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MONDAY, NOVEMBER 23, 2009
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Boomers Turn to Annuities, Leaving Nothing for Kids

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(Newser) – Now that the financial crisis has destroyed so many nest eggs, many soon-to-be retirees are buying annuities and leaving their kids to fend for themselves, the Wall Street Journal reports. Annuities turn a lump-sum payment into a guaranteed income for life. That’ll provide more peace of mind than living off investment income in an uncertain market, but it leaves nothing for the inheritance.

Metlife, for example, will happily turn a 67-year-old's $1 million into a $75,000 annual income. Buyers who die early subsidize those who stick around for decades. But annuities also aren’t a great deal right now, says one financial planner, because interest rates are low, which hurts returns. Inflation is a problem, as is the risk that the insurer selling the annuity will go belly-up; state backup pools won’t necessarily protect your whole policy.

Many boomers are turning to annuities, and leaving nothing behind.
Many boomers are turning to annuities, and leaving nothing behind.   (Shutterstock)
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10 comments
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Toon
Jul 11, 09 12:16 PM CDT
Unless the beneficiary is mentally incompetent or has a long term disability annuities are not a good idea. They have high maintenance fees and low return rates. It sounds like a lot of people who lost money on high risk money are now going to lose more on no risk money. Reply
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+3
UrUndertaker
Jul 11, 09 12:43 PM CDT
Thus this is what you are left when you become old at a time when for almost a decade your country was at war and big business had gone unchecked thus taking the entire economy down the tubes when their greed destroyed what was left of a one great nation. The GW Bush years will go down in history as the era that destroyed America.....and with good reason Reply
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+5
IN RESPONSE:
Rocket448
Jul 11, 09 3:38 PM CDT
I recently buried my 87 y/o father, who like many in his generation fought in WWII and survived to take a Master's on the GI bill, became a beloved professor and grandfather. Although he was terribly risk-averse he also accumulated several properties on his salary and had a decent annuity as well going together with his $5000/mo pension. He earned his success thru hard work and steady advancement in a climate of
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IN RESPONSE:
Rocket448
Jul 11, 09 3:42 PM CDT
sorry about the submissions below. I guess I have to put the cat in another room before writing. What I wanted to say was that my Dad and his generation seemed to find more doors open for them then shut. My experience has been quite the opposite. Oh, and the kids? Forget it. My sisters are greedy status-conscious hypocrites who tried to euchre me out of my portion of his estate. I say, keep what you can and the hell with the kids. If they can't make it without help screw 'em.
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+1
IN RESPONSE:
Reader62719514
Jul 11, 09 6:37 PM CDT
Sorry, UrUndertaker, but you've got to go back farther than GW. There is no particular party of administration favorites to blame when it comes to greed and corruption at all levels of our society.
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