In the news – Oregonian annuities article
Aug 24th, 2009 by Tim
Brent Hunsberger, the personal finance columnist for The Oregonian, tackled the often complex topic of annuities in his Sunday column. My take: immediate annuities have a role in retirement income planning. However, it’s important to understand the embedded costs and “apples to apples” cash-equivalent yield of a variable annuity with a Guaranteed Lifetime Income Benefit before making a purchase decision.
By Brent Hunsberger, The Oregonian August 22, 2009
…It’s apparent why they’re popular and being hawked aggressively by agents. Last year’s stock market dive sent investors scurrying for cover. Still others grappled with the (real) risk that they might outlive the money they set aside for retirement.
One of their refuges: Fixed annuities. Sales of individual fixed annuities increased by 39 percent in the first half of 2009, according to LIMRA. Variable annuity sales dropped 26 percent.
This is good news in a sense. Fixed annuities pay you a rate that won’t change in the future, no matter how the insurance company invests it. Variable annuities had been all the rage, but they often weren’t the financial deal that owners thought they were getting.
“The guaranteed income is compelling to a lot of people, especially in this environment where people are looking for safety and predictability,” said Tim Kober, a fee-only financial planner at Cedar Financial Advisors in Portland. “The question becomes, at what cost.” …