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The Truth About Buying Annuities

Book Description

Annuities have become one of the most popular ways to save for retirement and also one of the most misunderstood, overhyped, and dangerous investment vehicles available today. Some annuities are worth the money... but too many are flawed, overpriced, and packed with hidden fees that make them absolutely horrible investments. In The Truth About Buying Annuities, consumer finance expert Steven Weisman helps you make smart decisions about annuities and avoid the lies, misrepresentations, and ripoffs that await uninformed investors. From start to finish, Weisman delivers quick, bite-size, just-the-facts information and plain-English explanations you can actually use. You'll learn all you need to know about immediate, deferred, and variable annuities; actively-managed vs. indexed annuities; inflation-protected and tax-sheltered annuities; and more. Weisman explains the impact of annuities on taxes, Medicare, Medicaid, long-term care, and your other retirement plans. He presents crucial, hard-to-find information about death benefits, joint and survivor annuities, alternatives to annuities, assessing annuity risk, avoiding scams, and even how to escape from a bad annuity you've already purchased. Unlike some books on annuities, this one's simple to read, simple to use, up-to-date, and complete: it's the only annuity guide you need!

Table of Contents

  1. Copyright
    1. Dedication
  2. Introduction
  3. 1. The history of annuities
  4. 2. Immediate annuities
    1. Fixed rate annuities
    2. Variable immediate annuities
  5. 3. Fixed rates
    1. Time to bail
  6. 4. Deferred annuities
  7. 5. Annuity fees
    1. Commissions or sales charges
    2. Surrender fees
    3. Mortality and expense charges
    4. Investment management fees
    5. Contract maintenance fee
    6. The bottom line
  8. 6. Variable annuities
  9. 7. Variable annuity investment choices
    1. So what does it cost you?
  10. 8. Actively managing variable annuity sub-accounts
    1. Dollar cost averaging
  11. 9. Equity indexed annuities
    1. Participation rates
    2. What about dividends?
    3. Interest rate caps
    4. Margin—spread—asset fees—administration fees
    5. Simple or compound interest
    6. Early withdrawal fees
  12. 10. More about equity indexed annuities
    1. Dow Jones Industrial Average
    2. S & P 500
    3. Nasdaq 100
    4. Russell 2000 Index
    5. How can I lose with an Equity Indexed Annuity?
  13. 11. Calculating index changes
  14. 12. Inflation-protected annuities
  15. 13. Tax-sheltered annuities
  16. 14. Annuity settlement options
    1. Lifetime-only payout
    2. Lifetime refund annuity
    3. Lifetime payout with period certain annuity
    4. Joint and survivor annuities
    5. More bells and whistles
    6. Comparisons
  17. 15. Tax deferral
  18. 16. Annuity risk
  19. 17. Annuity death benefits
  20. 18. Annuities and income taxes
  21. 19. Tax-free 1035 exchanges
  22. 20. Charitable gift annuities
  23. 21. Split annuities
    1. Deep in the heart of taxes
    2. Single premium deferred annuity
    3. Maturity
    4. Shop around
  24. 22. Joint and survivor annuities
  25. 23. Shorter surrender annuities
  26. 24. Longevity insurance
    1. Bells and whistles
    2. Alternative investment strategy
    3. A few rules of thumb
  27. 25. Inheriting an annuity
    1. Substituting a life insurance policy for an annuity
  28. 26. Variable annuities versus variable universal life insurance
    1. Variable universal life insurance
  29. 27. Choosing between mutual funds and an annuity
  30. 28. Annuities and asset allocation
  31. 29. Asset allocation and laddering annuities
  32. 30. Minimum required distributions
  33. 31. About 59 ½
  34. 32. Annuities in IRAs
  35. 33. Annuities and 401(k)s
  36. 34. More about annuities, IRAs, and 401(k)s
  37. 35. Annuities for children
    1. Compound interest
    2. Roth IRA for children
  38. 36. Bonus credits
  39. 37. The Pension Protection Act, annuities, and long-term care
  40. 38. Annuities and Medicaid
  41. 39. Annuities and reverse mortgages
    1. Fees
    2. Helpful web sites
    3. Reverse mortgage options
  42. 40. State Guaranty laws
  43. 41. Annuities and creditor protection
  44. 42. Getting out of an annuity
  45. 43. Annuity scams and senior citizens
    1. The trouble with deferred annuities
    2. The case of Murray Cheves
    3. Seniors care package
  46. 44. Annuities and class actions
  47. 45. Prospectuses and annuities
  48. 46. Free looks
    1. Questions to ask in evaluating an annuity
  49. 47. For whom annuities are best
  50. 48. Steve’s annuity rules, part one
  51. 49. Steve’s annuity rules, part two
  52. 50. Where to go for information
  53. About the Author