Comments on: What is a Variable Annuity? http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/ WealthPilgrim.com - A Journey To Self, Health and Wealth Sat, 11 Feb 2012 14:42:35 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Neal http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-2394 Neal Thu, 22 Oct 2009 00:09:04 +0000 http://326742485#comment-2394 This is maddening. Not much you can do other than tell your employer to stop playing golf with the insurance agent! That's often how 401(k)s "offer" VA's.....I believe it's completely against the interest of the employees and the only reason firms do it is because of personal relationships. This is maddening.

Not much you can do other than tell your employer to stop playing golf with the insurance agent! That’s often how 401(k)s “offer” VA’s…..I believe it’s completely against the interest of the employees and the only reason firms do it is because of personal relationships.

]]> By: michael http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-2387 michael Wed, 21 Oct 2009 04:38:16 +0000 http://326742485#comment-2387 ok, here is one for you. feburary of '06 i finally get started in a 401k. i was pleased as punch to finally be doing something about my retirement. i was so pleased that i didn't pay any attention to the fact that the company had just changed from a mutual fund 401k to a VA 401k. i just "learned" this last week. Oct 15, 2009. the value of the account is about 22,750.00 i am so disappointed that i have no power to fully control my investing and that i don't understand the stupid calculus formula that describes what my income will be when i start to "withdraw." i feel like a big idiot. can't roll it over until i leave the company. i am considering discontinuation of the automatic payments from payroll and starting a separate IRA. ??? the brochure from the company...happens to be one mr. buffet recently sold his stock from...is very complicated...what happens to fools who mix up 401k plans with VAs? ok, here is one for you. feburary of ’06 i finally get started in a 401k. i was pleased as punch to finally be doing something about my retirement. i was so pleased that i didn’t pay any attention to the fact that the company had just changed from a mutual fund 401k to a VA 401k. i just “learned” this last week. Oct 15, 2009. the value of the account is about 22,750.00 i am so disappointed that i have no power to fully control my investing and that i don’t understand the stupid calculus formula that describes what my income will be when i start to “withdraw.” i feel like a big idiot. can’t roll it over until i leave the company. i am considering discontinuation of the automatic payments from payroll and starting a separate IRA. ??? the brochure from the company…happens to be one mr. buffet recently sold his stock from…is very complicated…what happens to fools who mix up 401k plans with VAs?

]]> By: Neal Frankle http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-1511 Neal Frankle Mon, 03 Aug 2009 13:16:04 +0000 http://326742485#comment-1511 Parag, Without completely discounting the comments of the people who justify VA's, I take your point. I don't agree with the folks who like the VA's but I still learn a lot from them. Thanks for taking the time to make your points as well as you did. Neal Parag,

Without completely discounting the comments of the people who justify VA’s, I take your point.

I don’t agree with the folks who like the VA’s but I still learn a lot from them.

Thanks for taking the time to make your points as well as you did.

Neal

]]> By: Parag http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-1498 Parag Sat, 01 Aug 2009 13:16:18 +0000 http://326742485#comment-1498 Neal, Thanks for the article. I think what you've witnessed here are examples of the venomous repsonse people get from financial advisors ( aka insurance salesmen) when questioned about the utility of VAs. I usually find that when people's responses are particularly vehement, it usually stems from some deeper underlying insecurity about the matter being criticized. I've had the unfortunate experience of having to rehash my father's investment portfolio and have found it to be filled with nonsense such as VAs and redundant Whole Life Policies. He had a smaller annuity with another individual some time ago and most recently had his other traditional IRA rolled over into a new annuity product 3 years ago. Of course I dont have to tell you the incentive for beginning a new annuity contract. It certainly wasn't for my dad's benefit. The surrender charges are now exorbitant. Luckily, as you mention, the taxes are a nonissue due to market performance.. we are now doing the math to figure out the cost/benefit of paying up the surrender charge. Thanks again for all the work that you are doing and let the punches roll :) Oh... and if anyone else reads this... pleaseeeee dont let yourself or your loved one get swindles into a VA..Educate yourself , take control, and dont let the fearmongers and the financial institutions/establishment make you believe that you can't do this ( manage your own money ).. you certainly can. Cheers P Neal,
Thanks for the article. I think what you’ve witnessed here are examples of the venomous repsonse people get from financial advisors ( aka insurance salesmen) when questioned about the utility of VAs. I usually find that when people’s responses are particularly vehement, it usually stems from some deeper underlying insecurity about the matter being criticized.
I’ve had the unfortunate experience of having to rehash my father’s investment portfolio and have found it to be filled with nonsense such as VAs and redundant Whole Life Policies.
He had a smaller annuity with another individual some time ago and most recently had his other traditional IRA rolled over into a new annuity product 3 years ago. Of course I dont have to tell you the incentive for beginning a new annuity contract. It certainly wasn’t for my dad’s benefit.
The surrender charges are now exorbitant. Luckily, as you mention, the taxes are a nonissue due to market performance.. we are now doing the math to figure out the cost/benefit of paying up the surrender charge.
Thanks again for all the work that you are doing and let the punches roll :)
Oh… and if anyone else reads this… pleaseeeee dont let yourself or your loved one get swindles into a VA..Educate yourself , take control, and dont let the fearmongers and the financial institutions/establishment make you believe that you can’t do this ( manage your own money ).. you certainly can.
Cheers
P

]]> By: Neal http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-988 Neal Thu, 18 Jun 2009 15:55:54 +0000 http://326742485#comment-988 Bob. 1. I am a licensed individual. 2. Before making libelous remarks, you might want to back them up. What is misleading? Its so easy for someone to say such things...now why don't you detail what is incorrect rather than making blanket statements. 3. What is incorrect about 10% penalties applying to withdrawals from annuities prior to age 59 1/2? 4. You are right...all annuities stink...not just VA's. Thanks for pointing that out. Bob.

1. I am a licensed individual.
2. Before making libelous remarks, you might want to back them up. What is misleading? Its so easy for someone to say such things…now why don’t you detail what is incorrect rather than making blanket statements.
3. What is incorrect about 10% penalties applying to withdrawals from annuities prior to age 59 1/2?
4. You are right…all annuities stink…not just VA’s. Thanks for pointing that out.

]]> By: Bob Farmer http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-987 Bob Farmer Thu, 18 Jun 2009 15:34:13 +0000 http://326742485#comment-987 This is arguably the most incomplete and incorrect article on VA's I have ever read. Obviously not a licensed professional as the author's mis-statements would result in disciplinary action. I suggest you read the entire tax law and not mislead people with the 10% penalty law. That applies to all tax deferred programs not just VA's. Misleading and incorrect information helps no one. This is arguably the most incomplete and incorrect article on VA’s I have ever read. Obviously not a licensed professional as the author’s mis-statements would result in disciplinary action. I suggest you read the entire tax law and not mislead people with the 10% penalty law. That applies to all tax deferred programs not just VA’s.

Misleading and incorrect information helps no one.

]]> By: Neal http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-411 Neal Thu, 30 Apr 2009 15:54:50 +0000 http://326742485#comment-411 Will, Thanks for your comments. With all due respect, VA's are expensive and the fact that there are mutual funds that are expensive too doesn't make the VA less so. The literature I've seen on "living benefits" is very confusing and fails to address the real cost of these features. It also fails to compare these features to similar benefits offered by alternative investments (i.e. bonds). Will,

Thanks for your comments. With all due respect, VA’s are expensive and the fact that there are mutual funds that are expensive too doesn’t make the VA less so.

The literature I’ve seen on “living benefits” is very confusing and fails to address the real cost of these features. It also fails to compare these features to similar benefits offered by alternative investments (i.e. bonds).

]]> By: will http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-409 will Thu, 30 Apr 2009 13:30:07 +0000 http://326742485#comment-409 Very misleading article about VAs. First of all, the commissions, for reputable VAs, are similar to Mutual Funds. Most importantly, annuities are the only investment products that can guarantee an income stream you cannot outlive. Bonds, dividends, and systematic withdrawals are all widely susceptible to market risk, and longevity risk. Lastly, for the most popular guarantees, called living benefits, you do not have to die in order to receive the benefit. Hence the name, living benefits. These benefits guarantee growth, and more importantly, guarantee a stream of income that can go up if the market does well, but won't go down the if the market does poorly. And, that stream of income is guaranteed for your life, and your spouse's lifetime. Are annuities for everyone, no. They are a niche product, and that niche is retirement income. And take are real look at the fees, and compare total expenses of VAs versusus mutual funds, stock portfiolios, adviosry platforms, including trading costs, and you will see that the difference between them all is not so great, but that would require some research, as opposed to spouting off uninformed opinions. If you want to view someone else's research on the subject, check out North Carolina State Professor John Huggard's work. He is a securities attorney, as well. Very misleading article about VAs. First of all, the commissions, for reputable VAs, are similar to Mutual Funds. Most importantly, annuities are the only investment products that can guarantee an income stream you cannot outlive. Bonds, dividends, and systematic withdrawals are all widely susceptible to market risk, and longevity risk.

Lastly, for the most popular guarantees, called living benefits, you do not have to die in order to receive the benefit. Hence the name, living benefits. These benefits guarantee growth, and more importantly, guarantee a stream of income that can go up if the market does well, but won’t go down the if the market does poorly. And, that stream of income is guaranteed for your life, and your spouse’s lifetime.

Are annuities for everyone, no. They are a niche product, and that niche is retirement income. And take are real look at the fees, and compare total expenses of VAs versusus mutual funds, stock portfiolios, adviosry platforms, including trading costs, and you will see that the difference between them all is not so great, but that would require some research, as opposed to spouting off uninformed opinions. If you want to view someone else’s research on the subject, check out North Carolina State Professor John Huggard’s work. He is a securities attorney, as well.

]]> By: Neal http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-402 Neal Thu, 30 Apr 2009 01:52:26 +0000 http://326742485#comment-402 Excellent point Kirk. Excellent! Excellent point Kirk. Excellent!

]]> By: Kirk Kinder http://wealthpilgrim.com/variable-annuities-why-they-stink-how-to-get-out-now/#comment-400 Kirk Kinder Thu, 30 Apr 2009 01:15:51 +0000 http://326742485#comment-400 Great article on VAs. Variable annuities are sold, not bought. These vehicles have very little usefulness. I think the other big point that you touched on was the tax liability when you withdraw from a VA. With government deficits skyrocketing, you have to believe tax rates will rise, which means many folks will end up pulling their money out and paying a higher tax rate. So much for the tax benefits. Great article on VAs. Variable annuities are sold, not bought. These vehicles have very little usefulness.

I think the other big point that you touched on was the tax liability when you withdraw from a VA. With government deficits skyrocketing, you have to believe tax rates will rise, which means many folks will end up pulling their money out and paying a higher tax rate. So much for the tax benefits.

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