Income Annuities for Retirement Financial Security

Wharton Study Suggests Lifetime Income Annuities Best Asset Class for Retirement Financial Security

Reprinted from Businesswire.com. August 08, 2007 09:49 Dueling Asset Classes: Wharton Study Demonstrates That Lifetime Income Annuities Are Best Asset Class for Financial Security in Retirement

NEW YORK--(BUSINESS WIRE)--As Americans grapple with the challenge of potentially outliving their retirement savings, a new study, co-sponsored by the Wharton Financial Institutions Center at the University of Pennsylvania and New York Life Insurance Company, identifies lifetime income annuities as the most cost-effective and least risky asset class for generating guaranteed retirement income for life.

The Wharton academic study revealed that:

•Income annuities can provide secure income for one’s entire lifetime for 25-40% less money than it would cost an individual to provide a similar level of secure lifetime income through traditional means, thanks to an insurer’s ability to spread risk across large numbers of people;

Bailing out of Unwanted Annuities

Rising Market in Purchase of Long Term Annuities

A fast-rising secondary market for people looking to cash in annuities for a lump sum settlement is causing consumers concern. Is this the perfect escape hatch for people locked into an annuity they don't want or yet another way for brokers to take advantage of seniors in dire financial straits? Of course, as with all financial tools, there is the possibility for both in each situation.

With an annuity, the buyer pays an insurance company a sum in return for regular payouts over a defined period. With more and more people owning or inheriting annuities, you can bet more and more people find themselves in a situation where they want out. Most annuities charge "surrender" penalties of up to 20% if the owner wants to withdraw the principal before a set period has expired. The penalty generally decreases with time.