Boomers Turn to Annuities, Leaving Nothing for Kids

By Kevin Spak,  Newser Staff
Posted Jul 11, 2009 11:56 AM CDT
Many boomers are turning to annuities, and leaving nothing behind.   (Shutterstock)

(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.