Considering annuities? Read fine print

VAN NUYS, Calif. Milton Cohen of Van Nuys is thoroughly enjoying retirement with his friend Regina Bell. But a short time ago he was worried about his savings. He had $30,000 of his money in a CD that matured, and his bank suggested he put it into an annuity to get an even higher interest rate for life, guaranteed. What had happened was Milton was hit with something called a "withdrawal charge" or "surrender charge" for pulling his money out before 10 years had passed, a provision in the annuity he didn't know about.

Brian Gilder, a certified financial planner and chartered life underwriter, is now advising Milton, and he says what happened to Milton can happen to anyone and especially seniors.

"Most people don't understand what annuities are," said Gilder.

That's because first of all there are many different types of annuities to buy.

And remember, your money must remain in the annuity for anywhere from five to 10 years to avoid any charges.

Milton is OK with it now, but he learned a valuable lesson.

"Read the small print," said Milton.

Another fact you should know about annuities: they are not FDIC insured, even if you buy one from a bank that is FDIC insured. Depending on the annuity, there may be no guarantee you will get all of your money back.


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