Annuity News

AARP Views on Health Reform Present Potential Conflicts with Members' Interests

AARP recently offered support for the health reform legislation that is currently circulating in Congress. As discussed by Grace Marie Turner in a recent Chicago Tribule piece, there is a case to be made that AARP's support of the legislation directly conflicts with the best interests of its 40 million members. AARP receives more than half of its $1.1 billion annual budget from fees related to endorsement and sale of health insurance and other retiree financial services products. So called "...

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Review of Free Retirement Planning Tools

U.S. News & World Report featured a review of five free retirement planning tools that can be found online. The review includes retirement planning software from: AARP Fidelity MetLife T. Rowe Price The U.S. Department of Labor The general conclusion is that the tools do "an inconsitent and poor job," often ignoring critical factors such as longevity risk , inflation and medical expenses. Source: U.S. News & World Report Full Story

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Retirement Planning with TIPS and Longevity Annuities

Gowri Shankar of the University of Washington has published an article on the use of Treasury Inflation -Protected Securities ( TIPS ) and longevity annuities. Shankar suggests that a combination of TIPS and longevity insurance provides an optimal strategy when the objective is guaranteed retirement income . Shankar demonstrates that the combination affords the ability to sustain relatively high withdrawal rates while minimizing the probability of financial ruin in retirement. The strategy also...

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Advanced Life Deferred Annuity

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Probability of Financial Ruin

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Advanced Life Deferred Annuity

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Probability of Financial Ruin

Tax Free Exchange of Annuities for Long-Term Care Policies Allowed Starting in 2010

The Pension Protection Act of 2006 created tax incentives for the creation of hybrid long-term care insurance policies. The Act also provides the basis for a tax free exchange of a life insurance or annuity contract for a long-term care policy. The exchange would be conducted through a Section 1035 exchange . Consumers and their financial advisors will be able to conduct such exchanges beginning in 2010. The details are complicated, but there is a good, in-depth article referenced below that...

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Annuity

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Long Term Care Insurance

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Insurance

Long Term Care Insurance

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Section 1035 Exchange

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Financial Advisors Struggling with Retirement Planning Compensation Models

One of the core compensation models for financial advisors involves fees that are based on client assets under management. As a result, it is naturally in an advisor's interest to gather, maintain and grow as many assets as possible. Retirement planning is proving to be a business challenge for many advisors as retirement involves asset decumulation rather than accumulation. In other words, advisors are in a situation where they are reducing assets under management and subsequently the...

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Finra Oversight of Investment Advisors Could Weaken Existing Fiducuiary Standards

The House Financial Services Committee recently approved a proposed amendment to the Investor Protection Act. The amendment has raised concern among many as it would provide the Financial Industry Regulatory Authority ( Finra ) to broaden its regulatory reach and cover investment advisors who are currently regulated by the SEC. A primary concern is that Finra's relatively weak fiduciary standards would be applied to investment advisors who, at the moment, are subject to higher levels of...

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Fiduciary

FINRA

Financial Industry Regulatory Authority

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Standards

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FINRA

Financial Industry Regulatory Authority

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Putnam CEO Sees Market for Annuities and Other Retirement Income Products Reaching $5.5 Trillion by 2020

Putnam Investments President and CEO Robert Reynolds has been a consistently vocal advocate of retirement reform. Reynolds believes that the retirement planning landscape requires revamping so that annuities and other sources of guaranteed retirement income play a more prominent role. During a recent industry conference, Reynolds discussed the notion of a "product allocation" in the context of retirement finances: A crucial part of the reform effort is helping to protect workers` savings as...

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Goldman's Short Positions for Own Accounts at Odds with Customers

A McClatchy journalist has published an article describing the apparent conflicts of interest that exist within Goldman Sachs. Goldman has materially benefited from its short positions on U.S. housing-related assets. These short positions were created for the firm's own accounts. At the same time, Goldman served as a distributor of the same housing-related assets, aiding many of its institutional clients in establishing meaningful long positions in an asset class for which the firm presumably...

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Goldman Sachs

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Congress is Reviewing AIG Payments to Goldman Sachs

Representative Darrell Issa has asked the New York Fed and AIG to provide related to the $14 billion Goldman Sachs received from U.S. taxpayers via AIG during the financial crisis. Representative Issa the ranking member of the House Oversight and Government Reform Committee. According to Issa: The payments may “amount to nothing less than a backdoor bailout of AIG’s creditors,” the California Republican said in the letters, citing an Oct. 27 Bloomberg article about the New...

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Defined Benefit Pension Plans are Not Without Risk

If you ever find yourself envious of those who still have access to the classic defined benefit pension plan through an employer, it is worth remembering that they are not completely risk free. In the wake of the financial crisis, many employers are finding that their defined benefit pension plans are both underfunded and unsustainable. One natural course of action in response to this situation is filing for bankruptcy. In this situation, much of the value that has been promised to employees...

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