TAKING STOCK: Annuity rates

Dear Mr. Berko: I recently celebrated my 80th birthday. I'm fairly healthy, and I have a good monthly income from Social Security and two pensions, plus more than $286,000 in the bank earning almost nothing. I figure that at my age, it's time to stop being so frugal and spend this money on myself because I have no family or friends I care to leave it to. I'm not complaining, because I've had a great 58 years serving as a Navy man and a cop. So I answered an AARP annuity mailing advertisement last week. It offered me a 7.45 percent return on $200,000, which would be $14,900 a year, and most of it wouldn't be taxable. With this extra money, I plan to spoil myself and maybe even spend a winter in Florida. The 7.45 percent sounds really good to me, but my instincts are to check with you just in case there is something you know of that might pay me more. If there is and if it's as safe as the AARP annuity, please inform me. I don't need all that cash, but I'll keep $86,000 in the bank just in case I happen to meet a youthful 70-year-old girl. I never have been in the market but have been reading your column for more than 22 years in our paper. So thank you for your help, and maybe I can visit you if I come to Florida to escape the cold winters here. HS, Syracuse, N.Y. Dear HS: Congratulations! You've been blessed with some very special genes. Most guys who've been vertical for 80 years don't even dream of robbing the cradle. And if you do visit Florida, I'm certain you will meet lots of youthful 70-year-old "girls" (especially in South Florida) who might enjoy your company. Now, seeing as you don't give a hoot where your dough goes when you get the boot, you could get a much higher return with a non-refund single premium immediate annuity. Read on. Most folks have no idea that the AARP is a private, cryptically covert, hugely prosperous, politically aggressive, nonprofit, selling organization with a bountiful and envious positive cash flow. It retails cruises, tours, hotels, entertainment packages, health products, airline travel, auto rentals, health insurance, auto insurance, annuities, mutual funds, life insurance, cellphones and cell service, legal services, publications, sound systems, PCs, and more through approved vendors and is righteously paid a piece of the action. In return for that piece of the action, the AARP folks make sure the vendors they support will do precisely what they promise to do. AARP's annual membership card costs $16, and this good organization has more than 40 million members who benefit from its vendor recommendations and smorgasbord of approved products. But sometimes the AARP people goof, and they don't always provide appropriate advice for their members. In your case, the AARP-recommended adviser could have improved your annual income by a much bigger number. In other words, that 7.45 percent fixed annuity payout - $14,900 of annual income - could be improved to $20,000 year. I suggest that you contact Pomona College, a private liberal arts college, founded in 1887, that enjoys a sterling international reputation. Like many colleges, Pomona offers charitable gift annuities (a non-refund annuity) that will pay you a lifetime stream of monthly income. I will not bore you with the details. It suffices to say that Pomona's AAA-rated fixed annuity will give you, at age 80, an annual income stream of 10 percent. And that's $20,000 a year, which is a little better than the $14,900 offered by the 7.45 percent AARP annuity! Google Pomona College, and compare. Or return to AARP and ask about a non-refund annuity. And I wish you enormous success in finding a young 70-year-old lady. Find her and stay well. ---------- Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775 or e-mail him at mjberko@yahoo.com. Visit Creators Syndicate website at www.creators.com. © 2012 Creators Syndicate Inc. Published: Fri, Nov 16, 2012