Archives for Annuities

What You Should Know About Annuities

Annuities are similar to a pension you purchase for yourself.     Company pensions are pretty much a thing of the past in corporate America. While the ubiquitous 401(k) plan might help workers save pre-tax dollars for retirement, they’ve also shifted the responsibility for retirement planning to the individual. And as many people saw in 2008, 401(k)s can be fraught with market risk, including the risk of losing it all and having to go back to work. Annuities can be thought of as a way to transform savings into income. When you purchase an annuity, you are exchanging a sum of
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Categories: Annuities and Financial Literacy.

A Brief History of Annuities

With June designated as “Annuity Awareness Month” one can argue that many Americans are aware of the word “annuity” but may not understand how annuities actually work. The annuity concept has been traced back to the Roman Empire. In return for their service, soldiers and their beneficiaries would receive annual payments for life known as “annuas,” the basis for the word annuity. In the 17th century, these contracts were structured in the form of a “tontine” by feudal lords. Investors would contribute to a large pool of cash and receive annual payments for life. Upon death the payments ended and
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Categories: Annuities.