What if you are a newly retired, or nearing retirement, and his wallet was devastated by the financial crisis? You can not be sure that its remaining assets be returned enough for you to live.
In addition to returning to work, one option might be to buy a fixed immediate annuity.
In fact, the financial crisis has been a boom in sales of these insurance products. The biggest emitter, New York Life, has sold 425 million U.S. dollars the value of contracts in the first quarter of this year – 82% from same quarter last year.
Fixed immediate annuities are simple. You pay a lump sum to the company insurance and agree to pay a certain amount per month for the rest of his life.
They can be a great for many people because you can get the same pension as a stock and bond portfolio – but with the principle of 25-40% less. For example, a man of 65 who pays $ 100,000 a day can get $ 650 a month for life. This is equivalent to taking 7.8% per year – double the yield of Treasury bonds over time.
The downside is that, unlike having your own portfolio you will not have nothing to bequeath to their heirs. But if your current portfolio is not large enough, then your comfort in retirement should take priority over everything goes down. Someone may even take a hybrid approach – investing part of their funds into an annuity and invest the rest.
The reasons for immediate fixed annuities are most popular are those that are not very profitable to sellers, and people confuse them with a sound similar but more complicated product called deferred annuities – which generate high fees and are not great investments.
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