Best Retiree Job

"Guaranteed income for life".  The ads for lifetime income annuities for retirees are so beguiling -- especially after the disastrous effects of the Crash of '08.  Predictable  income sounds like the perfect answer now that your retirement fund is worth a lot less and the interest your money is earning is abysmal.

But before you pick up a phone and sign up for an annuity, be aware of what you are buying.  You may end up with less than you expect. 1.  An annuity is NOT a savings account with a guaranteed interest rate or guaranteed periodic payment for life.  An annuity is NOT a FDIC insured bank account.  An annuity is an insurance plan. 2.    If the insurance company that issues your annuity goes out of business, you are out of luck--and out of your money.

3.  An annuity is still an insurance plan--even if you purchase it through a banker or stock broker.  The banker or broker is functioning as an insurance agent and, as such, is entitled to a commission for selling the annuity to you.  And the commissions can be very steep.  So part of your money right off the top pays for that commission.

6.  Other annuities guarantee payment for a fixed period of time, for example, five years or eight years or twenty years.

7.  Some annuities have clauses that allow you to get your money back in case of an emergency, BUT it is unlikely you will get it all back.  They will deduct some money to pay the commission, other money to offset what they have already paid you, and there may be other cancellation fees.  Always ask about this.

8. Other annuities do NOT allow you to get any money back-- even if you experience an emergency.   And your heirs may not receive any money at all from the annuity when you pass away.

9.  Some annuities offer a variable payment based on current interest rates.  With these plans there is usually a minimum guarantee.

So before you write that check for what the salesman  is claiming as "guaranteed income for life", be sure to get answers in writing about all these important factors.