mutual of omaha, anyone invest with them?

[OZisKTB]

The subject line is off you Don't Invest with insurance companies. You give them your capital to invest. They benefit from investment returns, and pay you savings interest and return your capital. Check tax treatment, the unfavorable tax law is an independent assessment of the quality of these investment choices. Per Clark Howard, break-even for variable (many types) annuities is upward of $400k adjusted gross income. Earn less, and you are subsidizing everyone else. Instant annuities have a place in retirement portfolios, but as a portion, shop widely, and diversify (companies fail).

 

[RSKY]

I rolled my 401K over into an IRA with Fidelity. Everything was done online. The lady whom I dealt with gave me a sales pitch for an annuity. I thought about it for a week or so then turned it down and invested in mutual funds. She later told me that annuities were the most profitable investment FOR THE FIRMS SELLING THEM! She said she had spent her entire life in financial services and that there were very few people that came out ahead with annuities. Her advice is "take money out when the market is high. Scrimp, save, do without, and buy when the market goes down. Look at a stock market correction as if stocks were put on sale."

Smart lady.

RSKY

 

[k0ua]

There is no doubt in my mind that if you wish to takes risks, you can invest in the market directly and have higher returns than investing in annuities. You can also lose everything. With annuities you have no risk of losing your principal. An indexed annuity is tied to the S&P index. If the market goes down, then you just don't make any money, you don't lose any either. If the S&P goes up or in some strategy's stays level, you make money. Are the insurance company's making money off of your money.. YES they are. If you are looking for a level retirement income for as long as you shall live, however long that may be... invest in an annuity.

 

[kenmac]

I have ask my financial advisor several times about annuities, and he advised against it. He's suppose to be the pro. I pay him ,because I don't have the time nor the knowledge to keep up with this stuff. As far as investing, I guess It all depends on what you want to do ,or what your situation my be

 

[NY_Yankees_Fan]

There is no doubt in my mind that if you wish to takes risks, you can invest in the market directly and have higher returns than investing in annuities. You can also lose everything. With annuities you have no risk of losing your principal. An indexed annuity is tied to the S&P index. If the market goes down, then you just don't make any money, you don't lose any either. If the S&P goes up or in some strategy's stays level, you make money. Are the insurance company's making money off of your money.. YES they are. If you are looking for a level retirement income for as long as you shall live, however long that may be... invest in an annuity.

I think it is OK for annuities to be PART of your entire retirement plan. But it should not be your only plan. You need to be diverse in what you have to protect you from the ups and downs of the economy. Stocks, mutual funds, bonds, cash, annuities etc. should make up what you have in your retirement pot. Your risk tolerance will dictate how much you have in each bucket. I do have a small $50k investment in an annuity as part of my overall plan. If you do not have the experience and expertise seek professional advice.

I have been working with a financial advisor for 20 years with a clear plan to retire before I am 60, I will meet the goal and retire at 58 in 2015. Paid in full for the 2 kids college, paid off the mortgage 5 years ago, I owe nothing to anyone. I do not think I could have done all this without planning and working with an advisor. Like they say you get what you pay for.

 

[OZisKTB]

As we discuss this, we need to distinguish between fixed (immediate or deferred) and variable annuities. Also, whether the annuity is contained in a retirement account, or standalone (see SEC note at bottom)

Fixed annuities are essentially CD-like investments issued by insurance companies. Like CDs, they pay guaranteed rates of interest, in many cases higher than bank CDs.
Fixed annuities can be deferred or immediate. The deferred variety accumulate regular rates of interest and the immediate kind make fixed payments - determined by your age and size of your annuity - during retirement.
The convenience and predictability of a set payout makes a fixed annuity a popular option for retirees who want a known income stream to supplement their other retirement income. (CNN)

Variable annuities are designed to pump up your savings by giving you a chance for long-term capital growth. They do this by allowing you to invest in anything from half a dozen to 20 or so stock or bond mutual-fund-like portfolios called subaccounts. As with fixed annuities, gains escape taxation until withdrawal. (CNN)

BUT they have significant disadvantages including investment choices, very poor tax treatment and FEES:

Fees: And then there are variables' fees. Aside from surrender charges that dock you for early withdrawals, variables can also come with steep sales commissions (often 4%). Add ongoing management fees and insurance charges, which combined can run as high as 2% to 3% a year, and you're looking at one hefty load of fees cutting into your returns. (CNN)

From the SEC:

Caution!
Other investment vehicles, such as IRAs and employer-sponsored 401(k) plans, also may provide you with tax-deferred growth and other tax advantages. For most investors, it will be advantageous to make the maximum allowable contributions to IRAs and 401(k) plans before investing in a variable annuity.

In addition, if you are investing in a variable annuity through a tax-advantaged retirement plan (such as a 401(k) plan or IRA), you will get no additional tax advantage from the variable annuity. Under these circumstances, consider buying a variable annuity only if it makes sense because of the annuity's other features, such as lifetime income payments and death benefit protection. The tax rules that apply to variable annuities can be complicated – before investing, you may want to consult a tax adviser about the tax consequences to you of investing in a variable annuity.

 

[k0ua]

And don't forget the indexed annuity's that don't have the risks associated with variable annuities, but you can usually make more money than a fixed annuity. Of course if you are still working, and have a 401K plan, than that is probably the best place for you investments. BUT if you are retired or near retirement, and look for a place to place old 401K's or heaven forbid CD's languishing around earning next to nothing, then consider some of these other options. I don't sell variable annuities, for several reasons, many of which have been mentioned here.