GRAND Magazine - May/June 2013 - (Page 48-49)

money matters Annuities Simplified BY dennis Miller a s we age, streamlining our finances looks increasingly appealing. Many seniors turn to annuities for a seemingly straightforward solution, but they are not bulletproof. ƒ Do you constantly worry about market ups and downs? ƒ 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 only $392.56. 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. ƒ Are you really stressed about paying your bills? Consider a single premium immediate lifetime annu- ƒ 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? 48 GRAND 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 49 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
Slaying Dragons
You’ve Come a Long Way, Granny
Electrical Safety
Let’s Pretend
The Grandest Gift
Born Free’s Virginia McKenna
My Aging Brain
Judy Cockerton: Foster parent and innovator
10 Best Story Books for Babies & Toddlers
Grand Expectations
Fun Toys for Kids of All Ages
Annuities Simplified
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