Annuity Rates 2011
Fortunately, for the record number of Retirees also knows as the “Baby Boomers” Annuity Rates in 2011 have started to creep up. While rates still have plenty of room to rise there is no telling when that rise may happen. People have been waiting for cd and annuity rates to rise for over three years now, and unfortunately there has not been much change. Now, in 2011, the Federal Reserve and Ben Bernanke are committed to keeping rates low attempting to boost the stock market. Although everyone will benefit from a rising stock market it is the retired person who really gets hurt when the stock market goes down. Unfortunately, Retirees need income now and the stock market is one of the least attractive places to invest. If you are retired, although the stock market may make up a portion of your portfolio the bulk of your portfolio will be in much safer products, like annuities that are geared to delivering income , which consequently are tied to interest rates.
Retirees who need to create as much guaranteed income as possible (similar to social security or a pension) only a couple options with the most attractive currently being annuities. Immediate Annuities and Fixed-Indexed annuities have offered the best rates in 2011, when compared with CDs. Unlike bonds which decline in value if interest rates rise Annuities do not lose value in a rising interest rate environment.
It remains a challenging environment for the fixed income investor. But with the right mix of Stocks, Bonds and Immediate Annuities and Fixed Annuities you will be well suited to take on any type of market the economy and the Federal Reserve creates.
Posts Tagged ‘Immediate Annuity’
Annuity Rates 2011
Thursday, March 31st, 2011 by ryanImmediate Annuity Payouts - Explained
Tuesday, March 1st, 2011 by ryanHere is brief description of how immediate annuities work and the different payout options to choose from. All immediate annuities will pay either a monthly income or an annual income to the owner of the contract for life. If the monthly payment option is selected payments will begin 30 days after the contract is issued and continue monthly. If the annual payment option is selected the payments will begin 1 year after the contract is issued and will continue annually.
- Life Only: Pays a monthly income for the life of the owner. When the owner dies the income stops. (highest payout option)
- Life with Period Certain (10, 15, 20): Similar to Life only but the owner is allowed to choose a period certain option. The options available are 10, 15 and 20 year period certain. If you choose this option with a 10 year period certain you would receive guaranteed income for life with at least 10 years of guaranteed payments. The way it works is if you were to die in 5 years it could continue to pay a named beneficiary for the remainder of 10 years (the period certain). If you lived 40 years and then died the payments would stop at your death. (Payouts are slightly less than the Life only). The benefit to the owner is it protects against pre-mature death and the insurance company keeping all of the money.
- Life with Installment Refund: Pays a monthly income for as long as you are alive but guarantees to return 100% of your initial investment if you die prior to getting it all back. If you die prior to receiving 100% of your initial premium it will continue monthly payments to your beneficiary until your entire premium is received.
- Life with cash refund: Similar to Life with installment refund above. The one difference is if you die prior to receiving 100% of
- Life with 3% COLA: This is similar to Life only except that your monthly payments are guaranteed to increase by 3% each year payments are begin made. Payments are considerably less than life only.
- *Joint Life with 50% reduction: This option is only available for in joint contracts. Monthly payments will be made to the owner’s until the death of the first spouse. Upon the death of the first spouse payments will continue to the remaining spouse at a 50% reduction of the initial payment. This option will have a higher payout than joint life only. This is a great option to maximize income for a couple who expects costs to go down in the future.
Annuities for the future
Tuesday, February 15th, 2011 by ryanThere was a great article today on www.cnbc.com Annuities in 401(k) Plans Offer income, but High Fees, which discusses alternative ways for baby boomer to receive guarnateed income from their retirement savings. It’s always a good idea to talk with an expert about which type of annuity may be right for you. In most cases it’s not the fees that one should be concerned about it’s the amount of income you will be guarnateed and the trade-offs between retaining control of your money or maximizing income. Give us a call at 888-515-7152 for expert annutiy advice. or visit us at www.AnnutiyRateShopper.com
Immediate Annuity Rates
Monday, February 7th, 2011 by ryanImmediate annuity rates are slowly coming back up. With over 2 years of depressed rates on fixed annuities and immediate annuities we are now starting to see rates pick back up slowly. In fact I was able to 70 year old client almost 8% on an immediate annuity that will pay him and his wife a monthly income for as long as they live. If you’re interested in what we can do for you, give us a call 888-515-7152.
Understanding the IRS Penalty on Annuities
Tuesday, April 6th, 2010 by ryanUnderstanding the IRS Penalty
The most known annuity penalty that can occur from (whether it be a fixed annuity, a fixed indexed annuity or a variable annuity) the IRS is the 10% penalty for withdrawals prior to age 59.5. If you withdrawal money prior to attaining the age 59.5 the IRS will impose a 10% penalty on top of any taxes that are owed on the distributions. This is similar to the penalty imposed for early withdrawals on retirement accounts. The reason for this, is simple, the IRS views annuities as long term retirement vehicles and as such grant them with tax deferral. Since the IRS grants special tax provisions for annuity policies they also impose penalties if they are not used as intended.
This 10% penalty can be avoided on immediate annuities however where the annuity provides income from either 1 month after payment to 1 year after payment for a specified period of time. Unless you are over age 59.5 or plan to not withdrawal your money before age 59.5 we recommend investing in another vehicle. There are other ways to avoid paying the 10% penalty if you are under age 59.5 (listed below):
Death of the annuitant
For most fixed annuities if the annuitant dies the money is left to a designated beneficiary. The beneficiary of that fixed annuity does not need to be 59.5 in order to receive the proceeds. Fixed annuities can be a very effective estate planning tool (described in more detail elsewhere).
Annuitization
Annuitization is what happens when the owner of an annuity policy decided to turn the fixed annuity into an immediate annuity. Essentially he is shifting from an accumulation phase (earning interest) to a distribution phase (receiving income). An immediate annuity is not considered an asset instead it is considered an income stream and as such avoids the 10% IRS penalty.
Immediate Annuities Now?
Friday, December 18th, 2009 by ryanIs now the time to purchase an immediate annuity? When searching for the right immediate annuity the one thing we evaluate is “how much income will this insurance company pay me” per dollar I deposit. Yes it’s true that amount of money has been coming down along with fixed annuity rates but they have come down as dramatically. While rates on most fixed investments have falled alomst 50%; a 1 year fixed annuity last year was yielding north of 5%, today barely north of 3%. Immediate annuities have fallen in how much money they pay but not as much as other fixed investments. In our opinion Immediate annuities stil offer a great way for retirees to generate lifetime income. If you would like to discuss immediate annuities in more detail please feel free to call us at (888) 515-7152.