Converting part of your retirement nest egg into an annuity may be a better deal than is commonly believed, says a new study by professors from the University of Virginia and Boston College. An annuity guarantees payments for the rest of your life. So the longer you live, the better for you -- and the worse for the issuer, which is usually a life-insurance company.
Economists Leora Friedberg of UVA and Anthony Webb of Boston College's Center for Retirement Research say insurers that use a common longevity forecasting tool called Projection Scale AA are probably underestimating increases in longevity and thus could be paying annuity owners some 10% more per month than is truly warranted. Of course the overpayment could be less than that if insurers using Projection Scale AA are building a little more profit margin into their pricing.
Still, Webb says the research is more evidence that annuities make sense for couples afraid of outliving their assets. For a 65-year-old couple today, there's a one-in-five chance that at least one of them will live to 95.
Yet another case of "when rates of return look too good to be true, they probably are." EverBank.com, an online bank that offers foreign-currency accounts to individual investors, launched three-month certificates of deposit denominated in Icelandic krona in late November. Why Iceland? High interest rates there allow the CD an 8.24% annual yield, nearly double that of dollar CDs. EverBank World Markets President Chuck Butler says the CDs attracted "tens of millions," the company's most successful launch.
Those CD owners may be surprised. In late February, the krona plunged 6% over concerns about the nation's credit rating. That fall will put many CDs under water, depending on the exchange rate when the CD was issued. Butler says he isn't surprised by the market volatility since Iceland is a small country with a thinly traded currency. "We picked three-month maturities because we wanted people to have a chance to look and see what's going on," Butler says. It's not a pretty sight.
Safety glasses are getting stylish to serve the growing ranks of female do-it-yourselfers. AOSafety, the largest maker of protective eyewear, now has a line sized and styled for women. Clear versions for use indoors, with a wraparound polycarbonate lens and red, blue, or purple temples, are $10. The $15 outdoor models have tinted, mirrored lenses. Called AOSafety Select, they're online at aosafetyselect.com and at Ace Hardware, Home Depot (HD), and Orchard Supply stores.
The studio where regionalist artist Grant Wood painted the iconic American Gothic will be the focus of a Smithsonian American Art Museum exhibit from Mar. 10 through July 16 in Washington (americanart.si.edu/renwick/index.cfm). The show features 160 pieces, including decorative artwork, photos of Wood's studio, and props he used for his paintings. American Gothic is not in this show. It hangs at the Art Institute of Chicago.