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Kiplinger: What Retirees Need to Know About 3 High-Cost Financial Products


Low interest rates reduce your income. Insurers invest proceeds from annuity investors in the bond market. If interest rates -- and insurance company earnings -- are low when you buy an annuity (as they are now), the size of your promised payouts is stunted. That doesn't mean you should put off buying an annuity, because interest rates could remain low for a long time, says Roger Ferguson, chief executive officer of TIAA-CREF. A better strategy, says Ferguson, is to invest your money gradually. Laddering your annuity purchases will allow you to lock in higher payments if rates rise. Plus, as you get older, the amount of your payout will increase to reflect your shorter life expectancy.

Once you've decided how much you want to invest, you can go to a Web site such as and compare insurers' payouts.


More From Kiplinger:
QUIZ: Are Annuities Right for You?
10 Least Tax-Friendly States for Retirees
10 Things You Must Know About Social Security

The opinions expressed are solely those of the author and do not necessarily reflect the views of Comcast.

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