Tuesday, October 14, 2008

AARP Insurance

AARP Insurance Annuity plans are in the news at the moment as people take try to make sense of the stock market and how they will be affected the question is Are annuities for you?

I think this is a good time for people who own an annuity - or are considering buying one - to ask themselves whether they really ought to be in an annuity at all. some people recommend a particular type of annuity - an immediate annuity - as a way to convert a portion of your savings to a lifetime income once you've retired.

But immediate annuities represent a very small portion of annuity sales. Most of the annuities that are sold fall into two categories: fixed deferred annuities, which are sold to older investors such as AARP insurance members , most of whom I think would likely be better off in bank CDs and bonds; and variable annuities, which are touted as mutual funds that can shelter their gains from taxes and often sold (usually inappropriately in my opinion) as investments for IRAs and 401(k) rollover money to people who are still years away from retirement.

If nothing else, I hope the attention that insurers and annuities are getting will lead AARP Insurance members to re-assess (ideally with the help of a financial adviser who doesn't depend primarily on annuity sales for his or her livelihood) whether they really belong in annuities.

David Ogden -Tomorrows Home Business
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