GRAND Magazine - May/June 2013 - (Page 48-49)
BY dennis Miller
s we age, streamlining our finances looks increasingly appealing. Many seniors turn to annuities for a seemingly straightforward solution,
but they are not bulletproof.
Do you constantly worry about market ups and
Would it be worthwhile to pay someone to relieve
the pressure of investing part of your portfolio?
company a sum of money and it sends you a monthly
Nevertheless, keep the following risks in mind:
20 years that benefit will have the purchasing power of
check. It sounds simple, but annuities are not one-size-
Default by the Insurance Company: Insurance
fits-all products. You’re better off with no annuity than
companies do fail occasionally, and annuities are not
Here are a few tips for minimizing these risks:
with the wrong one.
protected by any federal safety net. There are state-
1. Never hold a large portion of your portfolio in an-
level programs, but their coverage varies. Check with
nuities. If high inflation picks up, you could be
ucts, think of them as insurance products. Although an
the National Organization of Life & Health Insurance
entirely wiped out.
annuity may turn out to be a good investment, do not
Guaranty Associations to learn what safety net is avail-
buy one for what it might do. Buy an annuity only for
able in your state.
While annuities are often sold as investment prod-
what it must do according to the terms of the contract.
Keep in mind, however, that even though an annu-
Lack of Liquidity: When the unforeseen happens
(and we all know it will), your annuity funds will be tied
ity may end up being a poor investment—which won’t be
in your state and to what extent.
3. If you’re holding annuities, make sure another
part of your portfolio is hedging against inflation.
up. Remember this and plan accordingly. Even if the
clear until you’ve passed away—it may still be a good idea.
2. Understand what kinds of annuities are protected
annuity allows for a withdrawal, the fees will cost you
You may be a good candidate for an annuity if you
can answer “yes” to most of these questions:
an arm and a leg.
Inflation: This is the biggest risk with an annuity.
Are you really stressed about paying your bills?
Consider a single premium immediate lifetime annu-
If the more financially savvy spouse dies first, can
ity with an installment refund that pays $583.33 per
the surviving spouse manage the nest egg?
MAY JUNE 2013
Dennis Miller is the author of
Retirement Reboot and Miller’s
Money Weekly, and the editor of
Miller’s Money Forever.
month. Even with a very modest 2% rate of inflation, in
MAY JUNE 2013 GRAND
Photo credit: ©thoMas_eYedesiGn
When you buy an annuity, you give an insurance
Table of Contents for the Digital Edition of GRAND Magazine - May/June 2013
GRAND Magazine - May/June 2013
You’ve Come a Long Way, Granny
The Grandest Gift
Born Free’s Virginia McKenna
My Aging Brain
Judy Cockerton: Foster parent and innovator
10 Best Story Books for Babies & Toddlers
Fun Toys for Kids of All Ages
News, Products, Tips, and Resources for Today’s Grandparents
Sure Cure for Senior-Time Blues
It’s a Wonderful Life
When a Child Is Removed from the Parents’ Home
GRAND Magazine - May/June 2013