Fidelity is doing research of a variety of new income oriented annuity type investments with the baby boomer in mind. I am in their focus group on this or whatever they call it now as it is on the internet and not in a group discussion.
Many of the products I was asked to consider were variations on an investment annuity, but much different from the one I have with fidelity now.
I tried to copy some of the questionnaire but didn't do very well. Here is a clip from just one part of 5 scenarios presented:
"Another element that is being considered for this new product feature is a "step-up" option - which would be available every 3 years (for an additional expense of .15% to .25%). If your account value is higher at the end of this 3 year period, this feature would enable you to "lock in" this higher value.
For example - Your original balance was $100,000 and your original guaranteed payment is $5,000 a year for life. Three years later, due to favorable market conditions, the account has a value of $150,000. You could exercise the step-up option for an additional fee so your future payments would be $7,500 per year, for life."
Many of the options had similar scenarios to the above. The windup of the income annuities had several options including an extra percentage to be able to leave the balance to heirs. In most annuities, I think once you annuitize your income stream, if you were to die the next year, the investment company would take all.
MP |
