I linked to the Barron’s cover story on Top 50 Annuities Saturday. The entire article by Karen Hube is worth a read, but be sure to check out the two big tables — I suspect you will be referring back to them later, and will be worth the cost of your annual subscription.
Understanding the risks and upside of annuities is important to anyone working in the client facing side of finance. Some carry very high fees, other come from less than stellar companies. In short, there is risk involved, and understanding that can avoid disappointment decades hence.
After you get educated on Annuities, check out the tables below, after the jump:
Source:
Top 50 Annuities
KAREN HUBE
May 26, 2012
http://online.barrons.com/article/SB50001424053111903964304577422130743520466.html
click for larger tables
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Category: Investing
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
One thing I don’t get is why some think annuities are an all or nothing proposition for retirement capital, particularly for more modest amounts.
With the ways in which state, municipal and private pension schemes are being re-evaluated there could be waves of near retirees being offered lump sum packages to be bought out of the pension plan and much of this will probably work its way into the annuity market.
I think a basket of solid dividend payers ( dividend aristocrats etc..) with investment grade fixed income would be a better choice. You would have less fees and liquidity without insurance company risks and some chance for growth over a resonably long enough time frame to lessen the equity risks but also in todays low-interest rate enviroment it would also be wise to hold the fixed income portions to maturity. I believe you could probably get a blende rate of 4% to maybe 5% thus getting
8k to 10K annual income and still have your original amount. I know some will say this is to risky but i do not believe that in 20 years good solid companies will be below todays levels. Just my 2 cents.
BR, thanks for bringing this piece to the table. I read it on a flight from Montgomery-Wilmington and made a point to save the pages.
Many folks are skeptical about investing in securities. While a dividend portfolio may well beat annuity payouts, with lower fees, the comfort of a guaranteed income is important.
The maze of annuity products was screened beautifully by this article.