How to Use Annuities for Retirement Income

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Please explain: Life Income with 15-year Term Certain
Also: 15 year Term Certain
Life Income - Non Refund
Life Income - Installment Refund
Thank you

Theresa Bender of VA 7:45AM June 25, 2012

Great article and you can find more like this at… http://www.RETIREREPORT.com …Retirement information updated daily.

Your Retirement Report of FL 5:57PM February 13, 2012

To quote you: "The second statement is not true. Insurance companies don't keep the money you don't live to spend. They pay it out to those who outlive their life expectancies." I think the author of this article is saying that YOU don't get to keep the money you don't live to spend. The annuity company is keeping it to give to the annuitants who happened to be luckier than you to have lived longer. The end result is that YOUR heirs do not get anything from the annuity when you die. What a tragedy it would be to fund your annuity and then die a short time later. Is that really fair to your heirs? The money you've saved all your life to fund the annuity goes to someone else who just happened to live longer. Something is wrong with this picture.

C Smith of TN 8:01PM August 23, 2011

Hi
I noticed one discrepancy in this otherwise well-written article. First the author says that those who die before their life expectancy subsidize those who outlive their life expectancy. Then he makes the comment that keeping the money you haven't spent is one way insurance companies make money selling annuities. The first statement is true, generically. The second statement is not true. Insurance companies don't keep the money you don't live to spend. They pay it out to those who outlive their life expectancies. Actuaries have told them how much they can pay each annuitant, based on life expectancy statistics. It's the reverse of life insurance. Life insurance protects beneficiaries from losses they would suffer if you die too soon. Annuity life incomes protect you against "living too long". I wanted to correct this misconception, because I know it is a common one that can prevent people, who really should be open to the idea, from benefiting from annuities. Insurance companies make profits, but keeping people's annuity premiums after they die isn't how they do it. Thank you.

Diane Lathrop of IL 5:35PM August 17, 2011

Beware, you can't rely on the tax codes as written today to be in effect when you take the money. They will tax you in the future at a higher rate. Buy comedies or high end collectables.

jtL of CA 5:33PM August 03, 2011

Although I have not yet begun it, I have a TIAA-CREF annuity. I will ladder immediate annuities when I begin. My principal has always increased in this annuity; its costs are low; I "own" the principal. I do not belong in the equities market at my age--few people do, I think. The risk of loss trumps the chance of gain by orders of magnitude.

Boomerscoutofamerica of OR 12:39PM August 03, 2011

I've had my SIMPLE IRA in a bonus annuity from Allianz since they first became available 15 years ago. Although some may think this is double sheltering income that would already be sheltered in any type of IRA, my retirement funds have never decreased, only increased, no matter what the market did, and I still receive a guaranteed interest rate that is many times higher than what any CD has paid for several years.
Yes, the entire amount will be taxable as I receive it, but I will never be without an income, and if I live longer than the guaranteed certain period, I will get back much more than I ever paid back, and if I die before that, my heirs will get any balance that I hadn't received.

StlH2O of FL 11:23AM August 03, 2011

second paragraph states:
"If you set aside money now but defer the income to a later date, any earnings on your premiums accrue tax free."
Should this be tax "deferred" instead of tax "free". Don't you pay the tax upon withdrawal?

kl of AR 5:24PM August 02, 2011