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Barrons Top 50 Annuities

Barrons Top AnnuitiesBarrons recently published an article hi lighting the top 50 annuities in the marketplace.  It’s a good general overview article.  One of the interesting comments is how drastically the industry has changed over the last year.  We’ve seen benefits contract, fees move up, and payouts decrease.

Why is this?

Quite simply, the insurance and annuity industry faces the same investment climate you do.  they must make long term future promises to their contract holders, and have to invest the premiums in a near 0 % rate environment.

“We’ve seen investment options in variable annuities diminished, guarantees brought down substantially and fees going up,” says Nigel Dally, an analyst at Morgan Stanley. “Protracted low interest rates and high volatility in the stock market have made it far more expensive for annuity companies to support their products.”

With fixed and immediate annuities, the annuity issuers offer guarantees, then rely on their investment managers to produce the returns promised and also to produce a corporate profit.  They shoulder the market risk so you don’t have to.

But when they have no where to turn for safer, higher yield options, they necessarily must lower the payout benefits offered.

What’s your best strategy?

Our principal approach to retirement planning remains true now as before: cover your baseline income needs with guaranteed income, and optimize the remainder of your portfolio with the difference.  The optimization may mean allocating to riskier categories like stocks, when traditional wisdom would have you getting more and more conservative.  However with your bases covered, you can afford to do so, and may come out better in the long run.

You can see the article here:

The Best Annuities- Barrons Top 25 Picks

Asset Allocation on Wikibook
Asset Allocation Image via Wikipedia
Annuities are making news again and last week Barron’s decided to outline the reasoning consumers use to justify a purchase.  It’s all about safety for those who have experienced shocks in the market.  The related article also gives a list of the five best annuities in each of five categories.  In the end you’ll get a solid list of what Barron’s considers to be the best products on the market according to fees, past performance and company stability.  Read the article and see the list here– be sure to click the image of the list of quality annuities.
 
What is the primary characteristic of this list?   You’ll notice the first priority is the credit rating.  It’s imperative to understand that annuities are insurance, and are designed for the safe and low risk allocation of your portfolio.  The credit quality of the issuing company is of paramount importance then.  You will definitely find higher payouts and rates than on this list but as you dig in, you will nearly always find lower quality credits. 
 
Have you honestly analyzed your portfolio and your retirement income needs?  Most investors are accustomed to an asset allocation that is appropriate for accumulation.  But for investors approaching retirement, this often results in an inappropriately large allocation to stocks and even riskier classes of bonds.  Aligning your portfolio with your current and future needs is the first step in finding the right retirement income allocation- look for a future post on a useful exercise to help in this step.
 
Now, for the next comparison, please open this page– it's our secondary market annuity available inventory.  Notice the yields and the names of the insurers who make these payments.  These carriers have the same incredibly high credit ratings as Barron's top picks, but your yield is much better.  Why? Simply because the discounted purchase price available to you translates into a higher yield.  That's why we thump the table on Secondary Market Annuities- they are an incredible value, of high credit quality, and available most likely for only a limited time to individual investors. We'd be happy to help you do due diligence on the credit or specific contract terms of any specific secondary annuity you are interested in.  
 
With so many products on the market, there are likely many annuities that are comparable to the Barron's list.  As long as you understand how to compare different products you should have no problem finding one with the best mix of benefits for your situation.  Since most of you have read The Annuity Report, you know what it takes to do that kind of analysis and find an advisor that puts your needs first
 
We stand ready to assist and hope you will consider this opportunity in the secondary market annuity marketplace as well in your search for high yield safe investments.