Deferred Income Annuity Blog

Defined Benefit Annuity

A Defined Benefit Annuity allows you to define now the exact amount. timing and duration of income you will receive in the future. Some people like the idea of a financial vehicle that is tax deferred, secure and guaranteed. If that describes you, or someone that you know or love, then a defined benefit annuity may be for you or them.

A Defined Benefit Annuity is also called a Deferred Income Annuity.

Call 888-325-8640 toll free for further details. or email John Darer CLU ChFC CSSC at structures@aol.com

The Catch-22 of Longevity

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Monday's Insurance Newswire contains a memorable quote from Steven G. Vernon, FSA, EA, MAAA, producer of The Quest: For Long Life, Health and Prosperity, and president of Rest-of-Life Communications, who said, "There is a 'Catch-22' for individuals as they need to manage their resources for the rest of their lives, yet they don't know how long to expect to live. This is further compounded by the number of individuals taking a lump sum, but not planning accordingly to make it last through their entire retirement." 

This statement is highly relevant to:

1. Tort victims and the need for personal injury settlement planning
2. Claimants and the need for settlement planning in non personal injury settlements
3. Imminent and Future Retirees and the Need for Retirement planning
4. Lottery recipient financial planning.
5. Anyone of the above considering selling their rights to receive lifetime payments from a structured settlement, lottery or deferred annuity, for a lump sum of cash now

The Living to 100 Symposium is an international triennial symposium on high-age mortality and related issues supported by more than 50 sponsoring and participating organizations. Actuaries, demographers, gerontologists, biologists and researchers from around the world attended the event to discuss the implications of living to older ages. The symposium compared experiences across countries from India to the United Kingdom, Canada, Mexico and the United States since all of these countries are experiencing  profound changes.

Gregory Salisbury PhD, Executive Vice President of Jackson National Life Distributors, LLC has written and excellent primer on the American retirement crisis called "But What If I Live?", published by National Underwriter Company. All royalties from the book are donated to Junior Achievement.

Junior Achievement uses hands-on experiences to help young people understand the economics of life. In partnership with business and educators, Junior Achievement brings the real world to students, opening their minds to their potential.

Other helpful longevity planning tools include Monte Carlo analysis.

Monday's Insurance Newswire contains a memorable quote from Steven G. Vernon, FSA, EA, MAAA, producer of The Quest: For Long Life, Health and Prosperity, and president of Rest-of-Life Communications, who said, "There is a 'Catch-22' for individuals as they need to manage their resources for the rest of their lives, yet they don't know how long to expect to live. This is further compounded by the number of individuals taking a lump sum, but not planning accordingly to make it last through their entire retirement." 

This statement is highly relevant to:

1. Tort victims and the need for personal injury settlement planning
2. Claimants and the need for settlement planning in non personal injury settlements
3. Imminent and Future Retirees and the Need for Retirement planning
4. Lottery recipient financial planning.
5. Anyone of the above considering selling their rights to receive lifetime payments from a structured settlement, lottery or deferred annuity, for a lump sum of cash now

The Living to 100 Symposium is an international triennial symposium on high-age mortality and related issues supported by more than 50 sponsoring and participating organizations. Actuaries, demographers, gerontologists, biologists and researchers from around the world attended the event to discuss the implications of living to older ages. The symposium compared experiences across countries from India to the United Kingdom, Canada, Mexico and the United States since all of these countries are experiencing  profound changes.

Gregory Salisbury PhD, Executive Vice President of Jackson National Life Distributors, LLC has written and excellent primer on the American retirement crisis called "But What If I Live?", published by National Underwriter Company. All royalties from the book are donated to Junior Achievement.

Junior Achievement uses hands-on experiences to help young people understand the economics of life. In partnership with business and educators, Junior Achievement brings the real world to students, opening their minds to their potential.

Other helpful longevity planning tools include Monte Carlo analysis.

Deferred Income Annuity Can Right Sad State of Savings

US News & World Report's June 11th issue reports that nearly 50% of ALL workers have LESS THAN $25,000 saved for retirement. The startling figure includes 401(k) plans but does not include pension plans  (now fewer in number) and home equity.

The report was based on a study for the Employee Benefits Research Institute, Matthew Greenwald & Associates. In the report less than 25% of workers aged 45-54 earning $250,000 or more has $25,000 saved; 19% of those earning $100,000-$249,999 had $25,000 saved and the figures look worse at the lower earning levels. Incredibly while the average percentage is 49% for all workers (which includes the highest earners), the figure drops to 32% for all workers 55 and over .

In a "Reality Check" report in the same US News and World Report article*, check out these expectations which are a mismatch to the current savings reality.

50% of workers expected and 24% of retirees reported to RELY on their savings in retirement

14% of workers expected and 40% of retirees reported to RELY on Social Security

22% of workers expected and 18% of retirees reported to RELY on other personal savings or investments

13% of workers expected and 21% of retirees reported to RELY on a traditional employer sponsored pension plan

A Deferred Income Annuity permits you to buy future income now. With a deferred income annuity you don't have to worry about the stock market and its volatility. You can know now what you are going to get in the future. You can take control of the future.

You might Consider a deferred income annuity for the fixed income component of your portfolio as a possible supplement, or alternative, to bonds.

Concerned about where interest rates are now and where they are going?  Buy some income now and buy more later.

*Ibid. p 60

"Annuities-The Real Story", Vaughan's Wrong!

Halloween is 8 month's away yet goblin Michael Vaughan is trying to scare annuity owners.

Michael Vaughan's wrong about annuities and what he says is contrary to the value placed upon them by "sophisticated institutional investors" who buy J.G. Wentworth's annuity-backed notes. in an article Michael Vaughan wrote for entitled "Annuities-The Real Story" and showcased on Mature Resources.Org-Your Connection to Positive Aging, he attempts to scare the crap out of senior citizens to induce them to sell their annuities, while citing incomplete sources primarily relating to variable annuities (i.e.NAVA) while ignoring income annuities, equity indexed annuities, deferred income annuities and impaired risk annuities.

Consider this..."The company's annuity-backed notes, which are rated AAA by Standard & Poor's and Aaa by Moody's, are marketed by top-tier Wall Street firms to sophisticated institutional investors around the globe." This appears in the bio section for Michael Vaughan referring to J.G. Wentworth.

If the annuities were crap then why would the "annuity-backed notes achieve the highest rating from Moodys and Standard & Poors"? Why would "sophisticated institutional investors" be lining up to buy them? Because dear consumer, those "sophisticated institutional investors" are drooling to get at the high discount rate you're effectively paying by selling your asset to J.G. Wentworth at a discount. If you could get a AAA rated bond at better than junk bond rates wouldn't you be drooling?

Deferred Income Annuities and Structured Settlements or Software at A Discount from a "Big Box" While Sitting Drinking Fizzy Drinks Making You Big Blue?

I get a number of investment newsletters for my personal investing. A recent email concerning Large Cap Stocks caught my eye. Diligent Investor, a newsletter from Agora Publishing focusing on small cap stocks, discusses what it calls "Big Lie No. 1: Buy Large-Cap Stocks That Pay Dividends"

Diligent Investor is critical of those that are saying that you should go out and buy “feel-good stocks” such as Coke, Wal-Mart and Microsoft. The "feel good stock" proponents'  argument is that if these companies can’t make it in the market, neither can any other stock. And even if their shares don’t appreciate, you’ll make money on the dividends.

Now here's what I found to be very interesting. As related by Diligent Investor:

"If you own Microsoft (MSFT), you haven’t made any money for the last seven years. But you have been handed a “nice” 0.32% dividend each year. Wonderful!

Your shares in Wal-Mart (WMT) over the same period have been skidding downward for six years… but you did get paid a 1.12% annual dividend…

Coca-Cola (COKE) is nothing to write home about, either. It lost you 20% from January 2005 to January 2006, but paid a 2.3% dividend…

Another perennial favorite, IBM, lost more than 25% from 2001 to 2006 but eked out 0.90% in dividends."

Observations

I am not passing judgment on any of these fine companies or giving you investment advice to buy or sell them. I'm just observing that what Diligent Investor states, supports the value of deferred income annuities and (if you are injured, or a survivor of someone who is injured or has suffered wrongful death) structured settlements. My presumption is that Diligent Investor is basing its numbers on a buy and hold strategy (i.e. not a trading account) The dividend yields on the above stocks, albeit for a relatively short duration, are unimpressive compared to structured settlement yields that could've been locked in or deferred income annuity yields that one can get today.

Deferred Income Annuities give you tax deferral on interest and the ability to know now exactly what you will get then, with no loss of principal. What may seem surprising is that we receive the most inquiries about this concept from sophisticated individuals whose day to day lives involve lots of financial risk.

Structured settlements offer income tax free income and the abilty to know now exactly what you will get then.

Helpful Annuity Issuer Customer Service Number List

4structures.com has compiled a helpful list of structured sales annuity and structured settlement annuity issuer customer service numbers. A number of these insurance companies issue deferred income annuities as well. To access the list please click here

Deferred Income Annuities may be helpful as part of a long term financial strategy in that you reduce uncertainty. You know NOW exactly what you are going to get THEN.

Enough With The Excuses!

The Tip Sheet, on page 30 of the New York Post on December 3, 2006, reports an astounding United States Commerce Department statistic-the national savings rate fell to -0.5%. That's right... negative!

In Excuses! Get Over Yours For Saving, Gregory Bresiger highlights 3 common excuses and why you should reject them

"I Can't Afford it" Identify a luxury that you can live without and sock that money away

"I'll start Saving Later" Procrastinating and inflation will eat away at your ability to get ahead

"Isn't  Social Security Supposed To Take Care of Me?" It's intended to be a supplement, and who knows what the future holds?

There's much more to it than these three points, but Bresiger's points are well taken.

Deferred Income Annuities are an excellent conservative tax deferral strategy that helps you define your results so that you can "know now what you will get then". As part of your overall strategy consider allocating some portion to a deferred income vehicle as a stable counterpart to your more volatile investments.

The Deferred Income Annuity-An Important Retirement Planning Solution

As workers are increasingly less likely able to rely on employee benefit and employer sponsored retirement plans to solve all of their retirement needs, the deferred income annuity is an ever important solution. Years ago it was common for a company to have what is known as a defined benefit plan and worker/employees could know what they'd have along with the "gold watch". Today's worker employee is more likely to have a 401(k), SEP or other so-called defined contribution plan which puts the risk of adequacy (of contributions) and the investment risk on the worker/employee. Some employers provide matching contributions. Others don't have plans at all. Higher income employees may have hit the contribution maximum ( "maxed out") but the future shows that such plans will provide an inadequate level of income replacement.

With a deferred income annuity an individual can put away money now and it will buy a known amount of money at some pre-defined future starting point. There are no limits to what an individual can put into a deferred income annuity. Minimums are typically ten thousand ($10,000). You can even say that you want a certain amount of monthly, quarterly, semi-annual or annual annuity income and we can tell you what it will cost. You can set up a plan where you will buy a series of deferred income annuity contracts each year to help you achieve your goal.

A deferred income annuity serve the role of insurance for your portfolio. If you are a risk taker with investment experience and confidence in your abilities, you should still consider using a deferred income annuity to at least guarantee a baseline of income in case things don't turn out as you expect.

Such annuities are eligible for medical underwriting and a rated age could help boost the lifetime yield per dollar placed in the deferred income annuity

A Deferred income annuity is only available from a small handful of insurance companies who take on the risk of you outliving your assets.

Please contact us if you would like to see a quote. Please note that I only seek business in those states where I am licensed

Aviva Life Announces Income Secure

Aviva Life Insurance Company announced the arrival of its deferred annuity income product, Income Secure. The new deferred annuity income product possesses characteristics of both a deferred and immediate income annuity as well as an annuity of the type used to fund structured settlements.

With Income Secure, the deferred part offers tax deferred growth and the buyer also has the opportunity to define their income at the end.  Income Secure is a great solution for people who have money now and want or need guarantees as to the amount and timing of money then.

Buyers of the Income Secure deferred income annuity who are under age 59 1/2 must purchase a income payment stream that has some element of life contingency (e.g. life with 5 years certain, life with 10, 20, 30 years certain etc). A period certain or fixed period annuity is a possible deferred income option for Income Secure for annuitants over age 59 1/2. Minimum premium is $10,000. The product is currently available in 31 U.S. states with others pending approval.

Aviva Life Insurance Company is rated A+(Superior) by A.M. Best as of the date of the post. Aviva Life Insurance Company is part of London, England based Aviva plc group, which has a corporate lineage dating back to 1696, and is one of the 10 largest insurance groups in the world.

To learn more about this product, please contact us

Need Money Then? Now You Define Your Future Income!

TV ads at virtually anytime of the day and a plethora of Internet ads tell you about why you need money now. But what happens if you need money then?

Some people just want to secure their futures. Some want to avoid the volatility of the stock market, mutual funds, pyramid marketing and other schemes and would like to know what they are going to receive and to have the comfort of knowing exactly when they are going to receive it.

The Annuity solutions offered by most life insurance companies fail to adequately bridge the gap between deferral and income needs when there is a need for "money then" and there is a need to know how much. You can buy a fixed or variable annuity for deferral purposes, but you never know exactly what you are going to accumulate. Furthermore you never know exactly how much income you will get until you "annuitize" the annuity. You can buy an immediate income annuity or SPIA, but you can't have a start date later than 13 months (as provided by IRC Section 72(u). Fortunately today there is a solution.

A customizable deferred income annuity is now being offered in certain states (more pending) permitting an individual to, if you will, buy income, or better said to buy deferred income.

Very simply you can:

• figure out now, today, the amount of money you need then. Then we can help you calculate how much money now you need to put away to have that exact amount of income coming to you beginning on the very day then in the future that you want it.
• decide how much money now that you can or want to put away and know now exactly how much you will get on the very day you set to start taking the the money out as income then.

For details and quotes please contact us