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Retirement accounts

Posted by timmya (My Page) on
Mon, May 19, 08 at 22:33

I just heard about a retirement plan called American Equity's Gold Standard for secure retirement. It is a "Lifetime Income Benefit Rider" which guarantees 8% compounded interest, protected cash/capital investment, and a 10% "sign-up bonus." It does have some restrictions and penalties for early withdrawal, but the guarantee of 8% sounds way too good to be true. Does anyone have have experience with this plan and, if so, what am I missing? Who wouldn't go for a guarantee of 8% comppounded interest?

Follow-Up Postings:

RE: Retirement accounts

I suggest you read the two reader comments on this website. The second one summarizes an excellent column by Kelly Greene of the WSJournal on such products.

Caveat emptor always rules.

Here is a link that might be useful: Equity-Indexed Annuities

RE: Retirement accounts

I'd recommend that you really, REALLY do your homework

A lot of retirement funds are in deep trouble right now--people's IRA's, etc.

You NEVER want to put your money where YOU have to relinquish control to someone else to take care of it. No one cares as much about your financial future as you do.

Also, keep in mind, it's really MUCH better to pay the income tax on the money when you earn it, rather than putting that off till later (taxes only go in one direction--up--when you retire, the chances are that the money you take out of your IRA will end up being taxed much more than if you'd simply paid the tax the year you earned it.)

Also, keep in mind that Congress has already proposed, several times, restricting people who have retirement accounts from collecting their Social Security until their private savings are used up. So far that hasn't passed, but it's been brought up several times, and I think, as we boomers reach retirement age, there's a really, really good chance that we will see some form of that implemented.

I don't make those suggestions lightly. I've been a SAHM for the past 25+ years. I removed my retirement funds from the pension plan when I stopped working to raise my family. Understand, too, that my husband is just a blue collar worker, making only in the $40,000-50,000 range annually. Even so, with frugal living and careful investing, I've been able to accummulate enough money (in my own name--not our 'family' savings) to be able to buy a second home for us, and maintain it for the next 1-2 years so that when DH is ready to retire, our perfect retirement home will be ready for us.

Be smart--manage your own money, never give up control, and make it an actual job that you put time and effort into, and you'll do so much better than if you just hand your hard-earned $$$ over to someone else.

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