“Guaranteed Retirement Contract — Income For Life!” Sjuggerud

Steve Sjuggerud, whose name I think I have probably spelled half a dozen different ways in the last couple years, has a new ad for his True Wealth newsletter — and it’s teasing yet another compelling investment idea with a made-up name and an incredible promise.

Here’s how the ad opens:

“Take 10 minutes to sign a “Guaranteed Retirement Contract,” and you could get $2,250 per month… for life

“This alternative to stocks, bonds and mutual funds is now offered by more than 100 U.S. companies. Your payouts are guaranteed not to drop in value, and will be delivered EVERY SINGLE MONTH for the rest of your life. The only question is…

“Do you qualify?

…

“It’s a scary world out there for American retirees.

“Stocks and real estate are plummeting. Government bonds and CDs pay a measly 3-4%. If that weren’t bad enough, pension plans are falling apart… and even supposedly “safe” banks and Wall Street brokerage firms are collapsing.

“But there is one very safe solution few Americans have considered…

“In short, I want to tell you about what Barron’s calls, ‘The new way to retire.’”

So that sounds pretty exciting, no? Personally I’m a ways away from this kind of product, and I can’t retire as long as writing for folks like you is this much fun … but the idea of guaranteed ANYTHING really gets folks to look up from their Sudoku and pay attention.

Which is, of course, no surprise to the marketers — it’s not a coincidence that we see an ad like this during a week when many people are afraid about the safety of even boring ‘ol stuff like money market accounts.

So what is a “Guaranteed Retirement Contract?”

“For one, the money you receive as a result is guaranteed by a company that (unlike almost any other business in America) is required by law to have enough cash on hand to meet all future obligations. Your money is also guaranteed (typically up to $100,000) by a “Guaranty Fund” regulated by the government.”

OK, so that’s where the “guaranteed” part comes in. Not bad.

What else do we learn?

That your income can go up, but never down. Again, who wouldn’t like that?

“It will be sent to you for the rest of your life, and can even be passed down to your heirs.”

And we get an example of one company (though it’s not named, of course) …

“Right now, there is a hi-tech, publicly-traded company in West Chester, Pennsylvania, which is revolutionizing one of the most important industries in America.

“BusinessWeek recently called the company a ‘pioneer.’

“This cash-rich business has been growing incredibly fast. They made $8 billion in profits in 2005… $9 billion in 2006… and a whopping $14 billion last year.

“You can buy the company’s shares on the New York Stock Exchange (NYSE). The problem is, you have literally NO IDEA how this stock or the stock market in general is going to perform over the next few years.

“Even if this great business continues making millions, there’s no guarantee the company’s share price will rise… or that it will continue to pay out its twice-yearly dividend.

“But…

“Few investors realize that instead of buying this company’s ordinary shares on the stock market (which of course come with no guarantee), there’s a way to use this company as an investment and guarantee you’ll have enough money for as long as you live:

“Simply put: Instead of buying the company’s shares on the stock market, you can invest in one of the firm’s “Guaranteed Retirement Contracts,” which give you guaranteed payouts that CANNOT drop in value.”

So … this is getting a ways away from the Gumshoe’s wheelhouse (does anyone say wheelhouse anymore? Maybe I should be more sophisticated and say “sphere of expertise”)

But these Guaranteed Retirement Contracts are, as you may have guessed, just annuities.

Or perhaps I shouldn’t say “just annuities,” because there are enough different kinds of annuity contracts that it can quickly become incredibly confusing.

For those who don’t know anything about annuities, don’t even start looking at them unless you’re at least 40, and most people who buy them do so immediately before or during their retirement. They are essentially insurance policies where you pay the whole premium up front, and get a monthly income stream in return.

There are lots of different variations of annuities, and I have never researched them in any real detail, nor have I ever been an insurance salesman. Probably the most important thing to note is that while lots of financial advisers recommend annuities as part of a retirement income solution and they can be an extremely valuable and comforting tool, there are also many horrible, expensive, and near-fraudulent annuities and annuity salespeople.

The basic immediate fixed income annuity is what is usually referred to as a safe way to make sure you don’t outlive your nest egg — you buy an annuity for, say, $100,000, and in return you get a fixed monthly payout, starting right now, for the rest of your life. There are lots of places online where you can enter some data in a calculator and see what kind of income might be possible — I just checked out one of these sites, you can try it yourself here, and found that if I were 40 years old and plunked down $100,000, I could get something like $475 a month for life — that works out to something close to 6%. For a 60 year old the payment would be $550, so more like 6.5%.

You can compare that to things like long-term CDs, which give you a lot more flexibility in getting your principal back if needed and carry similar limited insurance (from FDIC, in this case), but usually yield far less and have a shorter contract term. You can get 5% on a five year CD now — will inflation drive rates higher in five years when want to reinvest, giving you a chance to keep up with inflation? Or will we be at .5% rates like Japan by then and looking back lustfully at those 6% payout annuities? You need a time machine to know for sure what the best path is, which is why many folks buy an annuity for a portion of their retirement, and invest the rest to try to keep up with inflation and maintain flexibility.

And don’t forget, when you buy a CD or most other investments, it’s easy to either sell them later on or get the cash back in the end; when you buy an annuity, usually the only thing you get is the monthly payments until you die (or until your spouse dies, or sometimes for a fixed period for your heirs) — the actuaries are busily trying to figure out exactly when you’re going to die, so probably the best way to get your “money’s worth” with an annuity is to be really healthy and live for a long, long time. Even if it doesn’t end up being the best financial decision it might still be useful to consider, though — the value of the peace of mind that guaranteed lifetime income gives is different for every individual.

And as to the specific example in the teaser, which was a monthly payout of $2,250, that’s certainly possible too — if you’re 60 years old a $2,250 monthly payout for life might cost you about $400,000 … if you’re 80, it will probably cost you half that much. Keep in mind, if inflation keeps to the average of the last 25 years or so (4%+ a year), you’ll need something like $3,500 in 2020 to buy what your 2008 brain thinks is worth $2,250.

Guaranteed income does sound appealing, and if you’re trying to not outlive your money, and bring some monthly guaranteed income, it may be great for you — especially if your parents or grandparents are 90 years old and going strong. But the devil is in the details — if you ever look at an annuity, please be careful. Variable annuities of any kind, which might be based on investment returns, or inflation, or give different payouts in different years, or let you take out lump sums, all have different rules.

Fixed income annuities themselves, though more easily understood and compared, also have lots of different rules — is it an immediate annuity, or are your payments deferred for a few years? Is the coverage for a single life or coverage for a spouse for their life, too, or payouts for heirs or beneficiaries for a certain number of years after you both pass from this mortal coil? Is it really an unlimited lifetime annuity, or is the time period fixed in some way? Those are just a few of the many variables a wise annuity buyer would probably want to consider.

This is one case where I’d think it would be extremely advantageous to talk to a financial adviser who you trust — an annuity is usually a single, sometimes huge investment that’s often hard to get out of, and the differences among the available products could make a big difference in the amount of income or flexibility you get. And please choose a disinterested financial adviser, like one who works for you for an hourly fee, not one who depends on commissions for insurance contracts — most horror stories you read about variable annuities probably originated with an uninformed investor and a commission-hungry insurance broker who made unreasonable promises or sold the wrong product (I know, they’re not all bad — sorry).

As Sjuggerud makes clear, these are, in part, investments in individual companies — that’s because the real value of an annuity contract depends on the financial health of the company that sells you the annuity. The example above, for the high-tech company in West Chester, PA, probably refers to the big internet bank ING, which has an annuity operation in that town. If you buy an annuity from ING, you are counting on their ability to be around for the rest of your life (or for the term of the annuity), and to have the financial wherewithal to keep sending your annuity income payments.

There is more of a backstop than just the company’s solvency, as folks who are holding AIG annuities are probably frantically researching right now (though I haven’t heard any mention that regular policy holders at AIG are going to end up having any real problems). Annuities are guaranteed to some extent, like most insurance policies. Every state has some kind of Guarantee Fund, you can review the rules for your state if you want to make certain what kind of backstop precisely exists in your state — it’s true that most state funds have a guarantee of up to 100,000 in present value for Annuities, as part of coverage that includes all your other insurance, like life insurance, up to $300,000 total in many cases (a few states offer significantly higher protection levels).

I’m sure that’s not the full story, and every state regulates slightly differently, so you should certainly learn that info yourself if you’re an annuity buyer (or owner). One place to look for this info is at the trade association NOLHGA, which allows you to search by state here.

If you’d like to see that Barron’s article that Sjuggerud quoted about the “new retirement”, there’s a reprint here (the article came out in the Summer of 2007) — it’s about one of many kinds of hybrid annuities that exist, in this case the combination of an annuity and a long term care insurance policy. You’ll also see policies that combine life insurance and annuities, and that’s all I’ll say about that because I’m just slightly informed on these products and I’ll probably steer you wrong if I go into detail.

So … you’ve probably heard of annuities if you’re anywhere near retirement (or if you’ve won the lottery jackpot), and they really are Guaranteed Retirement Contracts. I’ve never seen an investment newsletter tout annuities before, but if you’re about to retire and are wondering what to do with a lump sum of money this is one of several investments you can consider.

If you’ve had personal experience with annuities, either good or bad, I’m sure folks would like to hear from you instead of from a half-informed dilettante like me, so comment away!

The author will always disclose any direct long or short equity, debt or option position in any stocks written about as of the day of publication, and will not trade in any stocks mentioned for three days (72 hours) after publication. Full disclaimer is at the bottom of the page.

Related Articles:

Bonus Pick — "Escondido Retirement Trust"

Sjuggerud: “The Secret Currency”

“Gold-Backed Annuity” companies … income for life?

Retirement, Plan B: Pension Paychecks

“Treasury’s Gold Glitch: Make Money AFTER Gold Rises” Sjuggerud

1. Hopefully, both Steve & the Barron’s 2007 article point out the differences in NO-LOAD annuities, or NOT front loaded contracts vs. those single pay annuities where the sales commissions are paid up front. Usually these S/P types of annuities have surrender charges + limits on how much you can withdraw in any of those years.

   For an investment professional like Steve to fall back into, (or what many folks refer to as), an arcane investment vehicle like an annuity stikes me as strange. Isn’t Steve keeping track of the ongoing AIG horror show? Who backs up more annuity contracts than AIG via their subs.? Now the US taxpayers will own nearly 80% of AIG via our gov’t treasury, at least until AIG can repay this “bridge loan” of $85 bil. (yes, billion with a B!)

   No matter how tough our economic situation becomes, you’ll always have need of one utility or another + food & water. Surely a brainy guy like Steve could come up with a grouping of such utilities that would avoid the onerous surrender charges, massive commissions & limited $$ benefits. Not too many middle class folks nearing retirement have a spare $400K/$500K laying around for this purpose or have I been living in a cave in the 21st century?

   JMHO Folks!

   [Reply]

   

   StockGumshoe Reply:
   September 18th, 2008 at 10:09 am

   Good points as always — I don’t think annuities are necessarily terrible, but thanks for mentioning the sales load, that’s a point I didn’t include. Like some other insurance contracts, the fees can definitely be onerous. I hesitate to even mention annuities because it is so easy to be conned into an awful one, but that doesn’t mean that the principle is bad, or that there aren’t reasons to use an annuity. For folks who retire without any kind of fixed pension, the promise of at least one guaranteed monthly payment to supplement social security is awfully nice, even if it “should” be quite possible to do as well without an annuity — that “should” part can be very worrisome if you happen to have a couple bad years that force you to withdraw more than your investments are making.

   And as for those AIG and similar problems, it’s always important to understand the guarantees. I would be shocked if AIG annuity holders had any trouble getting paid, since those funds are supposedly held within regulared insurance subsidiaries that are careful with that money, but do note that the actual government guarantee is fairly small for each annuity in most states.

   [Reply]

   

   Bob Geiss Reply:
   September 18th, 2008 at 6:46 pm

   Thanks for the insights…

   [Reply]

   Posted by SageNot | September 18, 2008, 10:00 am

2. There is a Eastern European EFT that pays 24% dont know much about it, asked the gumshoe to look into it but no info yet

   [Reply]

   

   Papagoat Reply:
   September 21st, 2008 at 8:46 pm

   I think it is Central Europe and Russia Fund (CEE) which with the market decline is currently considered to be paying 29 percent.

   [Reply]

   Posted by sequential | September 18, 2008, 10:40 am

3. There are more lies, misstatements, half truths and material omissions written and spoken about annuties than any other financial instrument that I have seen in my 30+ years in the investment advisory business. Most journalist hacks lump them all together, just like saying all cars are the same. First, all insurance companies are regulated at the state level with every state having a state guaranty fund to cover any potential losses. The parent of AIG is insolvent, not the state regulated insurance subs. Second, the different types of annuities can be divided into 2 basic ones; annuities that accumulate in value or ones that pay out a periodic income. Each of these are further divided into several subsets which would require a book to explain. Third, if you buy an insurance policy, you are paying a commission plus a slug of fees. That is where an insurance professional is worth his weight on gold. Fourth, just because you do not like annuities does not mean they are not suitable for many people. Millions of people 55+ who are still working are gazing in horror as their 401k plans are dropping like a rock and wondering if and how they will be able to retire. A special escape hatch is available where they can transfer their assets to an outside annuity to guarrantee their principal and interest. Remember, a 20% drop in your account requires a 25% increase to get back to breakeven, a 40% drop requires a 67% increase to breakeven. Imagine you are now 60, what are you going to do now? Lastly, there are many specialty annuities that are NOT advertised to the public that are highly benefical to clients, like the income annuities that less than 2% of income annuity buyers get, yet these pay 20-30% more in income than those offered to the public.

   [Reply]

   

   USMC Retired Reply:
   September 18th, 2008 at 1:58 pm

   You seem very knowledgable about these investment tools and I would like to know more about the specialty annuties you discussed at the end of your comments. How do I find out more info about these? Thanks.

   [Reply]

   

   Gerry K Reply:
   September 20th, 2008 at 9:08 am

   Would appreciate any info you may have received on annuities. Havn’t been able to contact “Anthony Schuman,” the author.

   Thanks much

   [Reply]

   

   bob zimmerman Reply:
   September 18th, 2008 at 6:10 pm

   True enough. For most people, any insurance contract is a challenge. That is the reason for the book that I have described on my site. If anyone is interested, I will be happy to send a chapter about ‘avoiding mistakes’.

   There is also a strategy available on a no-fee basis that combines a fixed rate annuity with a market investment and allows one to participate in the market with a principal guarantee. A copy of this strategy is also available for the asking.

   Isn’t it interesting? We live in the age of information, but no one knows where to turn to get a straight answer about insurance contracts.

   [Reply]

   

   richard0826 Reply:
   September 18th, 2008 at 7:51 pm

   thanks bob zimmeman,

   I too would like to get your strategy so that it can help me choose more wisely

   [Reply]

   

   bob zimmerman Reply:
   September 22nd, 2008 at 5:44 am

   If you know when you want your principal returned, you simply use the present value of your principal discounted at a 5% rate, invest that amount in a ‘guaranteed’ account that is tax sheltered – an annuity. Invest the remainder in the investment of your own choice. At the termination of the term, you will have your principal, PLUS whatever the investment did for you.

   There is much animosity toward the insurance industry, but their contracts can be intelligently applied with proper counsel.

   That is the reason for my book, as indicated by the website: http://www.safemoneyplus.com

   

   TJAlex Reply:
   September 20th, 2008 at 10:15 pm

   Appreciate your insightful input regarding insurance contracts etc. Please post a link to your website as I would like to obtain the information you refer to.

   Thanks in advance

   [Reply]

   

   bob zimmerman Reply:
   September 22nd, 2008 at 5:45 am

   http://www.safemoneyplus.com

   

   GEORGE DYER Reply:
   September 25th, 2008 at 12:56 pm

   I JUST ORDERED YOUR BOOKS. I AM INTERESTED IN LEARNING ABOUT ALL YOU HAVE TO TEACH. THANK YOU IN ADVANCE FOR YOUR HELP.

   GEORGE

   PLEASE SEND ANYTHING YOU CAN TO HELP ME TO MY E-MAIL ADDRESS. AGAIN, MY THANKS.

   [Reply]

   

   Gerry K Reply:
   September 20th, 2008 at 9:09 am

   Any info on the “non-retail” annuities would be appreciated. Thanks much.

   [Reply]

   

   destry Reply:
   September 20th, 2008 at 12:50 pm

   Gerry K
   Insurance tends to be a retail business…
   There are “groups”, which can qualify for group discounts, or certain waivers…
   Google around on the internet awhile…

   [Reply]

   

   Brad M Reply:
   September 22nd, 2008 at 7:21 pm

   Anthony,

   Like the others I would also like to know about the other annuities you mention at the bottom of your posting. I have being doing a lot of research into Equity Indexed Annuities, Fixed Annuities and Variable Annuities.

   I have looked at several companies that offer bonuses and relatively good income leg compounding. I would be glad to share what I have found out if anyone is interested. Keep in mind that most EIA, FA and VAs pay substantial commissions which is why you get pursued quite heavily by the insurance salesman. Also be aware and to sell a VA requires a brokerage license where as to sell a EIA or FA only an insurance license is required.

   I am considering getting my insurance license so I can sell myself the annuities and pocket the commission. Not sure I am going to do that yet but still considering it…

   [Reply]

   

   farley 5 Reply:
   September 23rd, 2008 at 8:59 am

   Good luck figuring out Index Annuities on your own. I have a spreadsheet showing the different providers and it is overwhelming. To compare, you need to look at Participation rates with and without caps, annual vs monthly resets, Point to Point calculations vs high water marks, index blends, CDSC 5 yr, 7 yr or 10 yr, and the list goes on. Every product out there makes it sound like “Get stock market returns without the risk”. When the dust settles, the insurance company and the agent, make the big bucks. And getting an insurance license is not a walk in the park. Colorado requires 15 hours of CE per year just to stay in good graces.

   [Reply]

   

   Gary Duell, ChFC Reply:
   September 23rd, 2008 at 4:12 pm

   Ah, the “big bucks” argument. Funny how people don’t mind paying realtors 7%, car dealers even more but the begrudge us agents our average 3.5% on annuities. Annuities- especially equity indexed -require a great deal of continuous work to understand and sort out. Then we have to help translate all the compliance required information in a way that is complete and understandable. If you always focus on what the other guy is making you miss the point: are the benefits substantial enough for you? Having said that, annuities that pay 10%+ commissions almost have to be bad in order for the company to give up that much of its margin to the agent and still make money. Just look for the lowest fees, highest bonuses, highest interest rates (if fixed) and no or low spreads & caps with full participation(indexed).

   

   Joe Cicirello Reply:
   September 29th, 2008 at 8:21 am

   Farley 5,

   Not trying to be smart, but what is your point. Is it that Annuities are complicated or insurance agents deserve the big bucks because of their CE requirements.

   At best, being a former agent with Mutual Of Omaha and investment banker, annuities should be used as only one of the vehicles to ensure for a comfortable retirement. They where never meant to replace all other investments for one’s retirement needs. A good mix, by personal experience; is to have several different investment vehicles that hedge your portfolio. This shold be done with great care and with due diligences. We as a whole have gotten lazy and don’t spend the proper time researching our options. Then when things go bad, due to our neglect of our most important responsiblilty of our retirement years, we want to blame others.

   

   farley 5 Reply:
   September 29th, 2008 at 9:11 am

   Hi, Joe! I like smart people – keep it up. My first point on this thread is that our friend, Brad M, was thinking about getting his insurance license and sell an annuity to himself. Sorry my reply was not clear. I wanted Brad to see how many moving parts are in an annuity policy. I have the spreadsheet and find the number of choices overwhelming – and I’ve been a Registered Investment advisor since 1979. he CE comment was to say once he passed his insurance exam, he would still have to keep up CE. As far as the big bucks, I think the commissions are extremely high. Look at the CDSC of 8% – 10%. I don’t work for commissions and think that is high.

   The second point was covered in another thread: Scroll down to post #7, and that there are very few clients that should own annuities. There is an old expression, “To a man with only a hammer, every problem is a nail”. Most insurance agents cannot make a living selling insurance. Some get their series 6 to sell Variables. Some do not and sell Index Annuities. Thanks for your comments.

   Posted by Anthony Schuman | September 18, 2008, 1:07 pm

4. Me too. Can you give more info or sources of info on these specialty annuities you mention at the end of your very generous, informative comment

   [Reply]

   

   Gary Duell Reply:
   February 26th, 2009 at 1:38 pm

   I’m not talking about CE. 24 hours of CE per year is nothing. I’m talking about the constant stream of information that must be sorted through in order to narrow down, comprehend & communicate the best options to our clients. I spend a couple hours per day doing research and review.
   If annuity companies could sell their wares online or by direct mail then they would. But annuities- especially EIAs -are mind numbing & require human interaction.

   [Reply]

   Posted by wp in nyc | September 18, 2008, 4:11 pm

5. AXA has an annuity product that has both the guaranteed percentage pay out and the investment component. However, the fees charged are 3% per year for a guaranteed interest rate of 6%. If your investments do well, that is great and you don’t need the guarantee. If they don’t, you clearly won’t keep pace with inflation.

   [Reply]

   

   Gerry K Reply:
   September 20th, 2008 at 9:17 am

   I’m considering an AXA annuity contract. Any other hnts?

   Thans
   Gerry K

   GPK111@HOTMAIL.COM

   [Reply]

   

   jessfarr Reply:
   September 20th, 2008 at 1:56 pm

   don’t!

   [Reply]

   

   Cam Reply:
   September 25th, 2008 at 12:35 pm

   Besides AXA Equitable VA’s, you might want to look at Ohio National VA’s, they are a slightly less expensive but have the same Guaranteed Minimum Income Benefits. These are really the only 2 companies that have GMIB’s as oppossed to Guaranteed withdrawal benfits. Believe me, GMIB’s will treat you better in the long run. All of our clients that have the VA’s with the income benefit are still happy as can be during this terrible market downturn, while the clients that are invested in regular mutual funds are crying in their beds at night, especially the ones that are retiring soon.

   Annuityfyi.com is a good website that compares annuities

   [Reply]

   

   John Agent Reply:
   September 25th, 2008 at 9:18 pm

   You do not fully understand the product. The AXA annuity has two balances – 1) the account balance, which is a reflection of the value of the investments you’ve selected inside your account, and 2) the benefit base – the amount the company uses to determine how much income you can take out of the account or what the death benefit would be if you died. The 6% guarantee (there’s also a 6-1/2% guarantee option) applies only to the benefit base – not the account balance. If you close the account, you get the account balance – it may be up or down depending on your investment selections. The fees of the account, which range from as low as 1.5% to close to 3% depending on the riders you choose to add to the account, are calculated on the benefit base number but deducted from the account balance, not the benefit base. The goal is for your investment choices to beat the 6% guarantee, because you always get the higher number locked in as your benefit base. But the fees that are deducted from the account balance don’t reduce the guarantee – in essence, they simply make it harder for your investments to beat the 6% guarantee. The product gives you all the upside potential of being invested in the market (minus the fees you pay) with a 6% downside, worst case scenario, safety net. For a lot of people, knowing that they’re going to get 6% at a minimum, and probably a good bit more if the market repeats its long-term historical performance of 10-11%, is well worth whatever fees are taken out of the account balance – they don’t care about the account balance – it’s the benefit base that matters!

   [Reply]

   Posted by Elissa Stein | September 18, 2008, 7:27 pm

6. Clark Howard adamantly opposes buying annunities, both on his radio show, and his website. I looked into them at one time, but the fees erode away at the safe-but-meager returns you are getting. They are basically the insurance companies’ answer to the mutual fund. Personally, I wouldn’t buy one. I get more peace of mind from a cold beer on a quiet lake at sunset.

   [Reply]

   Posted by Big Mo | September 18, 2008, 9:44 pm

7. Big Mo – You are dead on. I have NEVER seen anyone that buys annuities. They are all SOLD to them. Why trade LTCG for ord. income, eliminate the step-up in cost basis at death, have a surrender charge for 8 years, lose flexibility of investment choices, pay huge management fees and mortality fees, pay a premium tax, lose transferability of your investment, have beneficiaries pay income tax on your investment, and pay a 10% penalty if you take money out before age 59 1/2? And the list goes on and on.

   [Reply]

   Posted by farley 5 | September 19, 2008, 10:25 am

8. All of your points have some validity…
   Annuities are very often sold because insurance products as a whole; Whatever benefits they do or do not provide; Pay the salesman handsomely.
   That having been acknowledged…Annuities have their place…Nearly all corporate retirement plans,are funded with fixed rate (”Fixed” annuities. I have used Immediate annuities to pay the premiums for a universal life policy, as part of a plan for a young pro-athelete to use his signing bonus to assure him a future income, if his career doesn’t pan out….A similar use for a young dissabled to live on an immediate, while a regular annuity accrues over the long term…
   Other investments, can be used for traditional wealth building;If they are fortunately availible.
   The point is; No matter how adverse toward them
   some of us might be…They have their place as carefully, and thoughtfully chosen vehicles to achieve a specific goal…No more…No less.

   [Reply]

   

   farley 5 Reply:
   September 20th, 2008 at 9:36 am

   Two quickies: 1. I spend hours doing a structured settlement on behalf of an attorney that won a case for a Denver Bronco that was injured. The settlement was to give the former Bronco cash for the next 20 years – a period we thought would help the guy train for another job. After I set the whole thing up, I learned that a sleezy company bought out his annuity for around $0.20 on the dollar. He blew it the first year!
   2. If anyone ran an internal rate of return on an immediate annuity they would be sick. Yes, the insurance company is taking the “risk” that you won’t die “on time”. Other investments are better.

   [Reply]

   

   destry Reply:
   September 20th, 2008 at 12:38 pm

   farley5
   Point taken on your 1st…And I can beat that by
   several time over the past many years; Not including my personal favorite; “The Christian Investment Professional”.That one ruined two families lives, that I know of.
   Every human endeavour attracts the 10% sleeze (I could be lying. It could be a bigger %). They exist soley to make you want to go out and kick somebody’s dog.
   As to your 2nd point. I believe your emnity is
   causing you to draw the longbow a wee bit.

   [Reply]

   

   farley 5 Reply:
   September 20th, 2008 at 2:03 pm

   There are a million calculators on line. The 2001 CSO mortality table for a 65 yr old man is 16.8. I took the first AM Best A+ rated company with the best annuity monthly payment using $100K for an immediate annuity 10 year certain. The IRR came up at 3.24%.
   A seasoned FNMA that pays monthly due in 2024 pays around 5.87%. This is how the insurance companies make the “spread”. This paper was originated when lenders expected to be paid back. Not this zero down crap. Comments welcome.

   Posted by destry | September 20, 2008, 9:28 am

9. Your comments above are very informative…and my biggest thanks to Gummy who checked this out in a hurry!!

   [Reply]

   Posted by Dick Ribas | September 20, 2008, 3:49 pm

10. A strategy to ensure retirement income that will keep pace with inflation and will provide income in the future is to use longevity annuities. These annuities can be funded with a small portion of your savings and begin to provide income at a future date. A good overview and the strategy is at http://www.longevityannuities.com

    [Reply]

    Posted by Mike | September 23, 2008, 6:42 pm

11. Besides AXA Equitable VA’s, you might want to look at Ohio National VA’s, they are a slightly less expensive but have the same Guaranteed Minimum Income Benefits. These are really the only 2 companies that have GMIB’s as oppossed to Guaranteed withdrawal benfits. Believe me, GMIB’s will treat you better in the long run. All of our clients that have the VA’s with the income benefit are still happy as can be during this terrible market downturn, while the clients that are invested in regular mutual funds are crying in their beds at night, especially the ones that are retiring soon.

    Annuityfyi.com is a good website that compares annuities

    [Reply]

    Posted by Cam | September 25, 2008, 12:36 pm

12. I do want info on retiment contract ,company that carry this type of invesment,

    [Reply]

    Posted by musa | October 4, 2008, 10:23 am

13. READING ALL THE INFO CONFUSES ME EVEN MORE. I AM A 70 YEAR OLD MAN WHO IS TALKING TO TWO AGENTS RE FIXED INCOME ANNUITIES. I AM REALLY FEARFUL. ARE FIXED INCOME ANNUITIES GOOD FOR ME?

    [Reply]

    

    nathan almond Reply:
    October 24th, 2008 at 10:02 pm

    Dear Marvin: No, no, and no. buy a gnma, fannie mae or freddie mac in this terrible stock market environment. You will get in return a monthly check in the mail consisting of interest and principal. These are all protected by the full faith anc credit of the United States. I’m 88 years old and have been buying these securites since they first came out. Good luck, be safe. Stay away from insurance, period. No need for any confusion. Nate

    [Reply]

    

    farley 5 Reply:
    October 26th, 2008 at 11:59 am

    Please remind Marvin that some of the return will be principal and not to spend that part. Otherwise, I see no need for annuities for any reason.

    [Reply]

    

    James Reply:
    March 12th, 2009 at 12:27 am

    Nathan:

    I came across this conversation very late.

    What product are you referring to when you say ‘buy a gnma, fannie mae, or freddie mac’?

    And is this advice you still have faith in now, March 12, 09?

    Thanks for your input.

    [Reply]

    Posted by MARVIN | October 16, 2008, 6:23 am

14. I dont have alot of money but I remember back in the late 1970’s when I was approach by a sellman who was selling ins for me and my wife for 500,000.00 each and 5,000.00 for my son,, if I would have bought though john hancock my son would have made it though college and Id might be retired right now at 47 years old.. We were 21 years old then and the policy was for 74.00 a month.. 74.00 was alot of money to us with a new born baby so we opt not to get the policy.. I am kicking myself in the butt for i really wonder how set id be right not or how much more poor id would be.the promise was yielding in 20 years payback at 28% John hancock is still in business.. I will alway wonder .. I still dont have much money but Id like to invest somewhere like 100.00 a month.. any ideas for such little money to invest??

    [Reply]

    Posted by jim | October 17, 2008, 4:43 am

15. Hi There,

    This all sounds fantastic.

    Would love to have someone explain and SHOW ME THE MONEY to share this with the masses to help them prosper.

    Miles Of Smiles

    [Reply]

    Posted by Larry Millionare | October 26, 2008, 11:39 am

16. Sunday Afternoon, 9 November 2008
    Hi-
    Looked at the web ad from Dr S; it included an indorsement by one purported “H. Anthony Nestor” of Cornwall Manor here in PA. Living in Cornwall, a quick call to the manor revealed that he was not living there. (This does not mean that he did not at some time or that they were just brushing me off.) Based on that, I not sure that the rest of the claims in the ad were also not factual. Jimmy Dee

    [Reply]

    Posted by Jimmy Dee | November 9, 2008, 5:09 pm

17. I don’t believe that anyone would ever buy an annuity of all the facts were honestly presented.

    WHY would you ever want an INSURANCE COMPANY managing your investments?

    Buy & Hold investing by an insurance company or anyone eles is DEAD!!

    Want a better way to KEEP YOUR MONEY in your pocket?

    Call Ron at 805-529-8300 or email at tca4u@mail.com

    [Reply]

    Posted by Ron Dwyhalo | August 25, 2009, 3:07 pm