Dear Liz: I am 57 and was just terminated from my job of 37 years. I have a pension and a 401(k). I went to see a financial advisor the other day and he suggested I buy an annuity. I know it is not FDIC-insured, but is it a really safe bet?
Answer: Annuities are complicated, often expensive investments that typically offer handsome commissions to the people that sell them. Before you buy one, you should thoroughly research what you’re getting into. A good place to start is AnnuityTruth.org. This site, run by the nonprofit education and counseling center Healthcare and Elder Law Programs Corp., offers a tutorial to understand the basics of annuities, warnings about inappropriate sales techniques and shopping tips for those who want to buy them.
Even after doing your homework, you still may have questions about whether an annuity is right for you. Rather than accept advice from a salesperson, which is what your “financial advisor” probably is, consider consulting a fee-only financial planner. These planners are compensated only by the fees you pay and do not accept commissions for selling financial products.
You can find fee-only planners who cater to middle-class investors at GarrettPlanningNetwork.com. Another resource is the National Assn. of Personal Financial Advisors at NAPFA.org or (888) FEE-ONLY.
Social poster
Downloads
- No documents for download.
