Posted on 01/30/2010 4:50:00 AM PST by abb
Annuities: The official retirement vehicle of the Obama administration.
As slogans go, it’s hardly “Keep Hope Alive,” or even “Change We Can Believe In.”
But there were annuities, in a report from the administration’s Middle Class Task Force that came out this week. They are among the tools the administration is promoting as it tries to give Americans a better shot at a more secure retirement.
At its simplest, which is how the White House seems to want to keep it, an annuity is something you buy with a large pile of cash in exchange for a monthly check for the rest of your life.
If the biggest risk in retirement is running out of money, an annuity can help guarantee that you won’t. In effect, it allows you to buy the pension that your employer has probably stopped offering, and it can help pick up where Social Security leaves off.
President Obama did not discuss annuities in his State of the Union address on Wednesday night, probably figuring that viewers had enough problems staying awake. But the mere mention of them by the task force was enough to send executives at the insurance companies that sell the products into paroxysms of glee.
“I never thought I’d have the president as a wholesaler for us,” said Christopher O. Blunt, executive vice president of retirement income security at the New York Life Insurance Company. “This is awesome. I’m trying to see if I can get him to do a big broker meeting for us.”
He’s unlikely to turn up for such an event just yet. After all, the announcement from the White House did make it clear that the administration was looking to promote “annuities and other forms of guaranteed lifetime income.”
snip
(Excerpt) Read more at nytimes.com ...
ping
I believe this will be the way they force people to buy bonds, which no one else wants.
In my opinion, you are much better off investing in dividend-paying stocks, and living on the dividends. Your capital will grow instead of shrinking, and you income will increase over time.
Annuities are a great deal, right up until the company that guarantees your income for life does an Enron or Dennis Kozlowski at Tyco (yes, I know Tyco’s still around - I’m using Kozlowski as an example of well known, blatant fraud) and goes out of business. Then where does your income come from? Not for me, thanks.
There is no way in Hell I would buy an non-inflation protected annuity in this environment.
And inflation protection isn’t going to help you when the company goes bust.
Yes, this is their plan to convert our 401-K’s and IRA’s to Treasuries. Looks like the NY Slimes is clued in.
Mr New York Life Guy,
Don’t get so excited. You will sell people your extremely confiscatory and expensive annuity products. Subsequently, you will be vilified by Obamao, taken over by the government, and told that your annual compensation will be limited to the lesser of 30,000 or the current poverty line. Be careful what you wish for....
First, get hold of your money, then make sure you die young via Death Panels. A great plan.
If they do that, it’s pitchforks and torches time!
Annuities = Life Insurance Companies = Warren Buffet
See the connection
Another
Estate Tax = Life Insurance Companies=Warren Buffet
If the biggest risk in retirement is running out of money, an annuity can help guarantee that you won’t. In effect, it allows you to buy the pension that your employer has probably stopped offering, and it can help pick up where Social Security leaves off.
My sister did this with her inheritance from our parents. Only problem .....it was with AIG. {:^(
I hadn’t thought of that. With the coming Obamacare, life expectancy is going to go way down. All the mortality tables will have to be re-written.
similar to the Toyota Recall over “sticking accelerators” aka “I am fat and lazy and can’t move my foot fast enough.” Now that gov’t controls GM, all regulatory power will be brought against competitors.
and what was the end result?Have they defaulted on her payments?Please elaborate.
First, they get you to buy a fixed annuity.
Then, they stir in some inflation.
The insurance company’s investments keep up with inflation, your payments remain at 2010 levels.
Result - poverty for you, great wealth for the International Bankers.
So I buy an annuity from Medoff and associates and I’m set for life?
I remember in high school in 1967 we remarked on a section of Joe Namath’s contract with the New York Jets that paid him $100/week for life after his playing days, “He can never be a poor man.”
Two major problems with annuities is the stability of the payer and inflation. Common stocks held in a mutual fund are probably a much better hedge against inflation, and a mutual fund by spreading risk over the entire market lowers the risk of catastrophic failure. If there is a general market crash, what are the chances that your annuity company is going to survive?
Annuities are great for shifting risk, except inflation risk. If you assume, argumendo, that you need $100 a week to live, should you retire when you able to buy an annuity that pays $100 a week, for life. Certainly not. You should buy several annuities from different companies (although this only weakly spreads the risk since the risks are highly correlated) that pay in excess of $100, with the difference accounting for inflation. You can account for inflation in two ways: Besides having margin for inflation, you reinvest the excess to continue to increase your income, hoping to keep the amount you need to live ahead of inflation.
Here it comes.....confiscate the 401ks and put them into government bonds.....
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.