Jump to content
Sign in to follow this  
understanding

I'm New

Recommended Posts

Hello Friends,

 

This is all very interesting. I understand what you all are saying, but I am also skeptical of this blog. Please help me understand what I am reading b/c I just have a very hard time believing that ALL annuity and insurance salespeople are misleading their clients. I know that my great grandmother is leading a very great life b/c of the person that helped her generate more income in her retirement and protect that income with both annuities and life insurance. Because of her agent she was able to put a new deck on her house, make more money, and help my wife and I with her 403b. And this agent also worked for AXA. So, while your stories sound interesting, I just can't help believing that her agent is doing the best for her and us. Please explain to us where we had gone wrong. Thanks Guys!!

 

Understanding

Share this post


Link to post
Share on other sites

Hi,

Welcome to this forum. Since you didn't ask an investing question and seem to be doing great, why don't you just read a bunch of discussions from the past. Maybe that will answer any of your concerns. Best Wishes.

 

Joe

Share this post


Link to post
Share on other sites

Because of her agent she was able to put a new deck on her house, make more money, and help my wife and I with her 403b. And this agent also worked for AXA. So, while your stories sound interesting, I just can't help believing that her agent is doing the best for her and us. Please explain to us where we had gone wrong.

I am just starting to learn financial resposibility (better late than never) and how to invest wisely by frequenting this forum and reading recommended books. I just got through reading "Teach and Retire Rich" and started on "The Random Walk Guide To Investing" by Burton Malkiel. Everything I have read so far, including the current book, say to stay way from annuities unless you have maxed out on all your other retirement accounts (401k, IRA, etc).

Your grandma may have built a new deck with annuities, but with no-load mutual funds may have built a new deck and a new house.

 

 

 

Share this post


Link to post
Share on other sites

First of all, and this is from a guy who was threatened "legal action" by an AXA rep if I continued to speak out against them, not all salesman are bad. The problem is, there is overwhelming evidence that having a Variable Annuity within a 403(b) retirement account is inappropriate in nearly every case, (in my humble opinion, every case) yet most 403(b)'s are in a Variable Annuity. Why?

 

I too have a friend who has been contributing to her 403(b) with AXA for over 30 years and has about $250,000 to show for it. It will nicely supplement her retirement income and would easily fund a new deck, but it is my contention that had she been in a diversified, low-cost, no-load 403(b) Custodial Account over that same time period, she would have well over $500,000 in the same account.

 

I too would recommend you search some of the older threads on this site and then get back to us, and be sure to formulate your opinion based on what you find, not what one or two of us has to say.

Share this post


Link to post
Share on other sites
Guest Sierra

Hello Friends,

 

This is all very interesting. I understand what you all are saying, but I am also skeptical of this blog. Please help me understand what I am reading b/c I just have a very hard time believing that ALL annuity and insurance salespeople are misleading their clients. I know that my great grandmother is leading a very great life b/c of the person that helped her generate more income in her retirement and protect that income with both annuities and life insurance. Because of her agent she was able to put a new deck on her house, make more money, and help my wife and I with her 403b. And this agent also worked for AXA. So, while your stories sound interesting, I just can't help believing that her agent is doing the best for her and us. Please explain to us where we had gone wrong. Thanks Guys!!

 

Understanding

 

 

Have you, your wife or your great grandmother ever bought a no load product? Your comments reflect the rationale of the AXA salesperson: "IF THEY DON'T BUY FROM US THEY WILL WIND UP WITH NOTHING WHEN THEY ARE READY TO RETIRE"

 

Tell us, when it comes to other consumer items do you employ the services of a sales person? When you know you can buy the same product for less, who gets your business? The same solid rules of comparison shopping apply to financial products.

 

Joel L. Frank

Share this post


Link to post
Share on other sites

 

Because of her agent she was able to put a new deck on her house, make more money, and help my wife and I with her 403b. And this agent also worked for AXA. So, while your stories sound interesting, I just can't help believing that her agent is doing the best for her and us. Please explain to us where we had gone wrong.

I am just starting to learn financial resposibility (better late than never) and how to invest wisely by frequenting this forum and reading recommended books. I just got through reading "Teach and Retire Rich" and started on "The Random Walk Guide To Investing" by Burton Malkiel. Everything I have read so far, including the current book, say to stay way from annuities unless you have maxed out on all your other retirement accounts (401k, IRA, etc).

Your grandma may have built a new deck with annuities, but with no-load mutual funds may have built a new deck and a new house.

 

 

Well that's not entirely true Jarhead. It seems to me that you hate annuities but don't really understand them. I am a pretty accomplished investor that owns several properties, mutual funds, and annuities. I also believe that all products are great (mutual funds, annuities, etc), and also that there is no safer way to invest in the stock market than through the use of variable annuities. If necessary, I will provide alot of citations. For average people that do not have the ability to self insure, an annuity can be a great investment because it is able to guarantee a ceratin level of income regardless of what happens in the market. I have seen too many friends get burned with no load funds because they were working with people on the other end of a 1-800 phone number. When the market took a dip a few years ago my friends were nervous to retire because they knew that they may potentially run out of money if they were to start taking distributions from their account, so as a result they are still working.

 

With regard to my grandmother's annuity, she needed income badly, and the only place for her to get money was through her home equity. So, she took a reverse mortgage and put the money in an AXA product called a Retirement Income For Life. She is collecting a guaranteed level of income (35,000 to be exact) no matter what happens in the market. She also has a death benefit that will pay me when she passes so that I will be able to buy out her share of the house. From what I understand, if she put that money in a no-load, with market being the way it is, if she did not have that annuity and were to die this year, then I would have a major problem in terms of buying out her share of the house.

 

I think that this website is just a blog for people to slam annuities without a real understanding of what they can do. Please correct me if this seems wrong.

 

What I failed to mention earlier is that I am a retired police officer that has taken many courses in financial planning. The advantages of certain variable annuities are huge. The idea that this website believes that ALL annuities are BAD and ALL NO LOADS is good is probably the most rediculous thing I have ever heard in my life. I think you guys need to do some more research before reading a few books and making assumptions.

 

I was under the impression that this was an intelligent site to discuss different investing methods. I did not realize that this was a site slam annuity companies. If that is all that this site is, then I'll go back to intelligent conversations with my network of investors!!

Share this post


Link to post
Share on other sites

 

Well that's not entirely true Jarhead. It seems to me that you hate annuities but don't really understand them.

I hate the fact that my wife and I got taken for a ride. I did not understand annuities but from what I have read in the past month, I realized that most of the time, they are not a good investment. Every single online article and book that I have picked up, say the same thing about annuities. Yesterday I had a meeting with a fee-only CFP who confirmed the same thing. I think I will trust a CFP before I do trust a snake oil salesman who call himself an advisor.

 

 

I was under the impression that this was an intelligent site to discuss different investing methods. I did not realize that this was a site slam annuity companies. If that is all that this site is, then I'll go back to intelligent conversations with my network of investors!!

 

So just because you do not agree with what is being said here it makes this site not intelligent?

 

Share this post


Link to post
Share on other sites

all annuities are not bad, there is a time and a place for any form of product. It is just my belief and that of many others that there is no place for an expensive annuity in a retirement account that you are planning on contributing to for 20-40yrs. No reason to pay 2-3% for a guaranteed death benefit on your account when we know markets will go up over the 20-40yr period! If an individual (your grandma) needs guaranteed income in the later stages of their life then an annuity does make since and they can easily roll over the less expensive mutual funds from their retirement plan into an annuity to guarantee that income.

lets also be very honest and realize that not everyone is going to take the time to educate themselves on retirement planning. If an advisor form ING, Met Life, AXA, AIG....gets an individual set up and has them saving for retirement and 30yrs from now they have 600k instead of 750k, they are still far better off then they would have been if they did nothing at all!!!

Share this post


Link to post
Share on other sites

Consider these quotes.

 

 

“It’s absurd to put a tax-sheltered investment like a variable annuity into an IRA, which is already tax sheltered. The only person who makes out on this deal is your broker.”

 

Lani Luciano, MONEY, January 1997, p.141

 

“As qualified retirement plans offer tax advantages beyond those offered in a Variable Annuity, investors should generally contribute the maximum allowable amount to qualified retirement plans prior to contributing to a non-qualified Variable Annuity . Moreover, it is generally not appropriate to purchase a VA within a qualified (tax-deferred) retirement plan such as a 403(b).”

 

Schwab Center for Investment Research Nov 2002

 

“I am sure you do know 60 percent of annuities are sold in IRA accounts [and other] retirement accounts. The absolute worst place for them to be. You’re putting a tax shelter in a tax shelter and your paying for it.”

 

Attorney and financial planner Gary Schatsky appearing on the CNN Financial Network

 

“If anyone ever tries to sell you a variable annuity within a retirement product, turn and run the other way”

 

Fee Only Financial Advisor Brian Preston and host of the "Money Guy" podcast

 

 

Let's see some quotes from well known financial professionals, who aren't associated with Insurance Companies, that recommend Variable Annuities inside 403(b)'s.

 

 

Share this post


Link to post
Share on other sites

Let's see some quotes from well known financial professionals, who aren't associated with Insurance Companies, that recommend Variable Annuities inside 403(b)'s.

 

Crickets... ;-)

 

 

An excerpt from Burton Malkiel's book "The Random Walk Guide To Investing"

 

"I would avoid buying variable annuity products, especially the high-cost products offered by insurance salespeople"

 

"Unless your mutual fund declines sharply with a fall in the stock market and you drop dead soon after purchasing a variable annuity, the value of this insurance is likely to be small."

 

"The only reason you should even consider a variable annuity is if you are super wealthy and have maxed out on all the other tax-deferred savings alternatives. And even then you should purchase such an annuity directly from one of the low-cost providers such as TIAA-CREF or the Vanguard Group."

Share this post


Link to post
Share on other sites

 

Let's see some quotes from well known financial professionals, who aren't associated with Insurance Companies, that recommend Variable Annuities inside 403(b)'s.

 

Crickets... ;-)

 

 

An excerpt from Burton Malkiel's book "The Random Walk Guide To Investing"

 

"I would avoid buying variable annuity products, especially the high-cost products offered by insurance salespeople"

 

"Unless your mutual fund declines sharply with a fall in the stock market and you drop dead soon after purchasing a variable annuity, the value of this insurance is likely to be small."

 

"The only reason you should even consider a variable annuity is if you are super wealthy and have maxed out on all the other tax-deferred savings alternatives. And even then you should purchase such an annuity directly from one of the low-cost providers such as TIAA-CREF or the Vanguard Group."

 

 

In the above quote, Burton Malkiel is talking about buying a Variable Annuity in general, not even in a 403(b), and even then he suggests that they are only for the super wealthy.

 

It is simply not appropriate to have a variable annuity within a 403(b) account. The super wealthy buy variable annuities for the tax deferral, which of course 403(b)'s already have.

Share this post


Link to post
Share on other sites

 

Understanding,

 

Annuities sold in tax sheltered insurance accounts to teachers are the annuities we bash here and for good reason. No one said you can't do well by saving in them because saving in them is better than not saving for retirement. The point is you will certainly do better by using low cost 403b (7) in a Tax sheltered retirement plan.

 

I admire people who do well even in a high cost annuity product becuase despite giving away 2% or more a year to expenses/fees and often lousy investment choices they still mange to stick with it and accumulate a decent nest egg. But just think that half a million saved could just as easily been 750,000 had they paid attention to the details we preach here. The math doesn't lie.

 

Every thing written says these products are not a good idea. I am glad you did well with your investments, but the truth speaks volumes and its out there if you wish to accept it.

 

 

Tony

Share this post


Link to post
Share on other sites

 

Your grandma may have built a new deck with annuities, but with no-load mutual funds may have built a new deck and a new house.

 

 

Well said, Jarhead. That sentence should be in an investment book somewhere, shouldn't it?

 

 

Share this post


Link to post
Share on other sites

Understanding,

 

Variable annuities are an interesting product. Under certain circumstances, they provide a steady, reliable income during the PAYOUT phase, like for your grandmother. Most of the comments by members here are suggesting that they tend to be an inappropriate vehicle during the ACQUISITION or SAVING phase. Birds of a different color, really.

 

I would certainly be interested in checking out whatever books you can recommend that suggest variable annuities would be helpful during wealth acquisition, or during your working years. Please give us a couple of names.

 

Thanks,

 

JudyS

Share this post


Link to post
Share on other sites
Guest Sierra

With regard to my grandmother's annuity, she needed income badly, and the only place for her to get money was through her home equity. So, she took a reverse mortgage and put the money in an AXA product called a Retirement Income For Life. She is collecting a guaranteed level of income (35,000 to be exact) no matter what happens in the market. She also has a death benefit that will pay me when she passes so that I will be able to buy out her share of the house. From what I understand, if she put that money in a no-load, with market being the way it is, if she did not have that annuity and were to die this year, then I would have a major problem in terms of buying out her share of the house.

 

The above leaves us with more observations/questions:

 

Is the lady your grandma or great-grand ma? How old is she? Did AXA give her the lump-sum and then sell her a life annuity? Or did she deal with two separated companies? If you take out the reverse mortgage in the form of monthly installments each installment is received tax-free. This is already an annuity because the bank/insurance company has contracted to pay your GM a monthly income for life. The accumulated installments must be paid off (with interest) by your GM should she move out of the house or by her heirs upon her death if they are so inclined to want to keep the house.

 

If you take out a reverse mortgage in the form of a lump-sum and then purchase an annuity with the principal the interest portion of the monthly income is taxable. GM paid a commission twice---first when she took out the lump-sum and second when she bought the life annuity. Why is this course of action better for GM than receiving tax-free monthly income for the rest of her life? The death benefit (payable to you, the grandson or great grandson) further reduces GM income which you asserted she needs badly.

 

Q.: Beside GM how many other owners of the house are there?

 

I look forward to your response.

 

Joel L. Frank

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

×
×
  • Create New...