My husband wants to retire next year, hopefully. He has money in a 401K. At the bank they are trying to talk him into a variable annuity. He is letting this up to me mostly as he doesn't know how to deal with money very well. The money is not probably what most people have for retirement, but when you don't have a huge income to begin with, you don't want to fritter any away. Don't have money to hire a planner. I know Cd's aren't the greatest income and most times don't keep pace with inflation, but he doesn't want to do stocks. I sat down and figured out this annunity that is managed by this insurance company. If we would put the money in cd's and get just 1% interest, we would still have as much as this annunity because of all the fees they take out for managing it. I know when you take a lump sum when retiring, you must pay taxes right away on the whole amount unless you roll it over into something. I DO NOT know if this applies to CD's?

Does anyone on here know anything about this stuff and if so, do you have any suggestions? Any help appreciated! They use such complicated language on these things that some is hard to figure out! TIA

I really don't know a lot but I do have a little experience from my mother-in-law. She was talked into putting $25000 by a 'good friend' (at the time) into an account thru a bank and was supposed to get great returns. Turned out she lost pretty much all of it. I don't know all of the details. All I know is it was high risk and she wasn't told all of the facts. She now has all her money put into various CD's and she's much more 'at peace' with that. She is still kicking herself for, as she calls it, throwing that money away.

If you don't know a lot, don't have a lot and can't afford to hire someone to advise you, I would put it into CDs. At least you know your money will be there if you need it and you can collect a little interest from it.

My understanding is if he's not retirement age and you rollover into a CD that isn't in a tax deferred instrument, then in addition to paying the taxes, you'll incur a 10% penalty too.

Be aware that a variable-rate annuity doesn't promise you a fixed amount at each scheduled payout.

You should see if your town's senior center, adult education classes, or equivalent offers retirement planning classes for cheap or free. You need to consider a whole lot of factors that folks on MyCoupons don't know about you and you don't want to tell us. For instance, your age, your current expenses, how much you have saved for retirement, and so on.

Oh, one more thing. Frequently, you can keep money in a ex-employers 401K account. If so, there's no need to cash out or roll it over when he retires. (But you should have a retirement plan in place before he retires.)

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If this is going to be a Christian nation that doesn't help the poor, either we have to pretend that Jesus was just as selfish as we are, or we've got to acknowledge that He commanded us to love the poor and serve the needy without condition, and then admit that we just don't want to do it.

- Stephen Colbert.

hi
he also can rollover to IRA with no panelty. he can start cashing it at age 59.5
don't do var. annuity, i also read that the managing fees eat up all the inrest, not worth it.
i don't know where you are, but in almost every corner in the US, there are local banks or credit unions that offer high intrest checking account, with 3 requirements:1- have a debit card and make 10-12 debit card transactions every month, you can do small ones like $1.xx. 2- have one electronic depost every month and 3- get your account statement online. we have 2-3 banks around here that do that, one gives 4.15% , one gives 3.75% (used to be higher last year)
the amount they give that intrest on is 25,000 only, so if you have more than that do 2 banks, but you have to keep up with the debit card transactions every month and make sure they fall in the bank's statement cycle.

here is a web site to find a bank in your area
http://www.depositaccounts.com/us/ch...-accounts.html

press "filter accounts" and enter your state
HTH

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"Two things are infinite: the universe and human stupidity; and I'm not sure about the universe."
Albert Einstein

I second the no for the annuity.......you not get any return on your money. You can roll over the money to an IRA. Many safe Ira's are getting 8% right now. It does not cost you any money to talk to a financial advisor. I would look for a local one that is endorsed by Dave Ramsey. http://www.daveramsey.com/ He does background checks on the them to make sure they are working in your best interest. And they all agree with the principle of living on less than you make.

i would like more info about IRA getting 8% please.
my dh has his in a credit union account, used to be over 4%, now is bearly 3%
thanks

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"Two things are infinite: the universe and human stupidity; and I'm not sure about the universe."
Albert Einstein

Thanks for the replies. Hubby is 62 now, and probably will only make it a year at work yet, as he does manual labor , is on his feet all day with heavy lifting and now they are talking on changing work from 8 hours to 12 a day. With his health he can't handle that and we just don't want to end up with something that is going to be ate away with fees.

I would love to know specifics on an IRA that is paying 8% -- I don't think there are any that are paying anywhere near 8%.

I would talk to another bank and maybe do some research at a library. Annuities, from what I've heard, are very conservative investments, but I'm not sure I would want to put the money in something that ties up funds for a long period of time, as I think some annuities do. I think there are big penalties for early withdrawals on some. Just check carefully before you commit to it. And get everything in writing.

My only experience is with a friend who was awarded one in a divorce settlement years ago. She could not get the money out for 15 years without a hefty penalty. She had other funds, luckily, to live on until she could start withdrawing from the annuity. But if that is your only source of emergency money, you might not want to do that. Basically, if it's going to cost you, think twice and then again.

As for the lump sum, put it into an IRA, and then decide what to do with it. You don't want to take possession of the money at any point. It would have be transferred from the current fund to the IRA without you or your husband ever having it in your possession. That would avoid, at least for the time being, having to pay the taxes.

My husband has invested some of his family members in Vanguard GNMA Portfolio, the symbol is VFIIX. He says this is a mutual fund that does have fees, but Vanguard is the lowest in the industry. First roll over into the IRA and then buy this within the IRA. He put his family in this some time ago and it weathered the financial up and downs that have occurred recently. It is US government insured mortgages. It is NOT anything to do with Fanny Mae or Freddy Mac.

This is not easy for anyone. I wish you both well, whatever you decide to do. If you have any more question, just pm me and I'll see what he has to say.