| View previous topic :: View next topic |
| Author |
Message |
SpringMan
Joined: 21 Mar 2007
Posts: 2156
Location: Michigan
|
 Posted: Tue Sep 04, 2007 2:46 pm Post subject: Ben Stein apparently likes variable annuities?? |
 |
|
http://finance.yahoo.com/exper....life/43552
He does admit these annuities come with a cost. Seems to me the opinion he expresses is contrary to what I have read here and other places.
Best Wishes,
_________________
SpringMan |
|
| Back to top |
|
 |
Taylor Larimore
Moderator
Joined: 27 Feb 2007
Posts: 7851
Location: Miami Florida
|
| Posted: Tue Sep 04, 2007 3:16 pm Post subject: Guaranteed Minimum Withdrawal Benefit Annuities? |
|
|
Hi SM:
I think Mr. Stein is talking about a relatively new type of variable annuity called a GMWB. This link gives more information:
http://www.financial-planning.....01023.html
Most (not all) annuities, particularly the complicated ones, are sold by insurance agents and designed to make money for themselves and the insurance companies. Caution is the watchword.
Best wishes.
Taylor |
|
| Back to top |
|
|
cheapskate
Joined: 26 Apr 2007
Posts: 194
|
| Posted: Tue Sep 04, 2007 3:37 pm Post subject: |
|
|
| IMHO, the only VA that makes sense for investors is the one Vanguard offers, to hold tax inefficient asset classes such as REITs (hopefully they'll offer TIPS within their VA soon). The Vanguard VA is essentially an IRA with no contribution limits with relatively low expenses. The VG VA REIT offering has an ER of 0.60% for example. |
|
| Back to top |
|
|
livesoft
Joined: 01 Mar 2007
Posts: 9263
|
| Posted: Tue Sep 04, 2007 4:23 pm Post subject: |
|
|
| Certainly in the past Ben Stein worked for a variable annuities assocation. He was paid by them. That may still be the case. He may have no financial interest in the specific products he wrote about, but his financial interest i plugging of variable annuities is well known. I believe he previously wrote about the VAs that his father had which help his family alot. Mr. Stein also knows that many folks do not invest like the folks on this board and may need VAs to save themselves from themselves. |
|
| Back to top |
|
|
Gregory
Joined: 20 Feb 2007
Posts: 1549
|
| Posted: Tue Sep 04, 2007 5:18 pm Post subject: TIPS in VA |
|
|
cheapskate, I once emailed Vanguard about adding TIPS. They'd love to, but some law prevented them from being in a VA -- that's the gist of the explanation I got. I emailed them some years ago, when I first opened my VA.
I like my VG VA. I can annuitize without cost. It holds my REITS, Equity Income and Value funds. I have little room in qualified accounts, so it fills my needs. I'm glad VG offers a low-cost annuity.
Greg
_________________
Pecuniae imperare oportet, non servire.
Fortuna vitrea est; tum cum splendit frangitur. -Syrus |
|
| Back to top |
|
|
larryswedroe
Joined: 22 Feb 2007
Posts: 5368
Location: St Louis MO
|
| Posted: Tue Sep 04, 2007 5:21 pm Post subject: |
|
|
WOW, shocker. These I would assume are like EIAs (equity indexed annuities). EIAs are IMO about the single worst product out there--products meant to be sold but NEVER bought. They are really disasters--sold based on psychological framing of protecting against disasters. But don't show you all you give up on the upside, as well as all the other negatives like converting K gains into ordinary income, loss of stepped up basis, inability to harvest losses, inablity to donate shares to charity, loss of FTC> Stein must be smoking some bad stuff ( ) |
|
| Back to top |
|
|
Murray Boyd
Joined: 19 Feb 2007
Posts: 733
|
| Posted: Tue Sep 04, 2007 6:11 pm Post subject: |
|
|
In regards to financial matters, Ben Stein has recommended everything by now, and has been completely right and completely wrong at least once about everything. That makes him aggravating.
If the first three things you read from him sounded like Jack Bogle then you'd think, "Oh, here's a reliable guy I can trust." Then the next thing you read from him is pushing annuities, dividend stocks, and oh, why not market timing too! |
|
| Back to top |
|
|
bob90245
Joined: 19 Feb 2007
Posts: 3617
|
| Posted: Tue Sep 04, 2007 6:17 pm Post subject: |
|
|
| larryswedroe wrote: | | They are really disasters--sold based on psychological framing of protecting against disasters. But don't show you all you give up on the upside, as well as all the other negatives like converting K gains into ordinary income, loss of stepped up basis, inability to harvest losses, inablity to donate shares to charity, loss of FTC> Stein must be smoking some bad stuff () |
1) What's an FTC?
2) Why would you not be able to donate to charity? Glance at Taylor's post:
If I am understanding correctly, funds inside variable annuities need not be annuitized. And therefore, they are available to heirs. Please correct me if I'm wrong. |
|
| Back to top |
|
|
zhiwiller
Joined: 20 Feb 2007
Posts: 1166
Location: New York
|
| Posted: Tue Sep 04, 2007 6:38 pm Post subject: |
|
|
| bob90245 wrote: | | 1) What's an FTC? |
Foreign Tax Credit? |
|
| Back to top |
|
|
bluemarlin08
Joined: 29 Aug 2007
Posts: 332
|
| Posted: Tue Sep 04, 2007 7:25 pm Post subject: |
|
|
And therefore, they are available to heirs
Yes, but someone has to pay IRD! |
|
| Back to top |
|
|
BigBird
Joined: 27 Feb 2007
Posts: 287
Location: A Big Nest
|
| Posted: Tue Sep 04, 2007 8:04 pm Post subject: |
|
|
| cheapskate wrote: | | IMHO, the only VA that makes sense for investors is the one Vanguard offers, to hold tax inefficient asset classes such as REITs (hopefully they'll offer TIPS within their VA soon). The Vanguard VA is essentially an IRA with no contribution limits with relatively low expenses. The VG VA REIT offering has an ER of 0.60% for example. |
If I'm maxed out on all my regular tax-preferred options, and for example underweight bonds, wouldn't it make sense to contribute to what is 'essentially an IRA', such as VVA-TBM? I've got plenty of other stuff to take losses on, and there's no conversion of K-gains to ordinary income. What am I missing?
_________________
BB |
|
| Back to top |
|
|
larryswedroe
Joined: 22 Feb 2007
Posts: 5368
Location: St Louis MO
|
| Posted: Tue Sep 04, 2007 8:14 pm Post subject: |
|
|
bob
If you have appreciated stock in taxable account can donate the shares to charity, instead of giving cash (what I do every year for major donations) and avoid the K gains tax altogether. |
|
| Back to top |
|
|
spikeymikey12
Joined: 28 Aug 2007
Posts: 139
|
| Posted: Tue Sep 04, 2007 8:28 pm Post subject: |
|
|
Ben Stein thinks you can time the market....  |
|
| Back to top |
|
|
bob90245
Joined: 19 Feb 2007
Posts: 3617
|
| Posted: Tue Sep 04, 2007 8:34 pm Post subject: |
|
|
| larryswedroe wrote: | bob
If you have appreciated stock in taxable account can donate the shares to charity, instead of giving cash (what I do every year for major donations) and avoid the K gains tax altogether. |
This is fine for someone who has more than enough assets to carry them in retirement. Their need to take risk is low.
However, this is not the case for many entering retirement. So another option that Stein and others are suggesting is to convert part of one's retirement portfolio to some income producing product that will guarantee minimum payments. The variable annuity with a guarenteed minimum withdrawal benefit rider is one option. Apparantly, this product will still allow one's heirs to receive the unspent funds.
This is in contrast with an immediate annuity. With this product, one's heirs will get nothing.
If I am mistaken on any of this, please correct me. |
|
| Back to top |
|
|
Taylor Larimore
Moderator
Joined: 27 Feb 2007
Posts: 7851
Location: Miami Florida
|
| Posted: Tue Sep 04, 2007 8:53 pm Post subject: Bob -- Immediate annuities |
|
|
| Quote: | | This is in contrast with an immediate annuity. With this product, one's heirs will get nothing. If I am mistaken on any of this, please correct me. |
Most, immediate annuities have options. These include:
1. Refund option guarantees payments equal to original premium.
2. 10-year option guarantees payments for 10 years if the annuitant dies earlier
3. 20-year option guarantees payments for 20 years if the annuitant dies earlier.
Of course, each of these options reduces the guaranteed monthly lifetime income. But the bottom line is that most annuities CAN provide payments to heirs if the annuitant dies early.
Best wishes.
Taylor |
|
| Back to top |
|
|
grok87
Joined: 27 Feb 2007
Posts: 2814
|
| Posted: Tue Sep 04, 2007 9:10 pm Post subject: Not surprising if you know Stein |
|
|
| larryswedroe wrote: | | WOW, shocker. These I would assume are like EIAs (equity indexed annuities). EIAs are IMO about the single worst product out there--products meant to be sold but NEVER bought. They are really disasters--sold based on psychological framing of protecting against disasters. But don't show you all you give up on the upside, as well as all the other negatives like converting K gains into ordinary income, loss of stepped up basis, inability to harvest losses, inablity to donate shares to charity, loss of FTC> Stein must be smoking some bad stuff () |
Actually not that surprsising if you know Stein...
As noted above by livesoft, Stein is a paid shill for variable annuities. He is the paid spokesperson (actually they call him "Honorary Chairman- sounds better I guess) for the National Retirement Planning Coalition.
The National Retirement Planning Coalition http://retireonyourterms.org/membership.jsp
is funded by The National Assocation for Variable Annuities http://retireonyourterms.com/
If you look closely at the two websites, you will see that they are the same except for the .com vs. .org ending.
I don't think you have to be a conspiracy theorist to figure this one out! Basically, NAVA pays Stein to promote variable annuities. Yet somehow Stein manages to avoid disclosing this...
What's even more interesting is that Stein writes regularly for the NY Times Sunday Business Section and often promotes variable annuities in his columns. Recently, as you may recall, the NY Times did a big expose on what a rip-off variable annuities are (http://www.diehards.org/forum/viewtopic.php?t=3986&highlight=stein
Since then Stein has held off from using his NY Times column to shill for variable annuities, but its just a matter of time till he starts again.
cheers
grok |
|
| Back to top |
|
|
rich
Joined: 16 Mar 2007
Posts: 902
|
| Posted: Tue Sep 04, 2007 9:37 pm Post subject: |
|
|
There is an interesting disclaimer at the bottom of his column on the Yahoo website.
| Quote: | | Ben Stein has no financial interest in the products mentioned in this column. |
How does he get away with that if in fact he does represent an annuity organization?
_________________
Best regards,
Rich |
|
| Back to top |
|
|
grok87
Joined: 27 Feb 2007
Posts: 2814
|
| Posted: Tue Sep 04, 2007 9:48 pm Post subject: Not sure |
|
|
| rich wrote: | There is an interesting disclaimer at the bottom of his column on the Yahoo website.
| Quote: | | Ben Stein has no financial interest in the products mentioned in this column. |
How does he get away with that if in fact he does represent an annuity organization? |
I'm not sure. Here's another interesting link between the two organizations:
http://www.montgomerycountymd.....rental.pdf
cheers
grok |
|
| Back to top |
|
|
bob90245
Joined: 19 Feb 2007
Posts: 3617
|
| Posted: Tue Sep 04, 2007 10:04 pm Post subject: |
|
|
| rich wrote: | There is an interesting disclaimer at the bottom of his column on the Yahoo website.
| Quote: | | Ben Stein has no financial interest in the products mentioned in this column. |
How does he get away with that if in fact he does represent an annuity organization? |
Reminds me of another prominent name promoting annuities: Moshe Milevsky. See POST #2 (from the Investing DURING Retirement forum). |
|
| Back to top |
|
|
grok87
Joined: 27 Feb 2007
Posts: 2814
|
| Posted: Tue Sep 04, 2007 10:09 pm Post subject: Thanks Bob |
|
|
| bob90245 wrote: | | rich wrote: | There is an interesting disclaimer at the bottom of his column on the Yahoo website.
| Quote: | | Ben Stein has no financial interest in the products mentioned in this column. |
How does he get away with that if in fact he does represent an annuity organization? |
Reminds me of another prominent name promoting annuities: Moshe Milevsky. See POST #2 (from the Investing DURING Retirement forum). |
Bob,
thanks for the link- very interesting.
cheers
grok |
|
| Back to top |
|
|
cheapskate
Joined: 26 Apr 2007
Posts: 194
|
| Posted: Tue Sep 04, 2007 10:09 pm Post subject: |
|
|
| BigBird wrote: | | cheapskate wrote: | | IMHO, the only VA that makes sense for investors is the one Vanguard offers, to hold tax inefficient asset classes such as REITs (hopefully they'll offer TIPS within their VA soon). The Vanguard VA is essentially an IRA with no contribution limits with relatively low expenses. The VG VA REIT offering has an ER of 0.60% for example. |
If I'm maxed out on all my regular tax-preferred options, and for example underweight bonds, wouldn't it make sense to contribute to what is 'essentially an IRA', such as VVA-TBM? I've got plenty of other stuff to take losses on, and there's no conversion of K-gains to ordinary income. What am I missing? |
BigBird
Not sure I understand what you ask.
The Vanguard VA is an excellent option for any money that you might want to invest after maxing out your 401K as well as your IRA. For investors with little room in tax deferred accounts, it is the best place to hold REITs. |
|
| Back to top |
|
|
Jack
Joined: 27 Feb 2007
Posts: 1227
|
| Posted: Tue Sep 04, 2007 11:01 pm Post subject: |
|
|
| rich wrote: | There is an interesting disclaimer at the bottom of his column on the Yahoo website.
| Quote: | | Ben Stein has no financial interest in the products mentioned in this column. |
How does he get away with that if in fact he does represent an annuity organization? |
Very simple. If you read carefully he gains nothing from the products mentioned. This is the standard disclosure indicating that he doesn't directly benefit from the products. It says nothing about him being a paid shill for a variable annuity trade organization. Deceptive? Yes, but nothing you wouldn't expect from Ben Stein.
You might also be interested in his latest project, a documentary called "Expelled" that touts creationism and the evils of evolution. He really is a silly little man -- a game show host. It's surprising that anyone pays attention to him at all. |
|
| Back to top |
|
|
lucky7
Joined: 13 Mar 2007
Posts: 359
|
| Posted: Wed Sep 05, 2007 8:08 am Post subject: |
|
|
| Murray Boyd wrote: | | Then the next thing you read from him is pushing annuities, dividend stocks, and oh, why not market timing too! |
Stein has written a book, "Yes, You Can Time the Market !". I believe that is the title.
Bob
_________________
Scotty, beam me up. |
|
| Back to top |
|
|
mur44
Joined: 27 Feb 2007
Posts: 126
|
| Posted: Wed Sep 05, 2007 11:47 am Post subject: Ben Stein is NO Jack Bogle |
|
|
Ben Stein writings are driven by non-Diehardish
factors. Unfortunately, his articles often appear in the
media.
I have been trying to not read his stuff, fwiw. |
|
| Back to top |
|
|
Taylor Larimore
Moderator
Joined: 27 Feb 2007
Posts: 7851
Location: Miami Florida
|
| Posted: Wed Sep 05, 2007 2:03 pm Post subject: Ira's and Variable Annuities |
|
|
| Quote: | | wouldn't it make sense to contribute to what is 'essentially an IRA', such as VVA-TBM? |
"VVA-TBM" Translation: "Vanguard Variable Annuity-Total Bond Market"
A Variable Annuity is not comparable to an IRA because a variable annuity is not tax deductable like an IRA (unless inside an IRA).
In the case of a Roth IRA which allows tax-free withdrawals, variable annuity withdrawals are nearly always taxable.
The primary advantage of a variable annuity (outside an IRA) is that the variable annuity is tax-deferred like an IRA.
Best wishes.
Taylor |
|
| Back to top |
|
|
BigBird
Joined: 27 Feb 2007
Posts: 287
Location: A Big Nest
|
| Posted: Wed Sep 05, 2007 2:11 pm Post subject: |
|
|
| cheapskate wrote: | | BigBird wrote: |
What am I missing? |
BigBird
Not sure I understand what you ask.
The Vanguard VA is an excellent option for any money that you might want to invest after maxing out your 401K as well as your IRA. For investors with little room in tax deferred accounts, it is the best place to hold REITs. |
'Skate,
Thanks, I wasn't arguing your point, just highlighting it. I thought I had scoped out all the tax-free compounding options (401k,IRA,I Bond, HSA, etc) and now I find out that VAs grow tax free. Even prior to annuitization? Are there constraints to how and when one could open an annuity, and when to annuitize? This is important for those in high tax brackets with no significant deductible expenses, years to compound in tax-inefficient assets, and an inclination to save.
It would seem that once we get past the pitfalls and acknowledge the costs, rules, and limitations of annuities, they should be taken as seriously as the other common vehicles in constructing an Asset-Vehicle Allocation. Much as having a portion of tax-free Roth assets hedges against higher future taxes, allocating a portion to annuities hedges against long life. Sounds like a great idea to me, assuming that low-cost options are available.
Given the confusing nature of the topic, I should think it would be discussed in greater detail around here. After all, Diehards are the self appointed masters of efficient risk moderation.
One thing that draws my attention is the nature of the insurance risk, which begins to look just like another financial ponzi structure.
From http://www.brkdirect.com/SPIA/WHY.HTM we see your payments will continue for the rest of your life, guaranteed, even if you live well beyond your normal life expectancy.
But from https://flagship.vanguard.com/..../annuities we see Annuity guarantees are based on the claims-paying ability of the underlying insurance companies that issue the annuity.
With the bulk of my retirement assets in TIAA VA funds, this has been an issue in the back of my mind. Payments from here to the end of my personal eternity sounds like a suspect free lunch under some circumstances. Even if they are under-written by our Uncle Sam, who seems to under-write everything else.
_________________
BB |
|
| Back to top |
|
|
BigBird
Joined: 27 Feb 2007
Posts: 287
Location: A Big Nest
|
| Posted: Wed Sep 05, 2007 2:18 pm Post subject: Re: Ira's and Variable Annuities |
|
|
| Taylor Larimore wrote: |
The primary advantage of a variable annuity (outside an IRA) is that the variable annuity is tax-deferred like an IRA.
|
And that can be very valuable for those in a high tax bracket, and/or with a long time to compound.
_________________
BB |
|
| Back to top |
|
|
JLP
Joined: 09 Mar 2007
Posts: 25
|
|
| Back to top |
|
|
grok87
Joined: 27 Feb 2007
Posts: 2814
|
| Posted: Wed Sep 05, 2007 8:07 pm Post subject: Interesting Youtube |
|
|
Thanks JLP for the Youtube links- Basically shamelessly shilling for variable annuities.
Noticably absent was any mention of immediate fixed annuities. And of course Ben advocates you buy these variable annuities from a financial advisor, not directly from TIAA-CREF, Vanguard, or Fidelity- the only decent providers. Buying a variable annuity from a financial advisor is a quick trip to the slaughterhouse, as the recent NY Times expose showed.
I'm still waiting for Ben to resume pitching variable annuities in his NY Times column- bet he won't give any disclosure of his ties to the National Association for Variable Annuities (NAVA). At that point, I would suggest we all write in to the NY Times public editor to complain...
cheers
grok |
|
| Back to top |
|
|
JLP
Joined: 09 Mar 2007
Posts: 25
|
| Posted: Wed Sep 05, 2007 11:41 pm Post subject: Re: Interesting Youtube |
|
|
| grok87 wrote: | | I'm still waiting for Ben to resume pitching variable annuities in his NY Times column- bet he won't give any disclosure of his ties to the National Association for Variable Annuities (NAVA). |
Here's something kind of funny.
Go to navanet.org and notice that they no longer call themselves the National Association of Variable Annuities. Rather, they call themselves The Association for Insured Retirement Solutions.
LOL!
Put some more lipstick on that there pig!
_________________
JLP
AllFinancialMatters.com - a personal finance blog |
|
| Back to top |
|
|
|
Wiki
FAQ
Search
Memberlist
Usergroups
Register
Profile
Log in to check your private messages
Log in
