Retirement Income Journal
The information forum of the decumulation industry.

“HIGH YIELD,” said the headline on the tiny 2” x 4” display ad in The New York Times. It was followed below by these words: “Pre Owned Annuities, Lottery Payments and Structured Settlements. Earn 7% to 9% in a 3% to 5% world.”  

Through a handful of ads like that and by word-of-mouth, retail investors are discovering that they can now buy the rights to “secondary market annuities” paid by A-rated insurance companies and get better—often much better—returns than conventional fixed income investments.

But, as RIJ learned in conversations with representatives at firms that either originate (“factor”) these products or market them or both, secondary market annuities aren’t for the unsophisticated, the unwary, the impatient or the meek.     

At their simplest, “they’re like real estate transactions,” one specialist said. He didn’t want his name used because he doesn’t want to stir up undue interest in what is only a $600 to $700 million-a-year business—interest that would only drive up prices. “They’re not too good to be true, but they’re too good to last,” he said.