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Annuities: Are they for you?

In the financial world, an annuity (specifically a commercial annuity) is a contract between an individual and an insurance company. In return, income will be be paid at some future date or dates to that individual.

All about retirement funds : the easy way to get started
Ellie Williams, Diane Pearl.
New York : McGraw-Hill, c2004.
Includes index.
     
J.K. Lasser's winning with your 403(b)
Pam Horowitz.
New York : Wiley, c2001.
BUILD A SOLID RETIREMENT FOUNDATION BY TAKING CHARGE OF YOUR 403(b) Learning how to properly choose and maintain a 403(b) plan can be confusing and downright frightening without the proper information. J.K. Lassers Winning with Your 403(b) will educate you on this unique and powerful tax-sheltered retirement plan for employees of nonprofit organizations. Retirement planning is an important aspect of everyones financial strategy. This indispensable guide to 403(b)s will give you the insight and knowledge needed to ask the right questions when choosing a 403(b) plan, receive respectable returns on your investment, and reap the rewards of your plan as you head into retirement. Whatever your goals may be, if you are investing in a 403(b) as a vehicle for retirement, you should also invest in J.K. Lassers Winning with Your 403(b). Critical coverage will help you: Learn why selecting the right 403(b) vehicle is crucial to the success of your investment returns Pick the 403(b) plan that fits your specific needs by using a 10-point checklist Compare 403(b) plans with other retirement plans including 401(k)s, Roth and traditional IRAs, annuities, and pension plans Select funds to meet the objectives of your 403(b) plan Develop sound investment strategies that will keep your 403(b) healthy Steer your 403(b) through job changes, retirement, and beyond J.K. Lasser-Practical Guides for All Your Financial Needs Please visit our Web site at www.jklasser.com
     
The lump sum advisor
Anthony M. Gallea.
New York : New York Institute of Finance, c1999.
A financial expert explains all readers need to know about lump-sum distributions to plan for and build your financial future. Tells what works and what doesn't to solve investment problems, plan a consistent investment strategy, and minimize the tax bite.
     
Guaranteed income for life : how variable annuities can cut your taxes, pay you every year of your life, and bring you financial peace of mind
Michael F. Lane.
New York : McGraw-Hill, c1999.
"One thing is for certain: Variable annuities have become a part of the investment landscape and show no signs of going away."--The Wall Street Journal. The investing public's love of variable annuities has soared so high that The Wall Street Journal started a weekly column on annuities, "Annuity Watch." The reason for the popularity is simple. Variable annuities give investors the opportunity to receive money every year of their life, no matter how long they live. Guaranteed Income for Life explains the benefits of variable annuities. this informative book: Shows specific ways that variable annuities can help investors achieve lifelong financial security; Proves how variable annuities are in many ways superior to more commonly understood mutual funds; Explains the different types of annuities, with tips on how investors can pick the best product for their unique situations.
     

The source of the advice about an annuity should be reliable. The U.S. Securities and Exchange Commission offers information about annuities.The Consumer Insurance Hotline, 1-800-726-7930 can provide information about a company’s credit rating. The Missouri state insurance office lists companies licensed in Missouri.

The fees, terms, and conditions of the annuity should be studied and understood fully.  All rate quotes should be provided in writing.  A prospectus will disclose the charges associated with the annuity. Comparing contracts from several different companies may be difficult because of the variations among the features of each company and the types of annuities.

A new type of annuity is called a Longevity Policy. A person pays a one time premium of a large amount and at an older age, usually 80 to 85, begins to receive annual payments.

It can contain add-on options that will reduce the benefit including inflation protection, a death benefit for heirs, cash withdrawal, and nursing home care.

A single premium is a one time payment, while a multiple premium requires a number of payments over a given time period. An immediate annuity begins to pay out income soon after paying the premium. A deferred annuity does not begin paying until a specified later date and defers payment of taxes until gains are paid out.

A fixed annuity will provide a guaranteed rate of income either for a fixed amount of time or until death. A variable annuity provides a return that can fluctuate because it is invested in such things as stocks, bonds, or other investments. A fixed-indexed annuity is a combination of the fixed and the variable annuity; its return is linked to a particular financial market such as a treasury bill rate or the S&P 500. There is a guaranteed minimum return, plus a varying higher return if the indexed instrument increases.

As more Americans age and look for investments to protect their money, they look for guaranteed sources of income. From this perspective, annuities could be part of someone’s overall financial portfolio and goals. The amount one receives can depend upon the amount of money one invests, one’s age and life expectancy, and the kinds of risks one is willing to take.

Article by: St. Louis Public Library staff