7/7 Mother, age 70, is thinking about putting money into fixed
annuity. I have absolutely 0 experience with annuity, and
I'm guessing they should be better than CDs since compounded
interest is tax deferred. Does anyone have old family members
who have annuities? Are they good? Are there other products
similar to annuities in terms of safety and slightly higher-than-CD
interest rates?
\- general/theoretical problem with annuities is it is a textbook
case of asymmetric information/adverse selection. [FYI: The classic
paper on adverse selection was by UCB Dept Econ professor GAKERLOF.
In a bit of a coincidence, he co-won with JSTIGLITZ, the economist
two threads up].
\_ useless advice. why even bother to write it?
\_ It's not advice. It is an observation and some trivia.
I'm not going to give somebody I dont know financial advice
via the motd. BTW, if you know what "adverse selection" is,
it is pretty obvious there will be some suboptimal pricing.
(i.e. if somebody is selling you health/annuity-type
income insurance with limited medical info).
\_ Have you not seen psb's posts before?
\_ I'm not the op, but psb's posts are usually in the
following format:
"There is an academic topic related to this"
"It is interesting, I've read a little bit of it"
<Stick some material and KEYWORDS in the thread>
"I am cool and smart and if you are like me, you'd
read it too."
(optional) ok thx
\- "Results 1 - 10 of about 97,600 for (annuity
"adverse selection"). BTW, yesterday [?] the FRESH AIR
program had a short discussion about annuities and
adverse selection (without using the term "adverse
selection" i believe), and sort of spells out why
individually negotiated annuities may be "a priori"
suspect due to overpricing. |