Earl at The Improv

Earl at The Improv - www.earlebird.com the Consumer Annuity Blog

Call it Annuity Improv. Earl decided to go to a nearby theater to answer some improv annuity questions. It’s not exactly Seinfeld, but you’ll find the information useful.

Is compound interest much of a benefit today?

Usually, the answer is yes. But, with yields around 1%, the power of compound interest is a pea shooter in a bazooka world. Until rates rise to at least 4%, forget about compounding benefits.

If compound interest is worthless, why should I own a deferred annuity?

It’s esoteric, but I would buy an annuity to keep those nest egg funds separate from my bank account. It’s a psychological tool using the “out-of-sight, out-of-mind” mentality. I’ve learned from my history of advising Americans that walling off assets so as not to spend them is invaluable.

Hartford is asking me to give up my variable annuity contract. Should I take their offer?

I’ll answer it this way: you bought an annuity with rich features and income guarantees, but Hartford is losing money on your contract. Now they want to give you a bone to cancel your contract. I say keep the contract and tell Hartford to go away.

You talk about variable annuity fees of over 3%. Should I care about the fees if I can guarantee a high income with the withdrawal benefit?

My problem is with the way VAs paint the appreciation picture. VAs now have limited upside due to high fees and conservative investment options. In other words, VAs are too complicated. Very few investments can show gains with 4% fees weighing them down.

Pay-it Forward:

Why is it that we can’t keep score and we can’t have winners because that means we will have losers? Our youth are doomed. The world has never been more competitive and challenging but the American youth are too sheltered for reality. Note to parents: reality has winners and losers. Make sure your sons and daughters compete accordingly.

Earl E Bird

I'm Earl E. Bird and I am very concerned about saving for my senior years. I am amazed at the stumbling blocks that exist when saving for retirement. That's why I take my time when making decisions on building my nest egg.

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About the author

I'm Earl E. Bird and I am very concerned about saving for my senior years. I am amazed at the stumbling blocks that exist when saving for retirement. That's why I take my time when making decisions on building my nest egg.

More posts by | Visit the site of Earl E Bird

 
 
 
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