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Howard Ain, Troubleshooter: Confusion Over Investment
CINCINNATI (Howard Ain) -- Many baby boomers are looking for a steady source of income during their retirement years.
Some turn to annuities, but you have to check everything carefully before you sign up. Annuities can provide a steady stream of payments. But there are a wide variety of things you need to consider.
That's what Ron Reeves of Ross says hes learned.
"According to the contract, I invested 65 thousand dollars and its 7 percent interest and they gave me a bonus of 5,200 dollars to invest."
Reeves was given a calculator which said his annual income from the annuity would be over 4,500 dollars a year.
"And I said OK that sounds good, like 7 percent would give me a nice interest income for retirement."
So Reeves says he was shocked when his first dividend was more than a thousand dollars less. The problem? His wife, Geraldine, was added as a joint owner.
"It calculated the dividends on my wife's younger age, 8 years younger."
Reeves complained the income calculator said he'd get that higher income so he didn't understand. Another thing that led to the confusion Reeves said, is this contract specification. Yes, it does talk about his wife being a joint owner but the only age listed is his age, 73.
Reeves now offers this advice, "If they run into a situation like this have a trusted friend or a lawyer or another adviser to check it over before they sign to make sure it looks okay."
Reeves complained to his insurance agent but the problem wasn't fixed, "There's a clause in here that says if both parties agree a contract can be changed but you know they're not going to change unless I get somebody like yourself."
So I, Howard Ain, contacted the insurance agent, who notified the company and I'm happy to report his annuity has now been changed to a single contract so now hell get the higher dividend.
Before you decide on any annuity, you should consider your income needs and risk tolerance because like many investments, it can lose value. Annuities are not government insured, so make sure you're dealing with a reputable firm.
And by all means, have your financial adviser review everything before you sign up.