[Elisabeth]

In seminars for the elderly the presenters recommend to put all of our assets in a 'Guaranteed Equity Index Annuity' by Allianz, telling us that the principal is safe and guaranteed forever PLUS if the market is gaining, one will increase one's principal.
I would appreciate anyone's opinion, sharing perhaps experiences with such retirement investment tool. So far I was unable to find objective literatur on this subject.
Thank you in advance.
With friendly regards, E.

[AtlantaTaxExpert]

Elisabeth:

This is an annuity, and, almost without exception, annuities are a bad idea for all concerned except for those who make huge commissions selling them.

In addition to being a tax professional, I am a financial planner. I have reviewed dozens of annuities for clients, and, except for one case, have always found them to be bad deals in that I could set them up in investments that would have yielded the same return without the fees and overhead that every annuitiy has.

RUN away from this deal as fast as possible. At the very least, call a fee-only financial planner in your area and ask him/her to review the plan. The planner will probably charge a $100-$300 consulting fee, but it could save you thousands of dollars in the long-run.

[Annuity Owner]

That is like saying there is no such thing as a good wine. Or for that matter anything else in life isn't good. I think that you are honestly pitching a very negative view on annuities. I currently have an annuity that has flurished over the last 3 years.. I took advantage of the stock markets gains without the risks. I have access to my money at 10% per year without any fees or surrender charges. Which in my case 10% will go a long ways for me. I think generalizing annuities as being bad is really an unfair thing to say. I'm not saying that there are not bad annuities out there. And as for fees? I have no fees. I am just happy to say that I moved my money into a more secure inviroment that allows me to access my money as I need it. I also have a nursing home rider that allows me full access to my money in the event I should need a nursing home care. So to be honest I have an annuity that will do everything I want it to do as well as generate stock market like returns without the risk. I am actually having my cake and eating it too.

I personally think that Atlanta Tax Expert should do some more research on the available products before he makes off the cuff remarks.

Annuity Owner and loving every year of it.

[AtlantaTaxExpert]

Elisabeth:

I have thoroughly investigated annuities. As a financial planner, I receive offers from the annuity companies monthly asking me to pitch them to my clients. They offer very lucrative commissions and, for that reason, I can understand why they are so heavily marketed. I have yet to accept any of these offers, since invariably the product being marketed is flawed in some fashion.

There are some annuities out there that are reasonably priced (the ones by TIAA-CREF and Vanguard come to mind). Further, some people do have a need for them.

However, those who need annuities are in a very small minority. The vast majority of working people would do much better in IRAs or other structured retirement plans, and retirees usually can properly manage their investments with a little research and some practical advice from a fee-only financial planner.

[FinancialPro]

Annuties are a huge part of what I offer because they SAVE client's money. My clients do not pay me, the company does. So compared to a Mutual Fund that I can offer, where I get 1% or more every year right out of my clients pocket whether there account is up or down, I choose Index Annuities for Safe-Money clients.

Bottom line is advisors have families to feed and get paid for their work. As we should. But to try to disguise the fact that you are getting paid using 'fee-based' is insulting.

[mtmjr77]

I agree that not all annuities are bad deals, however, Allianz sells some of the worst. The products lock up money for a long time and they limit the gains from market returns by using "caps". You can do much better by putting most of your money into a guaranteed account and a small portion into either "no-load" mutual funds or ETF's (electronic traded funds). The expense fee for a no-load fund is around .50% per year (Vanguard) and the ETF's is .07%. By using this technique you are cutting out the middle-man. Basically, if you are taking the risk in the stock market you should enjoy all of the returns.

[Solution Providers]

Asking the question "are annuities a good thing" will bring answers from experts from both sides of the field of "Yes" or "No" as you are seeing now. Whether you're a financial planner, estate planner, or insurance agent, your answer should never be a simple yes or no based on what you like to sell or what the commissions are. Really your answer on whether an annuity or index annuity is a good thing is, "It depends on your situation and current setting in your own financial world." There are a lot of people of various ages that have benefited from annuities/index annuities. Just make sure you find an advisor that fully examines your needs and suitibility before advising a product. Atlanta Tax Expert, you might want to think before responding to a client, Never buy them, they are horrible or what you need is a TIAA-CREF or Vanguard without knowing what you are working with, now that is a product pusher so don't throw rocks when you live in a glass house.
Just find yourself a trusted advisor that your feel does a suitable product needs anylisis with you before ever MENTIONING a company or product. Get a 2nd opinion and then make your judgement. There will always be a trade off in what you are putting your money in so make sure to compare all the trade offs before making a decision.

[lifeisgood20]

HI,

I'm in the same boat, wondering about the value, specifically to me, of an index annuity. If so, what index and what company. So far, the only ones I know about are S&P500. From Suze Orman's book "The Road to Wealth", pages 471-473, she addresses index annuities and explains them. Though she generally believes annuities are not good, she feels the index annuities are a good thing for certain people. If you don't know who Orman is, check out PBS. I understand she's also on CNBC. Only you can learn all you need to know to decide if you are one of the people for whom this annuity would be suitable. Good luck.

[Fr_Chuck]

Of course what has not been said is how old you are, what you are doing with the investment. If you are 60 and looking for the very safe lower interest investment.

Do you have 30 dollars or 30000 dollars to put into one.

I do have a small anuity, that has a guanentee interest of about 3 percent, pays out at about 4 or 5 right now.

I keep most in Vanguard funds, made about 16 percent last year divided between four funds of various security levels.

For evample, I am middle age, need to keep getting higher interest but willinig to risk part of my funds.

For my mother for example at 78 I keep all of hers on secure investments.

My son at 25 keeps more of his on a higher risk higher interest investments. ( I still beat him last year)

So how much money you have, years to retirement and other investments all play a part in choosing your proper investment.

So are they the best investment to get rich with, not a chance.
Are they a safe place to make a little more interest than a CD in the bank, yep.


Now while re-reading I see this is a seminar for the eldery, so for such nonrmally you want a non risk investment. But honestly, unless this was something that a senior citizen center arranged, I would advice talking to an independent investment company, and you local bank before moving or investing large amounts of money.

[Solution Providers]

To sum up what we are all saying.

Find an advisor whom you really feel is best covering what you need before ever mentioning a product or company. There is a lot of people who have found satisfaction from a fixed/index annuity. And you will find those who have not, and probably should have not been in a fixed/index annuity, based on their needs. I wish you the best of luck on seeking the right answers. Please keep in mind, if you where to ask 100 people if they where satisfied with their cellphone carriers 24% will say, "NO" There is always room for improvement and unfortanelty the 24% that say, "NO" are the ones that companies make adjustments that keep this industry ever growing into better product solutions. And as you have seen the cellphone industry kept growing as the index annuity will as well.

[FLASeniorAdvisor]

Elisabeth,
Some great advice has been offered here. I am an Certified Senior Advisor (deals with 'seniors' especially) & host seminar dinners similar to the one you went to. It is important to remember several things:
1. People who say 'without exception' are generally incorrect (to put it nicely)
2. Don't put 'all' your money into any annuity! (You need reserve/emergency funds)
3. Annuities are just tools. If you use them right they can be a great help, but used wrong... (for example a sledgehammer is a great tool for tearing down a wall but almost 'without exception' are a lousy tool for hanging your wedding photos!)
4. Allianz annuities do tend to be much more restrictive & promise things you'll never be able to reap (tho some of the new ones are better I still don't trust them).
5. It is VITAL-(& it's the law in FLA)-to take the time as was suggested by Solution Providers to sit with an advisor you can trust, because you can't make a recommendation to someone to invest in annuities without knowing their financial situation & goals.
6. Our 'fee-based planner' above is still enjoying his commission every time he buys & sells for you his products which are generally at risk in the stock market.
And #7. How much risk do you want associated with your money? What do you want 100% at risk & what do you want 100% guaranteed?
Hope this helps (if you're even still looking!)

FLASeniorAdvisor