Please tell of any experience you had with any ANNUITIES purchased in The Villages
 

Here vs. up North...................Here: high concentration of old people looking for guaranteed payments during their final years.

That "guarantee" comes at a high price..................Low rate of return & High fees & lack of flexibility.

:crap2:

In my experience, annuities are sold everywhere because it is one of the highest commissioned products for an insurance salesperson to sell. Often, an inexperienced person will be sold an annuity, and they don't even know that they are buying an annuity. An annuity is a life insurance contract.

Invest in quality toilet paper.
:ho:

Annuities is a word that should never be spoken. If you must go to Vanguard with lowest costs. car salespeople pushing a different product. Your money deserves better

On the "Disdain Scale," annuities are second only to reverse mortgages around TOTV.

When I hear someone trying to sell me an annuity, I run the other way.

Yes, Annuities are a high profit product for the company you purchase it from and the company selling it. For example, there is a company here in TV that sells annuities exclusively. They will go unnamed, but I can only say you see lots of people here in The Villages wearing the company's logo clothing and going to the parties they throw. You also see this companies' billboard signs all over TV. Where the heck people do you think this advertising money is coming from??? YOUR POCKETS!!

Any investment that has 10 pages of fine print explaining the investment means you are getting screwed. The fine print is not there for your benefit.

10 pages? Most annuity contracts are more than 100 pages, and the company will not allow you to read it until you pay the money and agree to buy the annuity. Then, after you have paid the money and receive the contract, you have 30 days to cancel the contract and ask for a refund.

Asking questions on TOTV is fine and can be a good place to start, but I hope you are going to do your own homework if you are considering buying an annuity. Actually, this thread will probably leave you with more questions than answers -- and that's not a bad thing.

I never got into annuities because I did not want to -- but you might want to -- so at the risk of sounding like I am giving you a homework assignment, may I pass along a few things for you to think about, to educate yourself.


Things I (sort of) Know (and/or think) about Annuities

1. Some people stop listening after they hear the word 'guaranteed' -- a powerful word, indeed -- and that's all they think they need to know. GONG!

2. I don't think of annuities as an investment. I think of them as a product because they are sold under a contract. It is like an insurance policy.

3. There are management expenses in those contracts somewhere. The company that sold the annuity invests your money while you get the contracted percentage. I don't think you ever see where your money is invested. It's kind of like you say, "Have at it, but just make sure the check is in the mail."

4. If the insurance company that sells the annuity fails, I think it then goes to some sort of rehabilitation fund. Then another insurance company can go to the state and say it will do the rehabilitating. That could take a while. (I don't know if this backup varies by state. Anyway, I think it is a good idea to know how the insurance company is doing before you buy in.)

5. There are different kinds of annuities. (I will not try to explain them all because I have never dug that deep.) But you can get started by reading up on Fixed Annuities v. Variable Annuities v. Index Annuities.


4. There are sometimes things that can be added to an annuity -- like a death benefit. The extras come at an extra cost to you.

5. I have never bought an annuity, but, as I understand it, there is a 30 day look back, like a window, after you have signed the contract, so you can change your mind. (But I do not know for sure if this is always the case, or if it varies by state or company. Find out, for sure.)

6. That word 'guaranteed' should maybe be thought of as being kind of like a faucet -- to be turned on and then to be turned off. If someone outlives the guaranteed time period, I think they might have to take the original investment -- sounds good -- but I am pretty sure the full amount would be taxed as ordinary income. That could be a chunk of change. Be sure to check on how that would work with the different types of annuities. Just something to be aware of.

7. For those who already have an annuity, they might want to know that there is something in the tax code that can allow an annuity holder to switch companies. It is called a 1035 Exchange -- but I don't know how it works. (I do wonder if those buying annuities have ever had the salesperson voluntarily explain that one.)

8. Most of the items listed above are things I know only a little bit about. I am not a financial advisor. I am just some nice, silver-haired lady on the internet, who is just trying to get you to do your own homework by giving you some things to think about and to understand before you buy an annuity.

9. One thing I do know for sure -- Never buy on the day you are being "sold."

Now then, aren't you glad you asked. :)

Mrs. Boomer

PS: Embrace your own critical thinking skills -- and enjoy that free steak dinner.

A more accurate description would be an annuity is a contract sold or underwritten by an insurance company.

My mother bought a guaranteed annuity in her 60s and lived to be 93. That investment paid off many times over. Could she have earned more by investing herself? Sure - if she understood the market and was willing to invest the time. She was very happy with her choice.

My obligatory advice, take time to read Paul Merriman’s 3 FREE ebooks.
1. First-Time Investor
2. 101 Investment Decisions
3. Get Smart or Get Screwed (read this first!)

Found at paulmerriman.com

Also on his site are recommended portfolios for using Vanguard, Fidelity, T.Rowe Price or Schwab for DYI'ers. Much good info, ignore the puffery and sales pitches.

Also, if you want to know too much about annuities, listen to Stan The Annuity Man® | Brutally Honest Facts About Annuities podcasts.

Fun With Annuities Jay Zawatsky: How Debt & Energy Connect

I would just add that an annuity is a life insurance contract, and it automatically has a death benefit, although the benefit is minimal. That is how the policy qualifies for tax deferred income. Any income earned in an annuity is taxed as ordinary income, and no capital gains rates apply. Many people buy an annuity with the intention of keeping it for a long time, but the insurance companies know that you probably won't, so they end up making a lot of money on the surrender fees, which can extend up to 10 years. They guarantee that you will not lose money, but they don't tell you that the management fees and surrender fees do not count as losing money. An annuity is not an investment because you don't actually own any assets in your name. Everything is in the company's name with a contractual promise to pay you back.

No one buys an annuity, they are sold an annuity.
If you really want an annuity, vanguard sells them commission free.

Annuities
 

The *right* annuity can be great. Nine years ago I purchased Allianz 360. It has netted 5.3% a year. It has a 1.1% fee (so it grossed 6.4% a year). It cannot go down when the market goes down, but it goes up if the index it is linked to goes up (and the index will go up if "the market" is up). I can begin payments at any time - if I begin payments in September I get 7.36% of $250,000 for life (I'm now 66) - so about $18,400 each year - off a $150,000 original investment.

I've been very happy but I know I was very fortunate. There are many bad products out there.

Yes, the salesman makes around 7% commission on these products. Invest 100K, the salesman gets 7K.

It takes a great deal of financial knowledge to understand whether you are getting a good annuity or not. An average person is not likely to possess such knowledge.

Main drawback: Difficult to identify a good annuity.
Main plus: Safety, many years of high payments when the market may go bad.
Safety: No annuity has failed to pay in 150 years of the insurance industry - they are insurance.T he state pays if the company goes bad.

Warning: Do not take a "variable annuity". All are very high fee with danger from market volatility. The only purpose of this type of annuity is if you want to put more in a 401K than tax law allows, these are an alternative (but again high fee) vehicle.

Great response! Thank you.

Why would anybody get an expensive/over priced/under performing annuity? This is a terrible way to put your money. Even if you don’t know finance/the stock market, find a good broker (hard to find and I don’t use 1) or a friend that knows his stuff and invest your money that way.
In todays environment, I would invest in money market funds that pay 4% with low low fees and with really no risk. Then when things get back to normal, move this money to some good index funds and you will be better off than an annuity

Yep...sort of like tons of Lawyer Billboards or highly profitable mattress stores...

So the S and P 500 has exactly doubled since 2014, meaning your 150,000 investment would now be worth 300,000. At 5% it would be paying you 15,000 per year And you still have your 300,000.

Yup - annuities could be sold on the same lot as used cars and sold by the same folks. I worked as a programmer for many years in the Insurance Capitol (Hartford, CT). I saw the intimate, nitty gritty details of how each product was structured, the costs, the profits, etc. because I had to program this stuff. They all suck. Don't buy anything from an insurance company except insurance and then only TERM insurance and then only if you need it. Annuities are cr@p. Same with whole life, universal life, and anything else they come up with.

Annuities are not always bad
 

You need to know who you are buying form and fully understand all the facts about the annuity and the company including the small print. We have half our money in several annuities because we do not want to have to worry about the crazy Stock Market ups and down. We don’t have 20 years to recoup a big market loss. No retired person does. So for us having some money in an annuity is a safety net. Parady Investments is an excellent company to deal with. They just merged with a large company Risk Strategies but Parady is being run by the same people and doing the same thing they have been doing for years. We have done Very well with them. We are also keeping a chunk of Cash on the sideline.

With interest rates up and stocks and bonds losing money, the “right” annuity is a good option. Make sure it has low fees and bought through a replicable discount firm.

Not true
Purchase a mutual fund because they give you a book when you do that

Ohiobuckeye
 

I bought an annuity several yrs. ago & it was the best thing I ever did, the company I bought it from I was told they don’t do it anymore because this company couldn’t make a profit but they are honoring the people that bought into it. When I die my wife will get a Ins. Settlement more than I have invested into it. So to answer your question, yes right now I’m tickled pink that we did it.

hmmm, interesting opinion. First- Since you use the "4% rule" to pull from a portfolio, and most Annuities pay out in the high 5s or low 6% range depending when you turn them on, not sure what you are talking about. Second, who cares about "fees", it is the money you get every month. Last, you don't put everything in an Annuity, just a portion of your portfolio to have steady income.
On top of that, the rate of return on my stocks and bonds in the past 2 years is negative, my annuities with gauranteed income riders went up.

Please state your source of information on the "high profits". Can you even explain all the different types of annuities? I just put a large amount of money in MYGAs that pay 5.5% out as long as 7 years, I know for a fact my agent made very little money on them. Where else can you get those interest rates? SPIAs are also not a high profit product.
It is sort of like looking at American Funds who charge 5.75% to get in, and condemning the whole mutual fund industry for it.

Disclaimer - I don't have anything to do with selling annuities, but I have learned a lot, and own several as noted above and a few with income riders. I would suggest reading anything from Wade Pfau who is a professor for unbiased advice.

Finally a measured response with facts. Totally agree. I have my entire "minimum dignity floor" covered with gauranteed income - 2 small pensions, some annuities and of course the best annuity - Social Security.

If these annuity haters don't like annuities, they should not take their Social security.
Ed

We have used Baum Financial Services and have been pleased with their services. They will also do your taxes.

Please provide your proof. I can tell you I have NEVER been sold an annuity and own several. I researched them, quoted them, and bought what made sense for me. I have several types, each for different reasons. I did a lot of research, starting with Wade Pfau's book and going from there. Most academics who do not sell annuities feel that most people should own at least a SPIA in retirement to provide a buffer against market moves.
Mine are part of a comprehensive plan I have for my retirement. Where else can you get a withdrawal rate of 6% with no risk? Where else can you get a 5.5% compound interest rate for 4-7 years but in a MYGA right now? I really think that people need to learn more versus just believing the haters.

You (& do mean you) respond to my post and use "you" a lot.
None of the "you's" posted about me is true.

:beer3:

The interest rates on 5-year brokered CDs offered by Fidelity and Vanguard are comparable to the currrent MYGA rates, but brokered CDs have FDIC insurance, and they have lower early withdrawal penalties as compared to the MYGA surrender fees.

I don't know what an "academic" is, but most fee-only financial planners would not recommend annuities as a primary retirement investment.

You may have never been "sold" an annuity, but, I can guarantee you that unscrupulous insurance salespeople are selling them to trusting, uninformed people every day. I have reviewed many people's portfolios who were sold a totally inappropriate variable annuity by someone they trusted with their life savings. In many cases, they didn't even know that they owned an annuity because the salesperson didn't tell them. In some cases, they were advised to transfer their entire IRA balance into an annuity with way higher fees and restrictions than they were paying. It makes no sense to transfer taxed deferred IRA funds into a variable annuity. These people were ripped off by a trusted friend or relative who made a huge commission at their expense. It happens way too often.

I lost a great deal of money leaving money in an annuity! Find a different way to invest.

I think you made a great point about covering your basic minimum needs with guaranteed income. But I am baffled about your comments about social security. 1. Social security is far from the best annuity. If 15% of my income for the last 42 years had been invested in something other than social security, it would be worth far more than what I will receive from it in my lifetime. 2. "If these annuity haters don't like annuities, they should not take their Social security." What a ridiculous statement. If you don't like annuities, then don't take the money that you were forced to pay in for most of your life. Makes perfect sense....oh wait.

Parady Financial Group
 

one of the largest and best know sellers of annuities in The Villages area has just been sold by Greg Parady to a company called Risk Strategies. Looks he got his so hopefully all those who have invested with them will get theirs.

" Most annuity contracts are more than 100 pages, and the company will not allow you to read it until you pay the money and agree to buy the annuity. "

Same with any trip to Advent Health. You are forced to sign or no treatment -- then you want your legal copy -- nada -- you have to 'go to records' weeks later for anything. Advent hides behind photos of Jesus so you are mislead that they are a reputable outfit.

Note that some health care providers require patients to sign an agreement to change the Florida law's "non-binding" arbitration clause for medical disputes into a "binding" arbitration. These agreements have been challenged in the courts and have been ruled to be unenforceable because they circumvent the Florida law.

When a person comments on your use of words, It means your point was made.:1rotfl:

An annuity is not an investment, it is insurance. There is the mistake.

You have a point about social security, but the reality is you have to pay into it. It does not change the fact that it is an annuity. My point was that some who say they hate annuities love their Social Security, when it is just an annuity.