FINRA Investor News
May 14, 2009 |
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Investor Alerts: What You Should Know About Variable and Index-Equity Annuities
Market events over the last 9 months may have caused many investors to re-examine how their retirement funds are invested. Recent press articles and questions we have received from investors suggest that there is renewed interest in annuities as an investment vehicle. Annuities are complex financial products and it is important to understand the difference between the various types of annuities that exist and whether they are an appropriate option for you. To help you better understand how they work, we are highlighting several of the investor alerts we’ve written on annuities.
Variable Annuities: Beyond the Hard Sell
While variable annuities can be appropriate as an investment under the right circumstances, you need to be aware of their restrictive features, understand that substantial taxes and charges may apply if you withdraw your money early, and guard against fear-inducing sales tactics. Read the alert to learn more.
Should You Exchange Your Variable Annuity?
If you have a life insurance or annuity contract, you may be considering whether this is the time to exchange it for a new one with the latest features. You need to know that even though tax law makes the exchange income tax free and the new contract may sound better for you, you may be losing–not gaining–if you make the exchange. Read the alert to understand why this could be the case.
Equity-Indexed Annuities—A Complex Choice
Equity-indexed annuities (EIAs) are complex financial instruments that have characteristics of both fixed and variable annuities. Although one insurance company at one time included the word "simple" in the name of its product, EIAs are anything but easy to understand. One of the most confusing features of an EIA is the method used to calculate the gain in the index to which the annuity is linked. Read the alert for details on these indexing methods and other features of this investment.
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Protecting Investors: FINRA Takes Enforcement Action
In April, FINRA announced that it had fined Fifth Third Securities $1.75 million for 250 unsuitable variable annuities transactions. The firm was also ordered to pay restitution and offer rescission to affected customers. Read the press release for details.
Investor Tools: Use them to Plan Smart for Your Retirement
The Ballpark E$timate
The Ballpark E$timate is an easy-to-use worksheet that helps you to estimate quickly how much you need to save to fund a comfortable retirement. The Ballpark E$timate factors in projected Social Security benefits and earnings assumptions on savings and gives you a result that is easy to understand.
The Retirement Estimator
The Retirement Estimator produces estimates of the Social Security retirement benefits you will receive based on your actual Social Security earnings record to date. The estimate will change as your earnings record is updated to reflect your work life. Also keep in mind that the Social Security benefits you actually receive will be adjusted for inflation. Although the estimates you get today will vary somewhat from the actual benefit you may receive, you should factor the estimates into your current retirement planning.
Use the estimator to calculate your potential benefit. |
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Past Issues of Investor News Available
In response to numerous requests, previous issues of Investor News are now available on our Web site. |
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