For variable ANNUITY OWNERS only

[ducati1974]

For those of you that currently or previously owned variable annuities particularly those that have owned them for a period of time:
What is your assessment of your investment now?
Given the same opportunity would you invest in them again?

[Funinthesun]

We do have one but not had it for very long. Would not do it again and will likely convert it to a fixed annuity at some point. It will probably be OK in the long run but a Vanguard Fund like VWINX would probably be better.

[ducati1974]

Funinthesun- please elaborate as to why you wouldn't do it again

[Tom Hannon]

Funinthesun- please elaborate as to why you wouldn't do it again

My financial advisor is also pushing VA on us. After asking my accountant and a few other high end investment friends of mine, they all say to stay away and stay with the fixed account. From what I learned, agents/advisors selling these annuities make a big commission.

[eweissenbach]

My financial advisor is also pushing VA on us. After asking my accountant and a few other high end investment friends of mine, they all say to stay away and stay with the fixed account. From what I learned, agents/advisors selling these annuities make a big commission.

I spent twenty-five years in sales and marketing management for New York Life and Principal Financial Group, so know a little bit about annuities. The commission on annuities is generally about 3-3.5 percent for the major companies, though the commission rate is generally reduced on large amounts. Some smaller companies I have heard of pay 7-10 percent commission, which is usually reflected in more onerous withdrawal penalties. There are several reasons to invest in annuites, with the most common being tax deferral on accumulated earnings. If one is looking to accumulate rather than take withdrawals this is an advantage as you get to keep all the money invested and earn interest or growth on the entire amount without paying taxes as the investment grows. There are many features that are built into annuities that may be attractive to a given individual such as guaranteed death benefit (your original investment will be paid to a named beneficiary upon your death even if the value has dropped below the original amount and that guaranteed death benefit may be adjusted upward every few years to reflect the higher value - there is a small mortality cost deducted for this feature). Another advantage is that you can move your money into different investment accounts without incurring a taxible event. There are variable annuities that will pay a guaranteed income of 5% per year to the annuitant guaranteed for life, and will bump the income up every 5years if the accumulated value has grown since the previous lock-in period. Annuities can be good, but are not for everyone. If the features of an annuity arent of interest to you, you are better off in mutual funds generally, as the internal costs will be somewhat less.

[Tom Hannon]

Thanks for the info Coach.

The VA I was being pushed into has a 6% interest, but it expires at the end of the year. My issue is, we have no kids/grandchildren to leave our fortune to (LOL) so I feel it is safer in the 3% fixed we have it in now. Haven't we lost enough $$ in the stock market?

"I have three months to live" I want to go out in a blaze of glory. Don't need any hassles with drawing money. I believe the money tied up my my fixed account, money in CD's, SS and pension is enough to carry us, there is no need to risk losing a big chunk. Okay we might not be able to take a cruise every three months and will have to keep driving my 2003 Mini Cooper but at least I will be able to sleep at night. And if I live to be 100, then I might be screwed. But I'll worry about that in another 36 years.

[Funinthesun]

Funinthesun- please elaborate as to why you wouldn't do it again

Variable annuities do carry a large up front fee and seem very attractive with the 5%-6% guarenteed return. If the market does well you may be very happy with one. But you would be just as happy with a Vanguard fund if the market does well. The point is, there are a lot of If's and if everything goes well with all of them you will be delighted with a variable annuity. They are a bit complicated and need complete understanding so there will not be any surprises if all things do not go as planned. If you will never need the principal and could live without the income if you had to and want to leave all of it to someone else, you might be a good candidate for a variable annuity.

[rjm1cc]

They are doing better than I expected. I would buy then but only as part of a diversified income stream. You have to be careful with the costs and terms.

[natickdan]

[QUOTE=Tom Hannon;430918]Thanks for the info Coach.

"we have no kids/grandchildren to leave our fortune to"

You do now....DADDY!

[RichieB]

[QUOTE=Tom Hannon;430918]Thanks for the info Coach.

"we have no kids/grandchildren to leave our fortune to"

You do now....DADDY!

.........and Tom's "lost" family comes out of the woodwork :icon_wink:

[Debfrommaine]

:bigbow:

[Tom Hannon]

[QUOTE=Tom Hannon;430918]Thanks for the info Coach.

"we have no kids/grandchildren to leave our fortune to"

You do now....DADDY!

That would mean that Danny is Irish and a Yankee fan. Not sure if he'd still wanna be my little boy. Is having my fortune, worth the sacrifices of being in the Tommy clan?

[schrdr]

This is a subject that I had to consider when we were redeigning our investment plan for retirement. Back in 2005 we were very heavy invested in stcks and Mutual Funds. We could either continue on that path to take the advice of our new investment advisor that specializes in retirement planning.

We have 4 very large annuity contracts. From 2005 - 2008 they grew as the market grew. But in 2008 when the market crashed, had we stayed on stocks and MF we would have lost 40% and never recovered. Instead our annuity contracts switched automatically to a fixed rate at 7%. We actually did very well in the market crash.

As we are now ready to retire we can annuitize these contracts an get a very healthy income for life. In 2007 I thought we would never have to annuitize the contract and cash out at the propertime. The annuities provided a life boat for us and it was one of the best financial decisions we ever made.

People always say bad things about annuities because they lump them all together and make a quick judgement. If you find the right one it is great and a life saver, insurance on your hard earned financial "Pot of Gold"

[daca55]

I have had a VA since 1995. When my wife died they brought the value up to the highest amount it had reached while I owned it. That said when the market started to tank and i saw the value going down, down ,down I told broker to put it in the fixed portion of the VA. That was in 2004 and it has sat there earning on average 3% interest which is lowest interest they can pay. The bottom line is it depends on how old you are especially if there are surrender charges which most annuities have. Might be better off to find some municiple bonds to park money in. They pay pretty good returns and you pay no taxes.

[brostholder]

I will assume that a variable annuity is one that participates partially in stock market increases, but protects against stock market decreases. In 2008, I wish I had my money in a va instead of the market. For the past 3 months, I am glad my money is in the market (where it earned me 20%) than in an annuity that would have earned me 1% for the same 3 months. If I had millions of dollars, I would certainly put enough in an annuity to cover all my "costs". But, with my present net worth, an annuity would not throw off enough income to let me retire at the income level I want. So, I am forced to assume some risk in the market. A previous poster said an annuity should be part of a balanced portfolio. I agree and recommend shopping around for the ones with the lowest fees.

[eweissenbach]

Variable annuities do carry a large up front fee and seem very attractive with the 5%-6% guarenteed return. If the market does well you may be very happy with one. But you would be just as happy with a Vanguard fund if the market does well. The point is, there are a lot of If's and if everything goes well with all of them you will be delighted with a variable annuity. They are a bit complicated and need complete understanding so there will not be any surprises if all things do not go as planned. If you will never need the principal and could live without the income if you had to and want to leave all of it to someone else, you might be a good candidate for a variable annuity.

Most annuities have no up front fees. The fees are generally what is called a "deferred sales charge" or a surrender fee, charged in the event the annuitant takes out more than 10% of the balance in a given year, and only for the first 7 to 10 years in most cases. Variable annuities also charge a mortality fee and seperate account fees (which are charged to the values of the seperate accounts just like the internal charges for mutual funds) There are some annuities that actually deposit a bonus amount upfront to the contribution of the annuity (which may be forfeited if withdrawn early).

I will assume that a variable annuity is one that participates partially in stock market increases, but protects against stock market decreases. In 2008, I wish I had my money in a va instead of the market. For the past 3 months, I am glad my money is in the market (where it earned me 20%) than in an annuity that would have earned me 1% for the same 3 months. If I had millions of dollars, I would certainly put enough in an annuity to cover all my "costs". But, with my present net worth, an annuity would not throw off enough income to let me retire at the income level I want. So, I am forced to assume some risk in the market. A previous poster said an annuity should be part of a balanced portfolio. I agree and recommend shopping around for the ones with the lowest fees.

Variable annuities generally don't protect one against market decreases (except in the case of the death of the annuitant) unless the owner chooses to use the money market or fixed interest seperate account. Think of a variable annuity like money in your company's 401(k). You can put it into any of a number of seperate accounts depending on your objectives, and can move it from account to account without incurring a taxible event. When money is withdrawn it is subject to ordinary income tax to the extent that it represents gain - on a last in - first out basis. There are many variations available that have "gimmicks" that may or may not appeal to any given person, but they can be valuable planning tools. Pick a well known, large national company and do your homework. Remember, the sales person may be honest and ethical but he/she stands to make about $6,000 or more, on your $200,000 investment, so they might not disclose all the potential downsides.

[Pmhgroup]

I actually sell annuities including variables. While I often disagree with Suzie, I do believe that VAs are often sold to the wrong clients. In fact, in my opinion, most all types of variable and index annuities are oversold. I have seen huge portions of portfolios invested into various annuity contracts usually because the investor perceives a benefit that is simply not there.

Still, most investors who owned VA's and index annuities through the crash of 08 / 09 were thrilled to have the protection they offered.

Bottom line, VA's can be good, but you should know what you are getting in to, understand the expenses, and surrender penalties and what benefits are offered. Most important, make sure you know what the guarantees mean because most investors don't actually understand how these "benefits" do and don’t protect their portfolios.

[GatorFan]

I just rolled over to the Prudential product.

[Bryant]

The very best explanation of the various types of annuities I have seen can be found at seniorannuityalert.com. They have short video presentations (7 in all) on each type of annuity with pros and cons. They present it in a very easy to understand manner. Sounds like the "hybrid" is the best for us seniors. I do not have an account with this group; just happened upon them by chance.

[tommy steam]

The very best explanation of the various types of annuities I have seen can be found at seniorannuityalert.com. They have short video presentations (7 in all) on each type of annuity with pros and cons. They present it in a very easy to understand manner. Sounds like the "hybrid" is the best for us seniors. I do not have an account with this group; just happened upon them by chance.

ok thanks

[moneychanger]

For those of you that currently or previously owned variable annuities particularly those that have owned them for a period of time:
What is your assessment of your investment now?
Given the same opportunity would you invest in them again?

We were not told the whole story about these annuities....to high fees and we lost money in these....I have since switched to fixed index annuities and have not lost one dime.....My advisor is David Blackston at Sorensen Tax Advisory group....I highly recommend him...his expertise saved us alot of money and helped us with our estate issues: