What is a fixed annuity?
Posted in Fixed Annuities 9 months ago, 5 replies
So can you explain to me what a fixed annuity is?
submitted by Patrick in Hampton Beach, NH
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So can you explain to me what a fixed annuity is?
Yes I would like to know what a fixed annuity is as well please.
submitted by Dee Palmer in Oregon
@ November 06, 2008 - 12:00 PM
Reply
Basically, you give an insurance company a large amount of money. Then, based on your age, they guareentee you a monthly or annual payment for the rest of your life.
You can do this a couple of different ways:
1.) Give them money (usually from a 401k, etc.) and start taking payments----SINGLE PREMIUM IMMEDIATE ANNUITY
2.) Give them money, and delay taking payments. The strategy here is the longer the wait to take payments, the higher your monthly check will be-------SINGLE PREMIUM DEFERRED ANNUITY
3.) You made payments into this account over the years and are looking to the future to annuitize the policy.
Let's say you give the insruance company $100,000, then they agree to give you, say, $6,000/year for as long as you are alive.
Now, if you live to age 82, you've made money. If you die at age 72, you've lost money.
HOWEVER, that is a simple example of an annuity.
Many now include riders that can refund the difference of your intial investment to a benificiary. You can do one for your's and your spouse's lives.
To be completely honest with you, you would probably do better placing your money in something like this:
http://www.reuters.com/article/pressRelease/idUS189032+29-Sep-2008+PRN20080929
This product is invested in the stock market, and has quarterly step ups. This means your account can never fall below the amount you put. Let's take that $100,000 and put it into this variable annuity.
Now let's say in 2 years it is a Bull market and you have a 10% gain in one quarter. Your account would "step up" to that basis and your annual payments would be based on a percentage of the step up.
If your account dwindles (like many's 401k's have), you are still at the "high water" mark of the account.
I assume since your Financial Advisor recommended Fixed Annuities, that they have no idea about this product. Shoot me an email, and I'd be happy to help explain this further:
burks85@gmail.com
Hope that helps.
You can do this a couple of different ways:
1.) Give them money (usually from a 401k, etc.) and start taking payments----SINGLE PREMIUM IMMEDIATE ANNUITY
2.) Give them money, and delay taking payments. The strategy here is the longer the wait to take payments, the higher your monthly check will be-------SINGLE PREMIUM DEFERRED ANNUITY
3.) You made payments into this account over the years and are looking to the future to annuitize the policy.
Let's say you give the insruance company $100,000, then they agree to give you, say, $6,000/year for as long as you are alive.
Now, if you live to age 82, you've made money. If you die at age 72, you've lost money.
HOWEVER, that is a simple example of an annuity.
Many now include riders that can refund the difference of your intial investment to a benificiary. You can do one for your's and your spouse's lives.
To be completely honest with you, you would probably do better placing your money in something like this:
http://www.reuters.com/article/pressRelease/idUS189032+29-Sep-2008+PRN20080929
This product is invested in the stock market, and has quarterly step ups. This means your account can never fall below the amount you put. Let's take that $100,000 and put it into this variable annuity.
Now let's say in 2 years it is a Bull market and you have a 10% gain in one quarter. Your account would "step up" to that basis and your annual payments would be based on a percentage of the step up.
If your account dwindles (like many's 401k's have), you are still at the "high water" mark of the account.
I assume since your Financial Advisor recommended Fixed Annuities, that they have no idea about this product. Shoot me an email, and I'd be happy to help explain this further:
burks85@gmail.com
Hope that helps.
I am 75year old retired male . I have been getting the required distribution from my 401k for the last 4 years. It was suggested that I rollover my 401k to an IRA so that my spouse could rollover the balance to her own IRA thereby deferring her tax obligation. My 401k money is currently in very conservetive fund. It was suggested that I roll the funds into a fixed annuity. We currently do not use any of the 401k money for our living expenses. As an aside I have congestive heart failure and Parkinson's desease and my spouse is in the early stages of Altzhimer's. Is a fixed annuity the way to go?
Mr. Fortunato,
You need to contact and attorney that can help you with estate planning, as well as someone versed in Elder care IMMEDIATELY!!!
You and your wife, as you know, have conditions that can get worse very rapidly. I would do some planning while you are still able. Keeping your assets and getting around medicare law will be tricky, which is why you need to see someone now.
Annuitizing your money is the least of your worries, and though I do not have all the information, may be an unsuitable suggestion, as you may have need for ample liquidity due to your health concerns.
You need to contact and attorney that can help you with estate planning, as well as someone versed in Elder care IMMEDIATELY!!!
You and your wife, as you know, have conditions that can get worse very rapidly. I would do some planning while you are still able. Keeping your assets and getting around medicare law will be tricky, which is why you need to see someone now.
Annuitizing your money is the least of your worries, and though I do not have all the information, may be an unsuitable suggestion, as you may have need for ample liquidity due to your health concerns.
Compare about variable annuity and fixed annuity.
The annuity is an only safe guarantee. Fixed annuity could not possibly lose money. Variable annuity could lose money in the investment account but are guaranteed in the annuity income account. In most annuities you are guaranteed to have your principle. In mutual funds you pay an upfront load for the most part and if money is lost you have to wait it out to make it up or make moves. Fixed annuity should be fine (read more about Fixed annuity), depended upon the company insuring the annuity. Only the company can lose the money they had guaranteed you, not the investment.
The annuity is an only safe guarantee. Fixed annuity could not possibly lose money. Variable annuity could lose money in the investment account but are guaranteed in the annuity income account. In most annuities you are guaranteed to have your principle. In mutual funds you pay an upfront load for the most part and if money is lost you have to wait it out to make it up or make moves. Fixed annuity should be fine (read more about Fixed annuity), depended upon the company insuring the annuity. Only the company can lose the money they had guaranteed you, not the investment.