I can Buy an Annuity with my pension now but my pension pot has decreased over the last 2 years. If I should delay buying it for 5 years would this be a better option hoping that the pot increases as the credit crunch ends.
Are they offering you a lump sum buyout? If they are, you can move it into a fixed annuity that pays an up-front bonus and pays a guaranteed rate of return (about 6-8% pending on the insurance company). The other thing you need to figure out is when you will need to start receiving income from this pot of money.
Some people think that the only way to receive money from an annuity is by actually annuitizing, but this is not correct. Losing control of your money only happens if you OPT to annuitize once you purchase an annuity. You can enjoy taking free withdrawals each year without penalty, without forfeiting control of your money AND without annuitizing at any point. There are both good parts and bad parts of annuities, but if you do not want exposure to stocks or mutual funds, certain types of annuities can be an attractive option.
I’d be happy to provide you with free reports with additional information on annuities if you would like.
August 24th, 2009 at 1:12 pm
If you want to get an annuity you should maybe consider a deferred annuity. What this means is that you can put off (defer) receiving payments from your annuity for 5 years (for example). Over the course of that time you can have the money you put into it grow. Usually you would put your money into stock funds within the annuity that would have the ability to grow up until you finally need to start pulling money out (annuitizing).
This might be a good option for you, talk to a tax consultant to make sure that you don’t screw anything up during the transfer from your pension to the annuity or you might have to pay a bunch of taxes and penalties. Also make sure that the insurance salesman selling you the annuity explains it well enough so that you completely understand how it will work and all of the fees involved before you buy it. Don’t get confused into buying something you don’t understand, it is your retirement after all.
References :
Series 65 / Fund Manager
August 24th, 2009 at 1:52 pm
Never purchase an annuity under any conditions. You lose total control of all your money. You should have zero expose to stocks or real estate. The real crash has not even arrived! If you are a government employee you should be in the G fund or money market funds for the next several years, this is not the 80’s or 90’s, with yearly double digit stock gains. Suzie Orman, and Rich Dad Poor Dad both indicate 2015 may be the year the economy will improve. Do you want a 20 dollar bill in your hand or a 20 dollar gold piece? Do more research! The market is not making a comeback.
References :
August 24th, 2009 at 2:35 pm
The big question you did not answer, and must answer first is: Do you need the income now?
If you do not need the income now there is NO reason to annuitize your pension. However, there are plenty of annuities out there that are suitable for qualified funds (IRAs, 401Ks, Rollover Eligible Pension Plans) and do not require annutization at anytime.
If you wish to roll your pension to an annuity I would look into a tax deferred fixed or fixed index annuity. 1) Make sure you complete a proper rollover "per your employer guidelines" to avoid taxes and penalties. 2) Choose a reputable company. 3) Try finding a BONUS annuity that will make up some of your previous losses. 4) Try finding an annuity with a guaranteed lifetime income account, which allows income you can "TURN ON and OFF" as needed. Best of luck!
References :
http://www.RetireCo.com
August 24th, 2009 at 3:04 pm
Are they offering you a lump sum buyout? If they are, you can move it into a fixed annuity that pays an up-front bonus and pays a guaranteed rate of return (about 6-8% pending on the insurance company). The other thing you need to figure out is when you will need to start receiving income from this pot of money.
Some people think that the only way to receive money from an annuity is by actually annuitizing, but this is not correct. Losing control of your money only happens if you OPT to annuitize once you purchase an annuity. You can enjoy taking free withdrawals each year without penalty, without forfeiting control of your money AND without annuitizing at any point. There are both good parts and bad parts of annuities, but if you do not want exposure to stocks or mutual funds, certain types of annuities can be an attractive option.
I’d be happy to provide you with free reports with additional information on annuities if you would like.
References :
Retirement Income Planner / Annuity Expert
http://www.arisplanning.com