Browsing: variable annuity

Variable annuities

0

Q. I just retired from government service under CSRS and have left my Thrift Savings Plan alone. My financial adviser, whom I consider a friend, is telling me I need to roll my TSP over into a tax-deferred variable annuity that guarantees a 5 percent return on investment each year even when the market does poorly. He says because of this “guarantee,” I can choose a very aggressive growth portfolio, while not having to worry about the results. He claims my TSP is not protected against losses. I knew that already, of course. It’s with a highly rated company. Fees…

Transferring to a variable or fixed annuity

2

Q. What would be the advantage or disadvantage to a retiree of transferring their TSP to a variable and/or fixed annuity? What are the issues to look for, if any? A. The main disadvantage of variable and deferred annuities is their high cost. The main disadvantage of a fixed immediate annuity, in the current environment, is a low payout rate. I don’t know a universal advantage to a variable or deferred annuity. The advantage of an immediate fixed annuity is guaranteed income for life.

Variable annuities

2

Q. Why are variable annuities such a bad retirement option? I have seen this stated many times, but I’m still not sure why this is the case. On the other hand, I’ve almost never seen any investment outperform the TSP stock funds on a long term basis. I have rebuffed the efforts of my financial adviser (and many other advisers during lectures) to get me to roll over the TSP to “more flexible” IRA options. A. Because they are expensive. Keep your money in the TSP. Your financial adviser is a salesperson who wants the big fat commissions you’ll pay…

IRA?

0

Q. I’m recently retired from the federal government. I have currently made no changes to my TSP, leaving everything in my account. Is it generally a good idea to leave your funds in the TSP or should I consider rolling it over to an IRA? Also, what is your opinion of a variable annuity? A. It is generally better to leave your money in the TSP as long as possible. It is the best retirement investment environment there is. In my experience, variable annuities are one of the WORST investment propositions you’ll find. Avoid them unless a trustworthy (competent and…