what is an annuity

[heavy_chevy29]

can someone here please explain to me what an annuity is. im 22years old so that might explain why i dont know what exactly it is. the reason i ask is that i got a union job about 5-6 months again, and i always hear everyone talking about it. i dont want to ask them because i dont want to look like a dumb ass. i think i may have a very basic idea of what it is. i was just hoping that someone hear could could tell me what exactly it is and how it works. thanks for any help.

[iamsickofitall]

i don't know how it applies in your situation but it's basically a reverse loan. someone owes you money (such as the lottery) and you get paid a certain amount every month (that's usually how they are set up) until there is nothing left they owe you.

my only guess in your instance would be some type of retirement package

[BonzoHansen]

Right. An annutiy is a series of structured payments. What is this in reference to? What is the context?

[heavy_chevy29]

im sorry. i forgot to say that this is for a retirement package. i always hear everyone at work talking about their pension and annuity. i know what a pension is, i just wanted to clearify how an annuity works. thanks for the quick replies

[jims69camaro]

a specified income payable at stated intervals for a fixed or a contingent period, often for the recipient's life.

i will have an annuity once the court case settles. it will be a set amount up front and then bi-weekly payments until the money is all paid. in simple terms, they owe me $500. they pay me $250 up front, then $50 every two weeks until they are all paid up, in this case 5 weeks. that's an annuity or structured annuity, or however they want to put it.

if it's in terms of a retirement account, you are paying into it as you work. hopefully, the company is also paying into it and it is an interest bearing account, too. when you retire, you use that account as your income, so the more you have in there, the larger the payments you can take from it and the longer it will last you.

typically when people retire at 65, they are only expected to live until 80 or so, so the payments made to them from their annuity should provide them with a decent income and last until they die. any amount left over typically is paid all at one time to the heir.

you've probably heard the money-grubbers out there saying that they will buy your annuity and pay you a lump sum up front. it's not a scam, but very unscrupulous, if you ask me. they pay you a much smaller amount than you would collect if you left the accoount alone and let it pay you weekly or monthly. i hope you were able to follow all of that.

[heavy_chevy29]

jims69camaro: thank you very much. that helped me out alot. i know that i pay into it and the company that i work for pays into it aswell. can you use the money without a penalty to put a down payment on a house. or is it strictly for retirement.

[Savage_Messiah]

Originally Posted by heavy_chevy29

jims69camaro: thank you very much. that helped me out alot. i know that i pay into it and the company that i work for pays into it aswell. can you use the money without a penalty to put a down payment on a house. or is it strictly for retirement.

Assuming the money is in a retirement fund, you can't touch it before age 65 1/2 without paying a penalty

[BonzoHansen]

(DB or Defined Benefit plans) Pensions have very strict rules.

Annuity or lump sum payout is usually a decision to be amde at time of retirement. Often you have a few payout options presetned to you and you have to make a decision. It is best to consult with someone you trust at that time. I have never seen any qualified pension that you need to make that decision pre-retirement.

Regarding taking cash out of it, discuss it with your plan administrator, they will know what your plan allows.

[EchoMirage]

every union is different. in mine, its forced banking. its not just for retirement. you can take it out earlier. you can also invest it differently, either through our company or through one of your own. you can also take money out for certain things, such as for a house, car, college, etc. you dont have to pay it back.

dont be embarassed to ask questions about it. just say youre interested in it and what your options are, such as investing, withdrawing, etc. what union did you get into?

[heavy_chevy29]

thanks alot guys. you ve been really helpfull. the union i got in is local 15, operating engineers out of manhattan(sp)

[jims69camaro]

well, you're pretty much set for life. my dad was 825, operating engineers here in jersey. most of the time he only worked 6 months out of the year and still brought down some serious cheddar.

[Rutgers00]

Hey I am currently working for MetLife as a planner and there are many different types of annuities. Yours sounds like a deffered annuity or more of a pension type program which is great many companies around do not really offer them anymore. One thing I can do if you are interested is if you have a copy of your company benefits we can do a report on it that helps break it down in a more simplified program. Just let me know if you would like me to do that for you.


Rutgers00

P.S The money is avaible to take of for retirenment at the age of 59 1/2 without penalty. But can be moved into other qualified vechiles before that time.

[EchoMirage]

Originally Posted by heavy_chevy29

thanks alot guys. you ve been really helpfull. the union i got in is local 15, operating engineers out of manhattan(sp)

ive worked with some guys out of 15. do they have an apprenticeship or some kind of schooling?

[nj85z28]

our annuity is set up so you can break it early only to buy a house or in a financial hardship, but with the penalties i think you actually only walk away with about 1/2 of what you had to start with

[heavy_chevy29]

local 15 is a big construction union in the city. i know nothing about construction. i work as a diesel mechanic on busses for Atlantic Detroit Diesel Allison in lodi. i dont know if there is any sort of apprenticeship. i would think that they do. as like any other union, its pretty hard to walk in off the street and get the job. i lucked out, one of my friends works there and he got me the application. the money is pretty good. its almost double what i was making.

[EchoMirage]

hmm.......do you hit satin dolls for lunch often?