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Old 10-27-2018, 04:14 PM
 
Location: Colorado Springs
4,837 posts, read 4,952,340 times
Reputation: 17302

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Steak Dinner and Annuities: Retirement Product Surges After Fiduciary Rule’s Demise
Annuity sales were $59.5 billion from April to June, the highest since late 2015

https://www.wsj.com/articles/steak-d...ise-1540656000

"Annuities protect customers from losing principal, and they are typically sold to retirees or those close to retirement. Customers pay a lump sum to an insurance company, then can effectively get back their money plus a potential return for a set number of years or their lifetime in regular payments. In some cases, buyers can win if they live longer than expected but lose if they don’t. They can also pay hefty penalties if they withdraw money early.

Lawmakers have panned the product’s high commissions, and Sen. Elizabeth Warren (D., Mass.) has criticized the prizes given to sales agents, like expensive vacations. The estimated average commission received by agents selling certain types of annuities is more than 6%, according to Wink Inc., an industry market-research firm. In those cases, if a customer buys an annuity for $150,000, the agent would make around $9,000 in commission."



"The fiduciary rule wouldn’t have prevented all unscrupulous sales practices. But it could have forced brokers to be more transparent about their commissions and constrained them from putting customers in high-fee annuities if similar low-fee products were available.

Executives and brokers have cheered the reversal of the fiduciary rule, and analysts say it has already been a boon to the industry.

“Our regulatory environment has really changed,” said Todd Giesing, director of annuity research at Limra, which is funded by the insurance industry. “It takes away a lot of uncertainty.”

The annuities job market is also booming. The number of posts on Indeed.com targeting annuity specialists climbed 29% in the six months after the fiduciary rule was thrown out in March versus the same period a year earlier, according to data from the nation’s biggest online job board."
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Old 10-27-2018, 05:21 PM
 
1,075 posts, read 1,117,794 times
Reputation: 1416
My sister bought into this many years ago. It was the worst financial decision of her life. And guess who spent years trying to get her money out. The only way was to annuitize for a minimum of ten years with zero growth. What a mess this was.
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Old 10-27-2018, 05:41 PM
 
Location: Tennessee
23,579 posts, read 17,561,360 times
Reputation: 27660
It's up to the individual to not get sucked in to these things.
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Old 10-27-2018, 11:37 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,563 posts, read 39,944,045 times
Reputation: 23699
There are all kinds of annuities, some might be right for you (I don't have any YET... FIRE, still far away from SSI)

I have many retiree friends who have done terrific with their annuities.

(a Conservative bunch, but VERY happy! and secure and well funded 'pension replacement' after our evil CEO witch nabbed the company CASH / dough / assets)

Not always a BAD choice.

Do what is right for you!
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Old 10-28-2018, 03:24 AM
 
71,550 posts, read 71,712,424 times
Reputation: 49140
i agree . it is the variable annuities that are the biggest traps , especially the ones that guarantee the minimum growth rates or give you bonus dollars .

you rarely get the growth rates they guarantee because it goes in to a phantom account that only exists for annuitizing . since they control how much your draw is they in effect control how much of that virtual account with the guaranteed growth rates you ever get to see .

they can promise you any rate they like. they just adjust the draws to what they want to give and it is all perfectly legal .
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Old 10-28-2018, 06:06 AM
 
Location: Ypsilanti, MI
2,439 posts, read 3,663,507 times
Reputation: 4795
When I left my first employer and took a cash-out of my pension account so they couldn't steal more of it after my departure (they had already reduced our pensions 3 or 4 times while I was still working there), I placed the retirement account funds in an annuity.
  • The checks will come once per month, just like a pension,
  • If my wife and I both die early the money stops, just like a pension
  • Almost none of the funds were directly my savings, just like a pension
  • No investment decisions to make in the distant future when my mind may not be as sharp, just like a pension
  • No RMD required, just like a pension
  • A greater sense of security regarding future payments versus keeping the funds in the former employer's pension plan

The annuity is only a portion of our portfolio. Our other funds are invested for growth. The annuity is for predictable future retirement income only.

The experiences of StealthRabbit and myself regarding unscrupulous employers/executives robbing corporate pension plans may contribute a great deal to the sudden popularity of these plans, more so than the Fiduciary Ruling changes.

Last edited by MI-Roger; 10-28-2018 at 06:15 AM..
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Old 10-28-2018, 06:34 AM
 
1,075 posts, read 1,117,794 times
Reputation: 1416
Immediate Index Annuities are OK, but the Annuity my sister bought was a total rip off. She isn’t very good at making informed decisions.
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Old 10-28-2018, 06:39 AM
 
110 posts, read 43,583 times
Reputation: 213
Quote:
Originally Posted by MI-Roger View Post
When I left my first employer and took a cash-out of my pension account so they couldn't steal more of it after my departure (they had already reduced our pensions 3 or 4 times while I was still working there), I placed the retirement account funds in an annuity.
  • The checks will come once per month, just like a pension,
  • If my wife and I both die early the money stops, just like a pension
  • Almost none of the funds were directly my savings, just like a pension
  • No investment decisions to make in the distant future when my mind may not be as sharp, just like a pension
  • No RMD required, just like a pension
  • A greater sense of security regarding future payments versus keeping the funds in the former employer's pension plan
The annuity is only a portion of our portfolio. Our other funds are invested for growth. The annuity is for predictable future retirement income only.

The experiences of StealthRabbit and myself regarding unscrupulous employers/executives robbing corporate pension plans may contribute a great deal to the sudden popularity of these plans, more so than the Fiduciary Ruling changes.
Ditto … and our annuities are also the lesser portion of our portfolio - and the financial advisor that we went to provided full disclosure. We sought to have guaranteed income if we wished to take distributions in that way, and a safe harbor from the volatility and unknown of the stock market.


We have never accepted any of the many offers for a free dinner because we didn't want to feel obligated in any way - and we also feared it could be a bit like a timeshare presentation where they can make just about anything sound good.
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Old 10-28-2018, 07:04 AM
 
71,550 posts, read 71,712,424 times
Reputation: 49140
Quote:
Originally Posted by organic_donna View Post
Immediate Index Annuities are OK, but the Annuity my sister bought was a total rip off. She isn’t very good at making informed decisions.
they tend to end up returning a bit more than a money market over time the way they are structured .for one thing they do not include dividends which can be as much as 1/3 of the markets return . so right off the bat you can scratch away a good portion of the return . add in the fees and your are no where near a real market return .

it is more like a money market on steroids .

i used to create my own index linked cd's years ago when rates were higher .rates have to cover the option costs so it has not been worth doing the last couple of years .
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Old 10-28-2018, 07:09 AM
 
Location: Central IL
15,230 posts, read 8,523,201 times
Reputation: 35647
Quote:
Originally Posted by Serious Conversation View Post
It's up to the individual to not get sucked in to these things.
And there should be regulations in place to at least limit the degree of hucksterism consumers have to work through to understand the product.
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