Roll IRA into IRA fixed rate annuity, good or bad?
My husband and I are retired. Our financial adviser suggested we roll an IRA over into a fixed rate annuity.
What are your views and experiences with annuities?
We are looking for a safe place to roll the IRA over to with high interest. Do you have any suggestions that I can look into?
Thank you.
I think annuities are generally poor investments. Ask what fee your “advisor” is going to pocket for selling that annuity.
Bad idea. The IRA is tax free already since its a Roth. If you switch it to an annuity, it will probably become taxable income. There are no safe places that can make an extremely high interest rate.
With all assets at all time low, your life time savings would have probably a taken significant hit. Now is not the best time to liquidate and rebalance your positions. Having said that, “safe places” do not offer high interest at the moment. Government bond yields are at historic lows. You could take a look into TIPS and investment-grade corporate bonds.
Be aware that fixed rate annuity is expensive for the investor and is lucrative for the sales person. Whether it is right for you and if so, when is the time to do the switch depends on your accumulated wealth and many other factors. You should also consider alternative income-oriented investment vehicles in the interim. Given the recent developments, you should also seriously take into account the credit risk of the financial institution selling you the annuity. Please talk to another financial adviser before doing anything with your hard-earned nest egg.
i say bad. in all likelihood, your financial adviser is getting a commission if he sells you an annuity, so he has an incentive to push it on you. the best financial advisors are the kind where you pay for their time, not commissions on what they sell you, because then they have your best interests at heart. an annuity is an insurance product, and there’s no way to achieve a 100% wealth transfer into an insurance product because everyone up the line, from salesman to ceo, gets a few golden crumbs from your hard-earned cake.
moreover, if there’s a hyperinflation as some anticipate, that annuity won’t be worth diddly.
A fixed annuity….. you’re money is guaranteed by the Insurance Company (not something I’d want)…… US Gov’t bonds or bank savings accounts are much better way to go…. especially if safety is a concern.
In general I don’t trust any annuity product (and I was a licenced Insurance agent);
There are law makers trying to make selling variable annuities into IRA’s illigal. Selling a tax deffered instrument (with high & hidden costs to make it tax deffered…. into a tax advantage account… is… robbery!)…..
Variable Annuties sold outside an IRA are usually sold incorrectly… or more soecifically purchased for the wrong reasons. The big one “lower taxes”….. But what they don’t tell you is… by using amn annuity you lose the very low “capital gains rate” for the eranings rate. Then you pay some of the highest fees (hidden and not hidden) of any financial product around.
A fixed annuity may have it’s place for you…… but do your homework. All annuities (fixed or variable) make a lot of money for the agents….. they may not be looking to hurt you…. but it’s nice to get the high commissions…. and many times they don’t fully understand why someone should steer clear of these products.