Fixed annuities: The do-it-yourself pension
Variation of the classic insurance product can provide retirement security
MSNBC, May 24th, 2006
It's not news that the
employer-funded pension, once a major component of a worker's retirement plan,
is fast becoming a thing of the past. But for those looking to recreate a
pension's security and life-spanning regularity, there is hope with a variation
of a classic insurance product — the so-called "fixed" annuity.
Also known as single-premium
immediate annuities, this retirement vehicle will not help the critically
under-saved or be of much use to the affluent, says Rande Spiegelman, vice
president of financial planning with the Schwab Center for Investor Research.
But he says “for the vast middle” they may offer relief from the dual fears of
out-living one’s savings and making bad investment decisions.
"With a single premium immediate
annuity you are done," says Bob Rockwell, a certified financial planner with
Clackamas County Bank in Sandy, Ore. "You’ll get guaranteed payments for life or
whatever period you contract for. There are no moving parts."
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