Be smart about annuities

The Savage Truth

Immediate or deferred-income annuities offer a simple, cost-effective way to buy lifetime income for a portion of your retirement rollover. But be smart.

Thousands of annuity salespeople are hoping to grab your money and steer you toward their high-commission indexed-annuity product before they will be required to act honestly under the fiduciary standard and undergo background checks.

You're a target if you're one of the millions of Americans retiring and rolling money from a company 401(K) plan into an IRA and wondering what to do with the money. You can avoid complex products with big commissions and set up lifetime income using immediate annuities and deferred-income annuities (sometimes called longevity annuities) with a portion of your IRA rollover.

Here are steps you can take to secure lifetime retirement income:

Take a look at your overall retirement income plans. You may receive Social Security or a regular pension check.

Your IRA rollover needs to be invested so that a significant amount will grow in the stock market in order to offset potential inflation in the long run of your lifetime. But once you retire, you will also need some safety in your investments because you can't replace money lost in a market decline with new contributions. That's where a guaranteed lifetime monthly check comes in using simple annuities.

Take a portion of your rollover money, up to about 20 or 25 percent, and buy the promise of a fixed check a month for life. These are called single premium immediate annuities or, for annuities with a delayed payout, qualified life annuity contracts. The monthly payments you receive will cover your required minimum distributions from the IRA money invested. And the monthly income, like all IRA withdrawals, will be taxed as ordinary income.

Compare the monthly income you could get for your money. It's easier than you think — and you don't need an insurance agent to find out. Go to to get started. This website was created by annuity expert and consumer advocate Stan Haithcock, also known as “Stan the Annuity Man.” He figured out a way to instantly compare single premium annuity offers from A-rated insurance companies or better, online without any salesmen.

Keep it simple. At you can get a real-time quote instantly, without giving your name or phone number. All you have to do is fill in your age, gender, state of residence and the amount of money you want to put into the annuity in a single premium. You'll get a quote for the monthly check you could receive as long as you live, or a slightly lower amount if you want a guarantee that your beneficiary will receive any leftovers from your original investment.

Take action. If you're interested, you can proceed online. Fill in your name and email address. You'll see the monthly amounts offered by nearly a dozen insurers. Choose one, and you can fill out the application online. Only then will a licensed administrator contact you, per insurance regulations, to arrange for the contract to be completed and payment arrangements made.

Taking this step could make a significant difference in your lifetime income. And that's The Savage Truth.

Terry Savage is a registered investment adviser. She responds to questions on her blog at

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