Fixed annuities or immediate annuities can make a portfolio last longer. They can provide steady income for life and smooth the portfolio; it won’t be as subject to fluctuations from market activity.
Annuities are not all the same. Yields and rates of return vary considerably. Insurers have different investment experience, life expectancy assumptions, and expenses. As a result, annuity shoppers should compare a number of annuities before making a choice. My studies over the years have shown that even among insurers that are top-rated for safety, annuity payouts can differ by about 20% per month. That is 20% each month for life. Over time, that is a significant amount of money.
These days it is very easy to compare the payouts from many different annuities. A number of brokers have web sites that provide either instant quotes or delayed quotes by e-mail or mail.
The grand daddy of these sites might be www.immediateannuities.com. It is part of WebAnnuities.com and is related to the newsletter Annuity Shopper.
The site provides quotes from a large database of different annuities. In addition to being able to compare payouts from different annuities, the site also contains safety ratings of the major insurers and articles on various annuity topics.
Another site with a database of annuity information is www.AnnuityFYI.com. It includes explanatory material, checklists, and various calculators.
Annuity quotes also can be found at www.annuity.com. The site links to a blog by its founder Bill Broich at www.RebelAgents.com. Though written for insurance agents, consumers can learn some helpful information from the blog.
None of the sites has relationships with all insurers or lists all annuities. So, do not use only one site if you want to maximize income. In addition, there are annuities sold directly by insurers or financial services firms that are not listed on other sites. Check the sites of Vanguard, Fidelity, T. Rowe Price, Charles Schwab & Co., Ameriprise, and any other financial firm you use. You also might want to visit the sites of a few major insurers for their latest quotes.
Annuities can be complicated and comparing them might be difficult. We have provided explanations of them in past visits, and that information can be found in the Archive on the web site.
In addition, there are web sites that provide a host of information about different aspects of annuities.
The National Association of Insurance Commissioners has a Consumer Alert on annuities that provides a great deal of information, including warnings about deceptive sales practices, at www.naic.org.
The Longevity Alliance also explains different types of annuities and aspects of them. It offer quotes by e-mail or telephone. It is at www.longevityalliance.com.
Remember we are talking about immediate and fixed annuities, not variable annuities. Those are a completely different vehicle. Warnings and details about variable annuities can be found on the SEC’s web site at www.sec.gov. March 2008.