Ask Mr. Annuity: Secondary Market Annuities Are a Hedge against Financial Fluctuations

The Federal Reserve will reconvene this September to discuss raising the discount rate. If the rate goes up, the stock market will likely slip. How can investors protect themselves? In this Ask Mr. Annuity program, Steve Lance and Jeff Dorfman discuss secondary market annuities.

Steve points out that a lot of seniors have their money sitting in CDs and money markets that pay almost no interest. They are having to tap their capital to live on. Higher interest rates could affect bonds, commodities, and equities. A secondary market annuity is a good and safe way to get a reasonable return on investment.

A secondary market annuity is one that is already in existence and is being resold. It will be retitled into an investor’s name. Many of these are bought by hedge funds or pension plans. These entities are looking for guaranteed payouts and higher yields than are currently available in the market. These same investments are available to ordinary investors.

For example, a 65-year-old investor with $120,000 in a CD, earning essentially nothing, could get a secondary market annuity with the Athene Life Insurance Company of New York that would provide a monthly payment of $1,000 for ten years. That’s a rate of four percent compound interest, a considerably better rate than is available in a CD or a money market account. It’s an easy way to get interest today.

Steve and Jeff point out that information about these annuities on the Ask Mr. Annuity website. Athene is a solid company, a huge company that is A-rated. Comparison shoppers looking for the best return for their money will find that the secondary market annuity is a much better investment than a CD or money market. These annuities are guaranteed.

There are all kinds of annuities with different payout provisions. Some of them pay out lump sums from time to time and pay out more money closer to the end of the annuity term. Steve explains an annuity that pays a much higher interest rate but does not provide a monthly income stream. Such an annuity could be a great legacy for family members. Steve and Jeff can be reached at (602) 795-6425.For more information, go to

Steve Lance has been a teacher, a financial analyst for GE Capital, and is the author of "Annuities: The 21st Century Pension Plan." Steve Lance along with his co-host Jeff Dorfman ask and answer questions each week that are the concerns of today’s savers retirees on  Ask Mr Annuity. The Financial Network is a featured network of Sequence Media Group.