The Truth About Buying Annuities [Paperback]

Steve Weisman (Author)

Book Description

ISBN-10: 0132353083 | ISBN-13: 978-0132353083 | Publication Date: August 15, 2008 | Edition: 1

Avoid the retirement annuity minefield...don’t make an expensive, catastrophic mistake!

·     The truth about using annuities to protect your future

·     The truth about hidden fees that could cost you a fortune

·     The truth about the newest types of annuities–good and bad

 

Simply the best thinking…the truth and nothing but the truth

 

This book reveals the 50 CRITICAL FACTS you must know about annuities before you buy

 

“Steve Weisman has accomplished a feat of immense proportion by explaining one of the most complicated investment vehicles in ways that average Americans can easily understand.”

Robert Powell, Editor, “Retirement Weekly,” MarketWatch

 

Introduction v

Truth 1          The history of annuities 1

Truth 2          Immediate annuities 5

Truth 3          Fixed rates 9

Truth 4          Deferred annuities 13

Truth 5          Annuity fees 17

Truth 6          Variable annuities 21

Truth 7          Variable annuity investment choices 25

Truth 8          Actively managing variable annuity sub-accounts 29

Truth 9          Indexed annuities 33

Truth 10        More about indexed annuities 37

Truth 11        Calculating index changes 41

Truth 12        Inflation protected annuities 45

Truth 13        Tax-sheltered annuities 49

Truth 14        Annuity settlement options 53

Truth 15        Tax deferral 57

Truth 16        Annuity risk 61

Truth 17        Annuity death benefits 66

Truth 18        Annuities and income taxes 69

Truth 19        Tax-free 1035 exchanges 73

Truth 20        Charitable gift annuities 77

Truth 21        Split annuities 81

Truth 22        Joint and survivor annuities 85

Truth 23        Shorter surrender annuities 89

Truth 24        Longevity insurance 93

Truth 25        Inheriting an annuity 97

Truth 26        Variable Annuities versus variable universal life insurance 101

Truth 27        Choosing between mutual funds and an annuity 105

Truth 28        Annuities and asset allocation 109

Truth 29        Asset allocation and laddering annuities 113

Truth 30        Minimum required distributions 117

Truth 31        59 ½ 121

Truth 32        Annuities in IRAs 125

Truth 33        Annuities and 401(k)s 129

Truth 34        More about annuities, IRAs, and 401(k)s 133

Truth 35        Annuities for children 137

Truth 36        Bonus credits 141

Truth 37        The Pension Protection Act, annuities, and long-term care 145

Truth 38        Annuities and Medicaid 149

Truth 39        Annuities and reverse mortgages 153

Truth 40        State Guaranty laws 157

Truth 41        Annuities and creditor protection 161

Truth 42        Getting out of an annuity 165

Truth 43        Annuity scams and senior citizens 169

Truth 44        Annuities and class actions 173

Truth 45        Prospectuses and annuities 177

Truth 46        Free looks 181

Truth 47        For whom annuities are best 185

Truth 48        Steve’s annuity rules part one 189

Truth 49        Steve’s annuity rules part two 193

Truth 50        Where to go for Information 197

About the Author 201

 

 

Editorial Reviews

About the Author

Steve Weisman is Senior Lecturer at Bentley College in the department of Law, Tax, and Financial Planning. He has also taught courses on financial planning at the University of Massachusetts, Curry College, and Boston University. He is a host on the nationally syndicated radio show A Touch of Grey, heard on more than 50 stations, including NYC’s legendary WABC and KRLA Los Angeles. A member of the National Association of Elder Law Attorneys, Weisman is legal editor and columnist for Talkers Magazine and writes for publications ranging from The Boston Globe to US Air. His books include Boomer or Bust and The Truth About Avoiding Scams. Weisman has earned a Certificate of Merit for legal journalism from the American Bar Association.

Excerpt. © Reprinted by permission. All rights reserved.

Introduction

"Steve Weisman has accomplished a feat of immense proportion by explaining one of the most complicated investment vehicles in ways that average Americans can easily understand."

Robert Powell, Editor, "Retirement Weekly," MarketWatch

Saving for retirement used to be so easy. Companies provided pensions that would pay their retired workers for the rest of their lives, not to mention the fact that companies would also pay for health insurance for retirees. On top of that, there was workers' own savings. And don't forget the Social Security check that came in the mail every month. Retirees were set for the rest of their lives.

But times have changed. People are living longer. Baby Boomers facing retirement can expect to live considerably longer, but not necessarily healthier, lives than their parents. They will spend much more time in retirement. But few companies offer the kind of guaranteed, defined-benefit pension plan that formerly was so common. The 401(k) is king, and although it provides the potential for considerable retirement savings, it takes some effort and commitment by workers today to provide for tomorrow. As for health insurance, all too often companies are telling retirees that they are on their own. In addition, people are not saving as much as they did in the past. And even that Social Security check doesn't seem quite as secure as it once did.

Things look rough for retirees.

But to the rescue have come insurance companies and others with a product that guarantees it will provide retirement income for the rest of your life. The product is the annuity. It is not a new idea, but it may be an idea whose time has come, with close to 2 trillion dollars now invested in all kinds of annuities.

But is this the answer to our problems?

According to H.L. Mencken, "For every problem, there is a solution that is simple, neat, and wrong." Well, annuities are far from simple. And although they may appear neat, they are quite complicated. They also are dead wrong for many people who own them, particu-larly elderly purchasers of deferred variable annuities, who were sold inappropriate annuities by salespeople more interested in the high commissions that annuities bring to salespeople than in helping their clients.

But are annuities always wrong?

The answer is no. Annuities have much not to like about them, including high fees along with misleading and sometimes illusory benefits. However, this investment, which has been around since early Roman times, has evolved and continues to evolve in an effort by insurance companies and other legitimate issuers of annuities to provide secure retirement income for people. If you look hard enough, you can find lower fee annuities that provide benefits which may be tailored to your particular retirement needs.

But you need to know the truth.

Perhaps nowhere in the investment world is there more misleading and downright wrong information about an investment product than with annuities. But this book will tell you the truth. It explains, in clear and understandable language, basic information you need to know about the many different types of annuities. It tells you what the pitfalls of annuities are. It tells you about the lies and misrepresentations to avoid. It also tells you about where annuities might play a useful part in your own retirement planning, when to use them, and how to use them.

It gives you the rules in simple and concise language so that armed with this information, you can make an intelligent and confident decision as to whether annuities should be a part of your retirement planning. Oscar Wilde said, "A man who does not think for himself, does not think at all." This book will give you the knowledge you need to make an informed decision for yourself about one of the most important issues you will face for the rest of your life—how to make your money last a lifetime.

© Copyright Pearson Education. All rights reserved.

Product Details

• Paperback: 208 pages
• Publisher: FT Press; 1 edition (August 15, 2008)
• Language: English
• ISBN-10: 0132353083
• ISBN-13: 978-0132353083
• Product Dimensions: 8.4 x 5.5 x 0.4 inches
• Shipping Weight: 12 ounces (View shipping rates and policies)
• Average Customer Review: 3.0 out of 5 stars  See all reviews (6 customer reviews)
• Amazon Best Sellers Rank: #198,181 in Books (See Top 100 in Books)
  • #11 in Books > Business & Investing > Industries & Professions > Insurance > Life
  • #38 in Books > Business & Investing > Industries & Professions > Insurance > Business

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Customer Reviews

Most Helpful Customer Reviews

25 of 27 people found the following review helpful:

1.0 out of 5 stars Research is outdated., December 26, 2008

By 

J. Thornberry - See all my reviews
(REAL NAME)   

This review is from: The Truth About Buying Annuities (Paperback)

This book is overwhelmingly negative towards annuities. Although, I think that many of the author's (Weisman) points are valid they are mainly geared toward older variable annuities, with particular attention given to equity indexed annuities and annuitization. Not one of the 50 chapters is devoted to living benefits, which make today's annuities most attractive.

I am very disappointed in this book. Nothing of what the author outlined is factually incorrect, but it is written as if he looked for all the negative aspects and published them. To write a book title " The Trust About Annuities" in 2008 and not even mention living income benefits (GMIBs, GMWBs, etc) seems negligent.

24 of 27 people found the following review helpful:

1.0 out of 5 stars Author completely omits most important features!!!, June 28, 2009

By 

Timothy (Coronado, CA USA) - See all my reviews

This review is from: The Truth About Buying Annuities (Paperback)

This author omits the most important facts about today's Annuities.
The guaranteed principle and income riders.
People who took Steve Weisman's advice to stay away from annuities and lost 40% to 50% of their life savings in 2008 should be upset.
For a fee of .35% per year, which is just 350 per 100,000 . Your principal could have been 100% protected from loss as long as you don't withdraw more than 10% per year and hold your annuity for 7 years.
Another very popular rider that has also been available for years is called Lifetime HD 7 and has a .75% yearly fee.
This rider locks in market gains EVERY DAY and guarantees a 100% return of principal after 10 years.
It also guarantees a 7.2% compounded return for your retirement value .It guarantees your retirement value to be 200% in 10 yrs and 400% in 20yrs (this value is what you can base your 5-8% lifetime withdrawal on. You cannot walk away with this amount as you can with your principle.)
When you start your lifetime withdrawals they can never stop even if you run out of principle.
Your income can also continue at your death for your spouse and double if you enter a nursing home or become disabled.
For this author to completely omit these riders in his book shows he may be biased and have an anti annuity agenda.

20 of 26 people found the following review helpful:

5.0 out of 5 stars Simply the Best, September 20, 2008

By 

Dennis De Ford (elk grove vlg, il United States) - See all my reviews
(REAL NAME)   

This review is from: The Truth About Buying Annuities (Paperback)

The contracts on insurance products are written for the benefit of the insurance companies, not the insured. This is the first book I have read that simply and yet completely explains a complicated financial product that most people buy without understanding what they are buying. Annuities are an area where there has been great abuse by salespeople; I wish I could make this book required reading before anyone could by one.