| Hi Rita, and others. I receive a (non-contributory - with years-of-residence requirement) government pension - on which I pay income tax, fed. & prov. I also earned my right to receive a government pension through (deductible at the time) contributions made by my employers and me. I pay tax on that, as well. I receive a privately funded pension, to which my employers and I both contributed, which was then a deductible amount for me. Which annual payment amount is added to my taxable income. I had a retirement fund, to which I alone made deductible contributions, plus a later addition from a credit earned with a part-time employment situation, part of which I could roll into that retirement fund, and part of which I had to take out in cash - thus incur tax liability in that year. When I was 69 (earlier it was 71) I had to close my personal contributory retirement fund, and I had choices: one was to shift all or part of the retirement fund into an annuity - more about that option, which I don't like, below. Or I could roll all or part of it into a retirement income fund into which I could no longer make contributions, and from which I was required to make withdrawals for the rest of my life, initially at about 7.5% annual rate and in increasing percentages until at 20% annual rate at and after age 90. I could withdraw larger amounts if and whenever I chose. I had a choice among a fairly broad range of investment types into which I could invest that asset. If I had a spouse, at my death the total mount remaining could be transferred to a similar account in her name. If I lacked a spouse (or minor or disabled kids), the full amount remaining becomes income in the year of my death - probably taxed at a higher rate than I saved when contributing it. But ... I'm no longer around to need a pension, so ... Had I not chosen one of those two available systems, the income tax people would have said that my retirement fund was shut down at the end of the year in which I was 69 - and the full amount became income in that year. And taxed accordingly. I have a prejudice against insurance companies - if they were as concerned about the public/their clients as they claimed, how come they pushed (expensive) whole life insurance so much, for so long, saying how wonderful it was that it built up those great cash values, etc.? Trouble is - if you took the cash value, the death benefit evaporated. If you waited for the death benefit, to support your dependents ... ... the cash value disappeared. The insurance companies bet that you're going to live. You bet that you're going to die (prematurely - while you have others depending on your income for survival). They're the ones who employ the actuaries. And the sales people - who are, let's say, fairly well paid (or they don't get to stay around). Annuities are a situation where you give a manager a pot of money ... ... in exchange for a promise that they'll pay you a given amount of money, annually, until you die. Or for a guaranteed number of years, maybe including spouse, etc. - in each of which case, the amount that they're willing to pay annually shrinks. Of course. Some insurance companies have gone broke - which meant that the people who held their annuities were left holding a worthless piece of paper. Later some insurance companies went together to provide a partial remedy for such situations. Annuities may not have been a bad idea about 25 years ago, when interest rates were high (but inflation was high, then, also) but not now when interest rates have been low for a number of years. Many of us feel that, as the U.S. gov't. has such huge debt, an increasing amount of it in recent years held by foreigners, plus running a very large deficit annually, making the debt increase even more, plus are printing money ... ... that the high respect in which the U.S. Dollar has been held for generations isn't going to last much longer. Which means that, in order to entice would-be lenders to be willing to lend more to the U.S. government, they'll have to offer higher rates of interest. Consumer debt in the U.S. is huge, as well - and rising. They're buying much more from abroad, especially China, than they're selling. Which puts the U.S. Dollar in serious - and increasing - jeopardy. Not a good time to be agreeing to an annuity contract, in my opinion. Not only that. Not only that. I don't want someone else running my money - I want to run it myself. Those who do it well ... ... retire early. Have a great weekend, everyone. ole joyful | 
