If you currently own annuities, you’re not alone. Millions of Americans are depending on annuities as a large part of their retirement portfolio. I’m sure, with the changes in the economy, and none of them looking particularly promising, you may have wondered if your annuities will, in fact, provide the retirement finances you are hoping for.

As you probably are already aware, an annuity is a contract between you and an insurance company. Typically, investors enter into an annuity contract by funding it with a lump sum. In return for your investment, you receive periodic payments from the company, along with the benefit of having this return deferred from taxes.

A blanket generalization can’t be made as to whether annuities are a sound investment strategy or not, since there are both good and bad annuities. By choosing the right annuities, you’ll help to fund your retirement lifestyle for the duration of your life, even if your other assets run out.

Because of this promising feature and the current changes in the economy along with troubled AIG, many are wondering about the safety of their annuities, and rightfully so. Keep reading…we’ve got some answers for you.

Good News for Annuities

There’s good news for annuity owners. First of all, the AIG subsidiary that sells annuities seems to be financially sound. AIG’s situation can be compared to CONSECO Holding Company that declared bankruptcy back in 2002. Although the company declared bankruptcy, the subsidiary insurers continued to operate.

Fixed Annuities

Furthermore, if your particular annuity company does run into financial trouble while you are in the payout phase of your fixed annuity, your payments should go on uninterrupted. Worst case scenario, your payments could be reduced, but it’s highly unlikely for them to stop or fail to pay completely.

Variable Annuities

In the case of variable annuities, it’s important to understand that the assets connected to your annuity contract are separate from the assets of the insurance company itself. This means that your investments are subject to changes in the market, which isn’t always a good thing. When determining your risk tolerance, fixed annuities are a much more prudent investment strategy.

Smart Investing Involves Knowing What You Own

Even though it’s highly unlikely that you’ll run into serious trouble with your annuities, it’s always wise to research the financial health of the company providing your annuities. The more you know by taking an active part in your annuities and investments, the less likely you are to run into surprises.

If you decide to seek the help of a financial advisor, be sure to work with a Registered Investment Advisor (RIA) and not a wealth manager or financial advisor. Why? Because Registered Investment Advisors are required by law to uphold the highest standards of investing and place the interests of their clients first. On the other hand, financial advisors are, by contract, obligated to put the interests of the broker-dealer ahead of the investor. Financial advisors may receive certain perks or high commission percentages for pushing certain items. Registered Investment Advisors don’t operate this way, so they are your best bet for sound financial advice.

Are Your Annuities Safe from Crisis? is a post from: Lump Sum Annuity

After reading the reports from last fall’s Fidelity study, I was stunned. The report revealed that three out of every four pre-retirees do not have an income plan. Okay, that’s believable. The alarming portion of the study was the reason behind not having an income plan. The top reason was driven simply out of the fear of what their plan might tell them if they were to take a look at their options. Do you know what that tells me? That tells me there are a lot of pre-retirees out there who know that their finances are in an unhealthy state, but they are paralyzed from doing anything about it, because they are dreading the bad news. That’s disheartening, at best. But, at the same time, it’s good information to know, because we are going to take some steps to doing something about this fear problem, and we are going to start immediately.

Facing Our Fears of Retirement Finances

So, in this article, I decided to give anyone who has fears or concerns about their financial situation a free tool to use.

The new tool has been put out by Fidelity, although you don’t have to be one of their clients in order to use it. It’s called Fidelity Income Strategy Evaluator, and it is packed with features that will help you, from the comfort of your own home, check out your current financial retirement situation and come up with a strategy to help you retire the way you should, stress free.

How Does the Income Strategy Evaluator Work?

Glad you asked. This free tools will ask some simple questions in order to gather a personal assessment of your finances and options, you’ll fill in the blanks, and then the calculator will suggest a combination of products that can help you to replace your pre-retirement income with a new source of cash flow.

The beauty of it is, since every person is unique and has their own personal opinions and situation, if you don’t like the options the tool suggests, you can pick and choose a different set of options and the calculator will give you a best and worst case scenario based on what you’ve chosen.

For instance, if you want to see how annuities could benefit you by replacing part of your income, all you have to do is click on that option and that investment will open up the details of how it could affect or replace your income. The calculator also has the ability to tell you have your investment or particular annuities would hold up during different market conditions. The tool really is well put together and provides you with a holistic view that doesn’t leave too many stones unturned.

What About My Current Annuities and Investments?

For individuals who already have investments, annuities, a 401(k), etc, the tool will automatically populate with this information with just a few clicks of the button. You can find out where your weak areas out, what could happen with your investments, and how safe your retirement plan looks.

Bottom line here? Don’t use this tool as a “be all, end all” to your plans for investing in annuities or other financial ideas. Instead, use it to open your eyes as to exactly where you stand financially, and devise a plan to get to where you want to be.

For more information on annuities, including lump sum annuities, and the pros and cons of annuities, check the rest of our blog!

Surprising Reason Why Pre-Retirees Don’t Have Annuities or an Income Plan is a post from: Lump Sum Annuity

Most individuals will need to roll over their retirement account at least once, if not more, during their lifetime. If you worked for a company that provided you with a 401(k) plan, you’ll need to roll that money over when you retire or choose to leave. Here’s the information you will need in order to do so without losing any of your money or paying unnecessary taxes or penalties.

Avoiding Penalties and Withholding Fees When Rolling Over Your Retirement

There are a couple of scenarios you need to avoid when leaving your current employer. They may sound complicated, but the bottom line to remember if you are trying to avoid any penalties or fees is simply this; the check should not be made out to you. If it is, you are going to be hit with owing 20% for taxes, plus a 10% penalty for early withdrawal in the event that you are just switching jobs and are under age 55.

In order to get around this, find your new IRA account first, and arrange for a direct trustee to trustee rollover. All this means, in simplest terms, is that your retirement distribution check from your former employer will be made out to the name of the trustee of your new IRA  plan. Each IRA account is a little different, so you’ll need to ask your bank or your broker to inform you in writing on how the disbursement check should be worded. It should end up being something like, “AAA Securities House, for the benefit of Your Name Here.”

Once you have the details of how the disbursement check should be handled, contact the retirement plan administrator of your former employer and inform them that you intend on making a direct rollover. At this point you’ll be given a form to fill out which will ask for the information of how the disbursement check should be made out. The check (made out to the new IRA account for your benefit) will then be given to you. You will be responsible for depositing it into the new, rollover IRA account. You’ll generally have 60 days to do so.

The 60 day rule is important, so be sure you make the time to get this done . Begin counting on the day after the check is dated. There is not an extension period and the 60 days includes weekends and holidays.

Special Situations in Rollovers

Some individuals may not be looking to rollover funds due to a career change or retirement. If you are needing to transfer and split assets due to a divorce, you can also get this done tax free if you follow these two rules.

Rule number one: The splitting of your IRA assets must be a requirement of your divorce settlement. It can’t simply be a decision that is made and agreed upon verbally.

Rule number two: If you are transferring funds from your IRA in order to split assets with your ex-spouse, you must roll the funds over from your IRA into an IRA that has been set up specifically for the other person alone. Once the funds are transferred, if your ex-spouse withdraws funds, they will, of course, owe applicable taxes and penalties on the money. You are no longer responsible.

Of course, these are only two possible scenarios. For more information on rolling over retirement accounts, lump sum annuities, buying and selling annuities, and more, keep checking back. We will provide you with the latest and most valuable information regarding your retirement and financial success.

How to Avoid Penalties When Rolling Over Your Retirement is a post from: Lump Sum Annuity

When you are evaluating your finances and deciding whether to take a lump sum or annuity, it’s important to have all the facts. Whether you are a newbie or quite familiar with the options, you’ll find trusted and valuable information on LumpSumAnnuity.org.

Looking at Annuities:

This option provides you with regularly scheduled payments that will last for the rest of your life. If you’re married, this provides a safe option since your employer will make payments as long as you or your spouse are alive.

Annuity Pros: The advantage to the annuity option is, of course, the stability factor, and being certain of your budget. Opting for annuity allows you to plan your finances, vacations, bills, etc. without worrying about the ups and downs of the financial market.

That reliability of an annuity is a not only ideal for financial reasons but for emotional and peace of mind as well. As retirees, it is comforting to know that your finances are in order, and that income will remain stable throughout the remainder of your life.

Research has proven that retirees who have reliable pensions tend to be happier than those who do not.

Annuity Cons: Everything has it’s shortcomings, and annuities are no different. As enticing as a guaranteed pension may sound, it does have its shortcomings. Annuity payments, unlike Social Security, do not increase with inflation, and there is the possibility that budgets might become extremely tight over the years.

Another possible con to annuity is the fact that a stable monthly payment may not help much if you suddenly find yourself in need of a particular sum of cash to meet a financial need. One unexpected medical bill or home repair can throw your financial situation into the red if you are not prepared.

Pension payments are often spoken of as being a guaranteed payment, although actually they often are not. When you place your trust in a pension, you are counting on your company to make these payments year after year. All too often, companies that were once healthy have been known to fall into difficulty, causing them to renege on the promised pension plans. If this happens, the Pension Benefit Guaranty Corporation is supposed to step in, but with limitations that may still leave you without the income you once expected.

Lump Sum Pros: Taking the lump sum allows you have more control over your pension. With a lump sum, you decide how much income to draw for yourself each month. If an unexpected bill should come up, you can easily dip into your lump sum at any time. If you are a responsible, budget minded individual, this can be a perfect option.

Lump Sum Cons: Flexibility also has it’s possible downfall. With more available funds to manage, it can be easy to dip into the lump sum repeatedly without realizing that you have set yourself on a dangerous path. With a lump sum, once the money is gone, it’s gone.

With these being just two of the immediate options, you can see why it is important to wisely educate yourself on lump sum and annuities. Meeting with a financial planner to decide on possible investment options is always smart.

We at LumpSumAnnuity.org are here to provide you with reliable information for a financially successful future. Please contact us through our comments section with specific questions you may have and check back often for the latest information.

Welcome to Lump Sum Annuity is a post from: Lump Sum Annuity

Retirement is a part of every salaried person and much before his retirement he has to decide about his structured income after retirement. It is here that Lump Sum Annuity comes into picture.

This is how this scheme works. During the tenure of service, it is just and natural that every employee saves some money for his future. He has to invest these savings so that after his retirement, he gets some money every month which he can use for his day to day needs. To encourage the employee to save, some companies have instituted what is called as pension scheme. The employee, instead of investing his amount elsewhere can invest the amount with his employer who in turn would pay him Lump Sum Annuity. This Lump Sum Annuity is paid at a pre fixed percentage every month for the rest of the life of the employee. But the employee has to decide whether to invest with his employer or to withdraw the savings for better investment. Once this decision is taken, it is normally irrevocable.

Normally, the company pays him a predetermined percentage as Lump Sum Annuity. But, this Lump Sum Annuity or pension may diminish in terms of its intrinsic value. This is particularly true when there is inflation. Presuming that the inflation rate is 5% annually, in the next 10 years, the real value of Lump Sum Annuity would have substantially reduced. On the other hand, the investment market may be more favorable and investing in the open market could fetch more benefits than the Lump Sum Annuity. For example, investing in Shares could be more beneficial. But it has an element of risk with it. Unless the person is experienced in the operation of the stock market, this investment is not safe and such persons could opt for Lump Sum Annuity. There are also cases where the employee may find it necessary to withdraw the savings to pay his debts or law suits, medical expenses, etc. Therefore before opting for Lump Sum Annuity, the employee has to think carefully, and he should analyze the pros and cons. It is advisable that he should consult a financial planner.

In addition to this, there are many finance agencies and investment companies including banks who offer Lump Sum Annuity Plan at different rate structure. Some of these plans are also growth investment plans with assured Lump Sum Annuity in addition to some health coverage plans, etc. Some investment plans include payment of Lump Sum Annuity to the spouse or any other nominee either at the same rate or at a revised rate. As an alternative, some retired persons may prefer to invest the bulk in developing real estate property. This type of investment has one advantage; the real value of the property increases and at the same time, with proper planning he can get some returns from the investment made on real estate property if it is leased on monthly rent, etc. The return he gets as rent every month may even be equal to the Lump Sum Annuity which he would get from his employer.

On the part of the employer or the financial agency offering this Lump Sum Annuity, the amount is calculated using the estimates made by a qualified actuary. The actuary calculates taking the average life expectancy, growth rate of funds and many other factors into account before deciding on the Lump Sum Annuity which could be offered to the pensioner.

There is another category of people who are not really dependent on the Lump Sum Annuity for their retired life. Such retired persons may choose lump sum investment plan. In this plan, the person encashes his pension with some investment company. The company will pay a sum which is slightly less than the face value of the pension amount and the difference is the profit for the company. These amounts are normally invested in real estate or in franchise business. But, in this case, the pensioner should ensure that the return on the investment will cover the discount recovered by the company.

In all these investments, a wise decision is all that matters. But many people do not have thorough knowledge of the investment mechanism. They may not be aware of the financial market trend, the health of the financial institutions where investment is proposed to be made, etc. It is here that the role of financial advisers or investment advisers comes into play. They advise the investor on the appropriate investment plan so that the pensioner gets his Lump Sum Annuity or other appropriate investment plan. But it is the financial or investment adviser who can give the right type of advice depending on the need of the investor, his financial propriety, etc.

Lump Sum Annuity is a post from: Lump Sum Annuity