Immediate Income Annuity
With the current administration I have become overly cautious with my funds in the stock market. I have a $3M portfolio, $1.3M in Treasury bills/money markets; balance in the stock market. With the recent administration’s influence on the market, I moved $1M to cash. My intent was to hold until the market reaches some form of stability. My advisor (with NWML, who is a CFP) recommended putting some of the cash – $400K into an Immediate Income Annuity that would yield approximately $25,600 per year at a rate of return of roughly 6.36%. 20 year guaranteed and will last my and my spouse’s lifetime. We are both 65 years old. In reviewing your website on this product the only con I see is the lack of an annual inflation adjustment. As I am not well versed on this topic, what can you recommend and what questions should I be asking? Thank you. I enjoy listening to you on WGN!
Terry Says
Yep — turning your money over to an insurance company removes ALL flexibility — if you should need the cash for nursing home care, or for any other emergency. And, you get no inflation protection.
Your social security is an inflation-adjusted annuity. Your T-bills will roll over and give you income (though not guaranteed at any particular level, since it depends on current interest rates) throughout your retirement.
And if you hold the money, the balance is left to your children should you die before using it up. I think you don’t have a death benefit with this annuity.
The annuity would not be my choice.
