Saturday, January 30, 2010

Annuities

In the "old days" - that is, a generation ago - workers at many companies enjoyed the security of knowing that when they retired that would have a pension for the rest of their lives.

Even if the monthly pension payments were modest, there was a certain comfort in knowing that one could live out the retirement years with financial security.

Now, of course, the fate of your retirement largely rests on what happens in your 401(k), IRA, etc. Put another way: it's up to you, and the markets, as to how financially secure your "golden years" will be.

The only product on the market that compares to a pension plan is an annuity. Unfortunately, annuities have a poor reputation among consumers, often with good reason. High fees, unintelligible legal language, poor sales practices - you name it - a product that should resonate with investors and savers alike has all of the appeal of a root canal for many people.

This may change, especially in light of the poor stock market performance for the last decade. In addition, as this post from today's New York Times notes, the administration seems to be making a not-so-subtle push for Americans to rethink their current mindset about annuities, and reconsider them as part of their overall financial planning.

Here's the link to the article by Ron Lieber:

http://www.nytimes.com/2010/01/30/your-money/annuities/30money.html?ref=business