Forumsee logo
Forumsee » Finance and investment » Personal Finance » Read message
RSS: Subscribe to RSS

Suggestions for my mother's annuities

Bogleheads • View forum - Personal Finance (Not Investing) - www.bogleheads.org
Back in the 2000's when CD rates were declining precipitously my parents were directed by their "friends at the bank" to talk to the nice life insurance salesmen renting desks there. The following is the information on two of the annuities that they purchased (I don't know how many more there are).

Non-Qualified Single Premium Deferred Fixed Annuity

Contract Date 09/07/2001 Initial Payment $80,000

09/07/2016 Balance $145,733 Current Interest Rate 3.00%

The insurance salesman had us come to the bank a couple of years ago regarding this policy and told us that we should cash it in and buy whole life insurance. Neither of us were thrilled by this suggestion.

Non-Qualified Classic Fortifier Flexible Premium Deferred Annuity

Contract Date 06/13/2008 Initial Payment $38,680

06/12/2016 Balance $49,937 Current Interest Rate 2.00% (may increase to 3.00% in 2018)

My mother who was widowed in 2009 turned 90 this May. I thought that the maximum age maturity dates on these type of policies were age 90, but both insurance companies claim that my mother can keep them until she is age 100. She will probably live that long but I won't. Her deceased husband is the primary beneficiary on both of these and I am the secondary beneficiary.

My mother is worried about what to do with them but doesn't really understand the difference between annuities and bank CDs. Every conversation ends with her saying that she will call her 'friends at the bank' and ask what to do. Her friends at the bank have started hanging up on her.

Both of these are past the withdrawal penalty date. The options for using them are:

· Payments for a fixed period (or single payment)

· Payments for life - guaranteed period

· Payments for a monthly fixed amount

· Life annuity - no guaranteed period

My mother has enough income from interest, IRA RMDs, and SS that $2000 of her SS is being taxed. Her basic financial philosophy is:

· Money is for saving not spending

· Pay taxes later rather than sooner

My concern is that these annuities have already built up $77K in untaxed income and may trigger an excessive tax bill if my mother dies.

Suggestions?
Date: Jun 19, 2017   


Last videos:

Asking for discounts
Asking for discounts
Financing the American Family
Financing the American Family
Being a Boglehead
Being a Boglehead
Explain Borrower Risks for an Interest Rate Swap
Explain Borrower Risks for an Interest Rate Swap
Bridgewater Associates Founder Ray Dalio has a Great Summary of How The Economy Works
Bridgewater Associates Founder Ray Dalio has a Great Summary of How The Economy Works
The Money Issue - CBS Sunday morning
The Money Issue - CBS Sunday morning
The Money Issue - CBS Sunday morning
The Money Issue - CBS Sunday morning
The Money Issue - CBS Sunday morning
The Money Issue - CBS Sunday morning

Cars ·
Travel ·
Pets ·
production-frontend