[westcoast]

Heard this radio show from Tampa this morning where they guaranteed 7% per year.
How can they do it and what is the catch?

[batman911]

Do yourself a favor and run the other way. Can you spell S C A M?

[KayakerNC]

Originally Posted by westcoast

Heard this radio show from Tampa this morning where they guaranteed 7% per year.
How can they do it and what is the catch?

Suggest you read (carefully) Moshe Milevsky's article on what is REALLY happening.
Annuity Analytics: What is a Guaranteed Rate Really Worth?

[Figmo Bohica]

If its to good to be true, it is to good to be true. Want to double your money? Fold it over and put it back in your pocket.

[Dr Winston O Boogie jr]

My Ameriprise financial advisor put me into a fund that guarantees 6% per year after three years. The catch is that you can't touch it for three years. After that you can withdraw whatever you want and continue to make a minimum of 6%. If makes more than 6% you get the whatever it makes. If it makes 6% or lees you get 6%.

[2BNTV]

Tha annuities that I used to have, include a penalty for an early withdrawal of funds.

Check to see what the number of years is and if your willing to tie of your money for that length of time.

7% sounds like a lot of interest so if it sounds too good to be true.........

[KayakerNC]

Fund?
A stand-alone fund or wrapped in an annuity and/or Variable Universal Life Insurance (VUL) product.

[eweissenbach]

Seven percent most certainly seems a little over-aggressive to say the least in this interest rate environment. The best annuity concept I have seen was Principal Financial's "five for life" annuity. (full disclosure; I retired from Principal but did not work in the annuity department). The five for life annuity guaranteed a withdrawal rate of five percent of the original investment for as long as you lived. You invested in seperate accounts (perform like mutual funds) and every five years your account would be examined. If it had grown, you would receive a guarantee of five percent on the new account balance, again guaranteed for life. If it had not grown, or decreased you continued to receive the original withdrawal amount. Every five years the account would be reviewed and if at any time the account had grown, you received a new withdrawal amount based on the larger balance. It offered the opportunity for growth with a baseline guarantee that is more than the four percent many financial advisors recommend one take as a withdrawal from their retirement funds. I don't know whether Principal still offers that annuity, though I would guess they do, and they are a top rated financial company.

[raynitsche]

I got one with Met Life 5 years ago at 6%. I can start withdrawing this year. I rolled over a company pension. I know New York and I believe Florida also has the Insurance Company post a bond should they go belly up.

[misky]

Originally Posted by batman911

Do yourself a favor and run the other way. Can you spell S C A M?

I have to diaagree. I opened a Nationwide annuity 5 years ago that pays 10%. If the market (based on the mix of investments) increases over 10% for a particular year, I get the increase.

Tha catches are that I have to wait 10 years to start getting my full distribution % (I'll be 68) and I can only get 10% a year.

But that's a ggod deal for me since I have other investments for my retirement.

These are not for everyone.

[jimpat737]

They are a good investment for some and not for others. I opened a Prudential Annuity at age 55 with monies rolled over from my 403b account that guarantee's a 6% return regardless of the market and is insured as well in case Prudential goes belly-up. I must also leave it alone for ten years (I'll be 65 then) and then I can begin withdrawing from the account or continue to allow it to accrue. The annuities value already is 23K over the initial investment. No scam here, reputable Morgan Stanley/Smith Barney account.

[JanandRonniemerlino]

The last two posts are the most accurate. Not for everyone, and the true "catch" is that you are only getting the "guaranteed" 7% if you agree to take the money out as a long term income stream - which usually does not amount to more than 5% per year. If you treat it like a regular investment and withdraw more in any given year, you not only lose the 7% "guarantee", you also pay penalties, which can be very steep. The sad thing is that these annuity peddlers are allowed to advertise things to retirees that say things like "7% guarantee" and just neglect to mention all of the rules that apply. They tell you all of the benefits and hope that you sign on the dotted line and don't read the fine print about the negatives. If you have other investments, a small piece in something like this might make sense, but putting all of your eggs in this basket can leave you very unhappy.

[DonC]

2 general kinds of annuities: Fixed and Variable. Indexed Fixed Annuities are more conservative financial instruments that feature good potential upside tied to a premium market index with NO potential downside with annual gains locked in. Variable Annuities are more aggressive financial instruments that can be compared to mutual funds as a financial instrument. There is a time and situation for most instruments.

[784caroline]

The 5, 7 or 10% mentioned in this thread are these annual return net of all expenses? If not what anual expenses ar paid to get this rate of return and then obviously the rate of return is reduced..most likely ny something like 2% annually...plus you most likely have early withdrawal fees, caps on upward performance and other limitations.

If its 7 or 10% net guaranteed annualy...thats great..but if I dont understand it, I dont buy it.

[EdV]

All of the annuities mentioned above are actually various forms of variable annuities. And while most reputable financial advisors will usually recommend against variable annuities due to their high management and commission fees, the same is not always true for an investment in what are called Immediate Annuities.

Depending on your circumstances, an immediate annuity may be just the ticket for retirees looking for a relatively safe but guaranteed monthly income for the rest of your life (and your spouse if you choose).

Here is a link to a straight forward overview of immediate annuities. And here’s a link to an online calculator to estimate payments. I’ve used this firm to roll over some of my IRAs’ into immediate annuities and they do all the work setting it up for you.

This may not be right for everyone, but it’s worth looking into.