The Truth About Buying Annuities [NOOK Book]

Overview

Annuities have become one of the most popular ways to save for retirement and also one of the most misunderstood, overhyped, and dangerous investment vehicles available today. Some annuities are worth the money... but too many are flawed, overpriced, and packed with hidden fees that make them absolutely horrible investments. In The Truth About Buying Annuities, consumer finance expert Steven Weisman helps you make smart decisions about annuities and avoid the lies, misrepresentations, and ripoffs that await ...
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The Truth About Buying Annuities

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Overview

Annuities have become one of the most popular ways to save for retirement and also one of the most misunderstood, overhyped, and dangerous investment vehicles available today. Some annuities are worth the money... but too many are flawed, overpriced, and packed with hidden fees that make them absolutely horrible investments. In The Truth About Buying Annuities, consumer finance expert Steven Weisman helps you make smart decisions about annuities and avoid the lies, misrepresentations, and ripoffs that await uninformed investors. From start to finish, Weisman delivers quick, bite-size, just-the-facts information and plain-English explanations you can actually use. You'll learn all you need to know about immediate, deferred, and variable annuities; actively-managed vs. indexed annuities; inflation-protected and tax-sheltered annuities; and more. Weisman explains the impact of annuities on taxes, Medicare, Medicaid, long-term care, and your other retirement plans. He presents crucial, hard-to-find information about death benefits, joint and survivor annuities, alternatives to annuities, assessing annuity risk, avoiding scams, and even how to escape from a bad annuity you've already purchased. Unlike some books on annuities, this one's simple to read, simple to use, up-to-date, and complete: it's the only annuity guide you need!
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Product Details

  • ISBN-13: 9780132701167
  • Publisher: Pearson Education
  • Publication date: 8/19/2008
  • Sold by: Barnes & Noble
  • Format: eBook
  • Edition number: 1
  • Pages: 208
  • Sales rank: 688,656
  • File size: 293 KB

Meet the Author

Steve Weisman is Senior Lecturer at Bentley College in the department of Law, Tax, and Financial Planning. He has also taught courses on financial planning at the University of Massachusetts, Curry College, and Boston University. He is a host on the nationally syndicated radio show A Touch of Grey, heard on more than 50 stations, including NYC’s legendary WABC and KRLA Los Angeles. A member of the National Association of Elder Law Attorneys, Weisman is legal editor and columnist for Talkers Magazine and writes for publications ranging from The Boston Globe to US Air. His books include Boomer or Bust and The Truth About Avoiding Scams. Weisman has earned a Certificate of Merit for legal journalism from the American Bar Association.

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Read an Excerpt

IntroductionIntroduction

"Steve Weisman has accomplished a feat of immense proportion by explaining one of the most complicated investment vehicles in ways that average Americans can easily understand."

Robert Powell, Editor, "Retirement Weekly," MarketWatch

Saving for retirement used to be so easy. Companies provided pensions that would pay their retired workers for the rest of their lives, not to mention the fact that companies would also pay for health insurance for retirees. On top of that, there was workers' own savings. And don't forget the Social Security check that came in the mail every month. Retirees were set for the rest of their lives.

But times have changed. People are living longer. Baby Boomers facing retirement can expect to live considerably longer, but not necessarily healthier, lives than their parents. They will spend much more time in retirement. But few companies offer the kind of guaranteed, defined-benefit pension plan that formerly was so common. The 401(k) is king, and although it provides the potential for considerable retirement savings, it takes some effort and commitment by workers today to provide for tomorrow. As for health insurance, all too often companies are telling retirees that they are on their own. In addition, people are not saving as much as they did in the past. And even that Social Security check doesn't seem quite as secure as it once did.

Things look rough for retirees.

But to the rescue have come insurance companies and others with a product that guarantees it will provide retirement income for the rest of your life. The product is the annuity. It is not a new idea, but it may be anidea whose time has come, with close to 2 trillion dollars now invested in all kinds of annuities.

But is this the answer to our problems?

According to H.L. Mencken, "For every problem, there is a solution that is simple, neat, and wrong." Well, annuities are far from simple. And although they may appear neat, they are quite complicated. They also are dead wrong for many people who own them, particu-larly elderly purchasers of deferred variable annuities, who were sold inappropriate annuities by salespeople more interested in the high commissions that annuities bring to salespeople than in helping their clients.

But are annuities always wrong?

The answer is no. Annuities have much not to like about them, including high fees along with misleading and sometimes illusory benefits. However, this investment, which has been around since early Roman times, has evolved and continues to evolve in an effort by insurance companies and other legitimate issuers of annuities to provide secure retirement income for people. If you look hard enough, you can find lower fee annuities that provide benefits which may be tailored to your particular retirement needs.

But you need to know the truth.

Perhaps nowhere in the investment world is there more misleading and downright wrong information about an investment product than with annuities. But this book will tell you the truth. It explains, in clear and understandable language, basic information you need to know about the many different types of annuities. It tells you what the pitfalls of annuities are. It tells you about the lies and misrepresentations to avoid. It also tells you about where annuities might play a useful part in your own retirement planning, when to use them, and how to use them.

It gives you the rules in simple and concise language so that armed with this information, you can make an intelligent and confident decision as to whether annuities should be a part of your retirement planning. Oscar Wilde said, "A man who does not think for himself, does not think at all." This book will give you the knowledge you need to make an informed decision for yourself about one of the most important issues you will face for the rest of your life—how to make your money last a lifetime.

© Copyright Pearson Education. All rights reserved.

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Table of Contents

Introduction v

Truth 1 The history of annuities 1

Truth 2 Immediate annuities 5

Truth 3 Fixed rates 9

Truth 4 Deferred annuities 13

Truth 5 Annuity fees 17

Truth 6 Variable annuities 21

Truth 7 Variable annuity investment choices 25

Truth 8 Actively managing variable annuity sub-accounts 29

Truth 9 Indexed annuities 33

Truth 10 More about indexed annuities 37

Truth 11 Calculating index changes 41

Truth 12 Inflation protected annuities 45

Truth 13 Tax-sheltered annuities 49

Truth 14 Annuity settlement options 53

Truth 15 Tax deferral 57

Truth 16 Annuity risk 61

Truth 17 Annuity death benefits 66

Truth 18 Annuities and income taxes 69

Truth 19 Tax-free 1035 exchanges 73

Truth 20 Charitable gift annuities 77

Truth 21 Split annuities 81

Truth 22 Joint and survivor annuities 85

Truth 23 Shorter surrender annuities 89

Truth 24 Longevity insurance 93

Truth 25 Inheriting an annuity 97

Truth 26 Variable Annuities versus variable universal life insurance 101

Truth 27 Choosing between mutual funds and an annuity 105

Truth 28 Annuities and asset allocation 109

Truth 29 Asset allocation and laddering annuities 113

Truth 30 Minimum required distributions 117

Truth 31 59 ½ 121

Truth 32 Annuities in IRAs 125

Truth 33 Annuities and 401(k)s 129

Truth 34 More about annuities, IRAs, and 401(k)s 133

Truth 35 Annuities for children 137

Truth 36 Bonus credits 141

Truth 37 The Pension Protection Act, annuities, and long-term care 145

Truth 38 Annuities and Medicaid 149

Truth 39 Annuities and reverse mortgages 153

Truth 40 State Guaranty laws 157

Truth 41 Annuities and creditor protection 161

Truth 42 Getting out of an annuity 165

Truth 43 Annuity scams and senior citizens 169

Truth 44 Annuities and class actions 173

Truth 45 Prospectuses and annuities 177

Truth 46 Free looks 181

Truth 47 For whom annuities are best 185

Truth 48 Steve’s annuity rules part one 189

Truth 49 Steve’s annuity rules part two 193

Truth 50 Where to go for Information 197

About the Author 201

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Preface

IntroductionIntroduction

"Steve Weisman has accomplished a feat of immense proportion by explaining one of the most complicated investment vehicles in ways that average Americans can easily understand."

Robert Powell, Editor, "Retirement Weekly," MarketWatch

Saving for retirement used to be so easy. Companies provided pensions that would pay their retired workers for the rest of their lives, not to mention the fact that companies would also pay for health insurance for retirees. On top of that, there was workers' own savings. And don't forget the Social Security check that came in the mail every month. Retirees were set for the rest of their lives.

But times have changed. People are living longer. Baby Boomers facing retirement can expect to live considerably longer, but not necessarily healthier, lives than their parents. They will spend much more time in retirement. But few companies offer the kind of guaranteed, defined-benefit pension plan that formerly was so common. The 401(k) is king, and although it provides the potential for considerable retirement savings, it takes some effort and commitment by workers today to provide for tomorrow. As for health insurance, all too often companies are telling retirees that they are on their own. In addition, people are not saving as much as they did in the past. And even that Social Security check doesn't seem quite as secure as it once did.

Things look rough for retirees.

But to the rescue have come insurance companies and others with a product that guarantees it will provide retirement income for the rest of your life. The product is the annuity. It is not a new idea,but it may be an idea whose time has come, with close to 2 trillion dollars now invested in all kinds of annuities.

But is this the answer to our problems?

According to H.L. Mencken, "For every problem, there is a solution that is simple, neat, and wrong." Well, annuities are far from simple. And although they may appear neat, they are quite complicated. They also are dead wrong for many people who own them, particu-larly elderly purchasers of deferred variable annuities, who were sold inappropriate annuities by salespeople more interested in the high commissions that annuities bring to salespeople than in helping their clients.

But are annuities always wrong?

The answer is no. Annuities have much not to like about them, including high fees along with misleading and sometimes illusory benefits. However, this investment, which has been around since early Roman times, has evolved and continues to evolve in an effort by insurance companies and other legitimate issuers of annuities to provide secure retirement income for people. If you look hard enough, you can find lower fee annuities that provide benefits which may be tailored to your particular retirement needs.

But you need to know the truth.

Perhaps nowhere in the investment world is there more misleading and downright wrong information about an investment product than with annuities. But this book will tell you the truth. It explains, in clear and understandable language, basic information you need to know about the many different types of annuities. It tells you what the pitfalls of annuities are. It tells you about the lies and misrepresentations to avoid. It also tells you about where annuities might play a useful part in your own retirement planning, when to use them, and how to use them.

It gives you the rules in simple and concise language so that armed with this information, you can make an intelligent and confident decision as to whether annuities should be a part of your retirement planning. Oscar Wilde said, "A man who does not think for himself, does not think at all." This book will give you the knowledge you need to make an informed decision for yourself about one of the most important issues you will face for the rest of your life—how to make your money last a lifetime.


© Copyright Pearson Education. All rights reserved.

Read More Show Less

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