Quote:
Originally Posted by arrowheadnation
Thanks for the advice. I appreciate it. I just wanted to make sure he wasn't being taken for a ride by some commission hungry college grad working for Edward Jones. He's reluctant to go the annuity route because he feels some moral/paternal obligation to "leave me something" when he's gone (I'm an only child). I keep telling him not to worry about it because I have a 401k and a pension, but he's old fashioned. I just want him to be able to be comfortable aka pay his bills & have a little left over for recreation/fun/travel/etc.
|
I've never looked into annuities, and the occasional thing that I read about them is that they're a bad idea.
I can see a value of them, though. For someone like your dad, getting a return while avoiding risk of loss is important. That usually means investing in lower-return investments. Presumably, companies sell annuities because they can take a longer term approach to investment and can be more aggressive. They can spread the risk over a longer-term period, invest more aggressively, and give your dad a little better return because they're making the difference that he would otherwise never see.
At least, that's how it should work. I have no idea the return that your dad would get. Common assumptions would say that he should get more than 4 percent return, but I have no idea if that's true and how much more it would be.
You're also betting that you'll live a long time rather than dying early. If you've got kids and care about inheritances, then maybe this is an issue. For someone like me with no dependents, the financial loss of dying early doesn't matter, and the benefit of always having income is a big draw.
Now that I think about it, maybe I should look into annuities. I think I'm a good market.