Using annuities in retirement planning
"I have a client who wants to know which annuity strategy is right for his/her retirement"...What a planner needs to know about the use of annuities in retirement income planning.
What is the psychological impact of having additional guaranteed income in retirement?
(Kenn Beam Tacchino, JD, LLM and David A. Littell, JD, ChFC®, CFP® and Somnath Basu, Ph.D.)
We discuss the results of recent research that demonstrate that those with guaranteed retirement income have a higher level of well being and a lower incidence of depression than those who do not.
How do you manage clients income needs as they move into retirement?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
In this practical video Ben Baldwin shares his vast experience talking with clients about the retirement income issue and we learn about the factors that will influence the appropriate annuity choice for the client.
Are annuities essential to a successful retirement?
(Mary Quist-Newins, CFP®, CLU®, ChFC® and David Babbel, Ph.D. and Kenn Beam Tacchino, JD, LLM )
We look at ways to deploy accumulated assets for retirement. We examine several effective annuity strategies and compare them to the"self-annuitization" school of thought.
Why are immediate annuities an overlooked part of the retirement income solution?
(Kenn Beam Tacchino, JD, LLM and Moshe Milevsky, Ph.D. and Craig W. Lemoine, CFP®)
We examine the questions of why annuities are important in retirement income planning and why clients shy away from the immediate annuity. We learn that planners need to frame the immediate annuity as a consumption vehicle, rather than an investment vehicle.
What is the role of immediate annuities in the retirement portfolio?
(David A. Littell, JD, ChFC®, CFP® and Allen McLellan, LUTCF, CLU®, ChFC®, CASL®, CFP® and Craig W. Lemoine, CFP®)
We look at the strategy of providing basic expenses with an immediate annuity, laddering annuity purchases, variable immediate annuities, and choosing the right company with which to place the annuity. We learn about inflation protection options and how to overcome resistance to the immediate annuity purchase.
What is the role of deferred annuities in the retirement portfolio?
(David A. Littell, JD, ChFC®, CFP® and Allen McLellan, LUTCF, CLU®, ChFC®, CASL®, CFP® and Craig W. Lemoine, CFP®)
We examine fixed annuities and their role in the retirement portfolio. We discuss suitability concerns and surrender charges. We discuss the role of variable deferred annuities focusing on the importance of the guaranteed living benefits that have become an important part of the marketplace today. Finally we compare immediate annuities with deferred annuities with guarantees.
What is an Advanced Life Delayed Annuity (ALDA) and how can it help my client?
(Kenn Beam Tacchino, JD, LLM and Moshe Milevsky, Ph.D. and Craig W. Lemoine, CFP®)
We examine that Advanced Life Delayed Annuity (ALDA) product and its role in protecting retirement security. We learn that protection for the later years of retirement can be purchased at a relatively low price.
Who regulates annuities and how does this impact the financial sector?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We identify the various regulatory bodies that oversee annuity sales and the variety of roles they play. We learn that one trend is to follow consumer expectation when setting the appropriate standards to be followed.
Why is suitability such a big concern for an older client purchasing a deferred annuity?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We examine annuity suitability for older clients. We note that regulators are concerned with liquidity, the options the client was shown, and whether the client had enough information to make an informed choice. the importance of documenting conversations is emphasized.
What factors are critical to consider when exchanging one annuity for another?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We look at the viability of making a 1035 exchange to a newer annuity product. We learn that the advisor needs to be wary about surrender charges, giving up higher guaranteed interest rates and/or other contract provisions that cannot be duplicated today.
What is the tax treatment of a nonqualified annuity?
(James F. Ivers III, JD, ChFC® and Kenn Beam Tacchino, JD, LLM and David A. Littell, JD, ChFC®, CFP®)
We discuss all aspects of the tax treatment of nonqualified annuities during the life of the contract holder. We learn about the early withdrawal penalty tax as well as the difference between the tax treatment of withdrawals prior to and after annuitization. We also learn about calculating the exclusion ratio when the annuity is a variable annuity or contains an inflation rider.
What is the income tax treatment of a gift of an annuity contract?
(James F. Ivers III, JD, ChFC® and Kenn Beam Tacchino, JD, LLM and David A. Littell, JD, ChFC®, CFP®)
We review the complex rules that apply to the gift of a nonqualified annuity. We learn that the contract holder will generally have taxable income at the time of the gift.
What are the tax rules for distributions from an annuity contract after the contract owners death?
(James F. Ivers III, JD, ChFC® and Kenn Beam Tacchino, JD, LLM and David A. Littell, JD, ChFC®, CFP®)
We discuss in detail the tax treatment of nonqualified annuities after the death of the contract holder. We learn that withdrawals (to the extent that they represent gain in the contract) are subject to income tax. Also, we learn that nonspousal beneficiaries are required to take distributions from a deferred annuity within 5 years or over the life expectancy of the nonspousal beneficiary.
What is the "non-natural person" rule for annuity contracts and how is it applied?
(James F. Ivers III, JD, ChFC® and Kenn Beam Tacchino, JD, LLM and David A. Littell, JD, ChFC®, CFP®)
We discuss the rule that generally prohibits a non-natural person owning an annuity from benefiting from the deferral of gain on inside build up. We learn that an exception is made for an agent holding the annuity for a natural person. We also learn when this exception may or may not apply.
How does the tax treatment of annuities compare with other types of investments?
(James F. Ivers III, JD, ChFC® and Kenn Beam Tacchino, JD, LLM and David A. Littell, JD, ChFC®, CFP®)
In this video we compare the tax treatment of annuities with stocks, mutual funds and certificates of deposits. We also learn that annuities need to be considered as more than just an investment vehicle.
How are annuity products classified?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We review the different ways annuities are categorized. We learn the differences between immediate and deferred annuities, single-premium and multiple-premium annuities, fixed and variable annuities, and qualified and non-qualified annuities.
What is an immediate fixed annuity and how is it used?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We discuss the various settlement options and contract terms available in an immediate fixed annuity. We learn about the interest rate environment and its impact on the desirability of these annuities.
What is an immediate variable annuity and how is it used?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We discuss the assumed interest rate issues that arise with a variable annuity. We learn not to use a variable annuity for basic expenses, but to consider it as an inflation hedge.
What is a fixed deferred annuity and how is it used?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We look at the contract terms of fixed deferred annuities and trends in current and guaranteed interest rates.
What is a deferred variable annuity and how is it used?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We look at a variety of features that must be compared when shopping for a variable annuity. We learn why a deferred variable annuity may work for an older client.
What are some recent innovations in immediate annuities?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We look at inflation riders, return of capital options, and interest rate recalculation features. We learn that an immediate annuity can be designed to overcome inflation, liquidity, and interest rate risk objections that a client may have.
Can an annuity be combined with long-term care insurance?
(Kenn Beam Tacchino, JD, LLM and Moshe Milevsky, Ph.D. and Craig W. Lemoine, CFP®)
An analysis of the possibility that a single product can be used for both long-term care and annuity protection. We learn that combining these products may open up underwriting concerns. We also learn that there are several variations of the product.
What types of lifetime guarantees are typically available as riders in a variable annuity?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We examine guaranteed death benefits, guaranteed minimum income benefits, guaranteed withdrawal benefits for life, and guaranteed minimum accumulation benefits. We learn about current trends surrounding these guarantees.
Are there advantages to annuitizing a deferred annuity over purchasing a new immediate annuity?
(Ben G. Baldwin, Jr., CLU, ChFC, CFP® and David A. Littell, JD, ChFC®, CFP®)
We look at questions a client may be asking when annuitizing a deferred annuity. We learn there are a variety of strategies to consider.
What annuity issues and concerns have been in the news?
(David A. Littell, JD, ChFC®, CFP®)
In Nov. of 2010 we talked with Ben Baldwin about the annuity business and the current regulatory environment. We learn that the public conversation has become more positive, and discuss the implications of additional regulation in annuities.
The opinions presented in these videos are those of the speakers, and do not necessarily represent the opinions or policies of New York Life. New York Life makes no warranties or representations about the accuracy or completeness of the statements made in this video, or any associated materials appearing on The American College website and assumes no liability for damages resulting from the use of the information contained therein. New York Life is not engaged in rendering legal, accounting, or other professional advice through the use of this video or associated materials. If legal or other expert advice is required, the services of an appropriate professional should be sought.
