to Lifetime Income Benefits not only gives an overview of the annuity benefits, but also gives real world scenarios showing how you can apply them in your life.  The Investor’s Guide uses reputable sources like The Center for Retirement Research at Boston College, AARP and the Employee Benefit Research Institute.  Email or call Annuity FYI to get your free Investor’s Guide to Lifetime Income Benefits today.

Written by Rachel Summit

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While you get a larger annuity payout when interest rates are higher, they are still a good investment choice even in this low annuity rate environment.  In “An annuity can still make sense,” Andrea Coombes of The Wall Street Journal says that this is still a good time for annuity purchases.  An immediate annuity helps to protect you against two major retirement concerns.  The first is that a drop in the stock market will cause you to lose all of your savings and the second is that you will run out of money during your lifetime.

If you haven’t saved enough money to carry you through retirement, an annuity is not going fix that problem.  But an annuity will ensure that the money you have saved, especially that money in your 401k, will last over your lifetime.  The monthly payments you receive will depend on the amount you use to purchase the annuity and many other factors, but it’s like a budget so that you know how much you will have to spend on expenses each month.  Some people choose to add an annuity rider to adjust for inflation or continue death benefits to their heirs in case they die sooner than anticipated.

Variable annuities with guaranteed income might be a better choice for people who want to maintain some control over their money.  With a variable annuity, you get to choose the sub-accounts in which you invest your money through the insurance company.  Make sure to find a lower fee variable annuity because there are some products that charge high fees.  State guaranty associations cover annuities in the case that an insurance company is unable to fulfill their obligations, so make sure that your state covers the entire amount of your annuity purchase.

Written by Rachel Summit

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There is a good chance that you are one of the many people who underestimate the strain inflation is likely to place on your finances in the future.  It is important to account for inflation in one way or another so that your money doesn’t run out faster than you planned.  Steve Burns of the Daily Breeze was asked about inflation and gave his answers in “Keeping up with inflation — stocks vs. bonds.”  Burns recently published an article about evaluating Social Security benefits through the use of an immediate annuity calculator.  The article said that the cost of an inflation-adjusted annuity would be about 50% more than the cost of purchasing a fixed annuity not adjusted for inflation.  A reader wrote in to ask Burns how he came up with this percentage and if he took age into consideration.

He looked at two different companies offering inflation-adjusted annuities.  While the 50% figure seems high to those reading it, he believes that many of us underestimate the real effects that inflation will have.  A 55-year old man using $100,000 to buy a fixed annuity with lifetime income would get a monthly payment of $420.  Compare that to an inflation-adjusted annuity where your payments would start at $268 per month.  That equals out to a 57% increase between the two types of annuities.  That number goes down to 39% if you wait ten years and purchase the annuity at age 65.  While there is a steep increase in the cost of an inflation-adjusted annuity, it is important to to account for inflation in some of your investments, whether it be your annuities or not.

Written by Rachel Summit

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The Sacramento Bee published a press release from John Hancock Financial Services introducing their new President of Annuities, John G. Vrysen.  He starts his position immediately and will be in charge of all aspects of John Hancock’s annuity business.  This includes variable annuities, fixed annuities, structured settlements, immediate annuity products, and other fixed products.  His boss is the President of U.S. Wealth Management, Hugh McHaffie.  Mr. Vrysen recently merged many of the company’s life insurance subsidiaries to increase company efficiency.

John Hancock’s President of Financial Services says that Mr. Vrysen has a plethora of both leadership experience and experience in their Variable and Fixed Annuities business.  Since 2008, he was the head of Strategic Initiatives, a position that will now be held by the previous President of Annuities, Marc Costantini.  Mr. Vrysen has worked for Manulife and John Hancock for more than three decades as the variable annuities’ chief actuary, the CFO of US Operations, the fixed annuities general manager, the COO of Wood Logan, and the COO for John Hancock Funds.

Written by Rachel Summit

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I recently blogged about the psychology of annuities and why more people aren’t using this product to receive guaranteed income for the rest of their life.  Sheryl Moore from Insurance News Net read the same article as I did, “Insights into the Annuity Puzzle,” and had her own theory about why more people don’t turn to annuities in retirement.  Since the original article didn’t have much of a conclusion to the puzzle, Moore tries to come to a better understanding in her “How to Escape ‘Annuicide’.”

She says that in order to guarantee your retirement income you need to either buy an immediate annuity or annuitize a deferred annuity.  With 1/5 of Americans realizing that they will never be able to retire and a tripling of the over-90 population in the last 3 decades, you’d think more people would turn to annuities that will offer income over their lifetime.  Moore points out that only 2% of annuity contracts annuitize to guarantee a lifetime income stream and immediate annuities don’t account for a large portion of annuity sales.  She has 3 reasons why she believes this is the case.

The first reason is that people who buy annuities don’t want to lose all of their flexibility, something Moore refers to as ‘annuicide’, where they are locked into their choice.  Secondly, with immediate annuities or annuitized deferred annuities, agents lose control of the assets due to the inflexibility and they cannot change up the investment.  The third reason is that commissions are only 3% on these annuities, compared with 6.6% on some indexed annuities and agents just don’t sell them as much.  Moore believes the solution to these three issues is the use of GLWB’s with a fixed equity indexed annuity rather than the traditional use with a variable annuity.  As of this past quarter, more than half of indexed annuities had an attached GLWB, so this seems to be a good solution.

Written by Rachel Summit

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