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kokopelli 2011-03-08 20:20

Someone learn my ass about annuities
As a Social Worker by trade, I'm financially ignorant. No need to understand money when you have no chance of making it, I figure. My folks, however, are trying to figure out annuities. I guess they were thinking of putting some $$ into CD's, but the rates for those aren't too special these days, I guess. So, someone at the Credit Union suggested a variable annuity, versus a fixed annuity. I think seven year term. Dad is almost 72, Mom is 69. Anyone understand this stuff?

Edit: Specifically, they mentioned a "Lincoln ChoicePlus Assurance" variable annuity from Lincoln Financial.

Bonus points for making this easy enough for a Social Worker to understand.

B L 2011-03-09 10:58

My understanding is that with a fixed annuity you put in a certain amount and you are given a certain amount back on a regular schedule until you leave the planet. I've never had one and never plan to, but I don't think the idea is inherently bad.

This page has a pretty simple explanation. I suspect anything simpler will leave out important information. I'd never heard of the equity annuities. That might be newish. I would think that if you're a person looking into an annuity then you're probably only comfortable with fixed. That's my impression. People go to them for the security of a steady income.

Wish I could be of moresome help.

ash# 2011-03-09 11:25

An annuity does not go on forever... the length of the payback is laid out in the annuity contract... You pay in for a number of years... they you get paid out for a number of years. Or you pay a lump sum up front, and you get paid out for a number of years. There is something called a perpetuity that does the payout forever...

Variable annuities are tied to a market index so that in theory the payments can grow over time, but they can also shrink. So bigger risk/reward potential.

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