ATLANTA — Rosalind Davidson worked hard for her retirement. As a young widow, she raised two children by herself while working her way up in the New York fashion industry.
Now, she's 97, in a wheelchair, and needs money to pay for assisted living. But AIG, a financial company, told her she could only get her $80,000 in quarterly payments, which amounts to $788 per month.
"I'm horrible with figures. I don't understand money, I know how to spend it, but I can't understand it," Rosalind told Channel 2’s Dave Huddleston.
What made matters worse, Davidson lost her original contract with AIG, leaving her children to try to piece together what happened.
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But they only got so far, and AIG told them it couldn't give her all her money back. That's when the family turned to Channel 2 Action News and The Atlanta Journal-Constitution for help.
Huddleston and the AJC went back to the beginning.
On a brisk November day in 1998, Rosalind walked into what was then the First Union Bank in Atlanta.
An employee, who called herself a "personal investment counselor," convinced Rosalind to put her money into an annuity.
"They were telling me how wonderful it was," she said. "My thought was, 'You know more about it than I do. Let's go with it.’”
Annuities guarantee a fixed stream of income, but Channel 2 Consumer Advisor Clark Howard says, there's another reason people sell these products.
"The whole purpose of a bank selling one of these annuities is they have massive, gigantic, huge commissions," Clark said.
Fixed annuity salespeople have no legal requirement to put their buyers' best interest ahead of their own financial gain.
There are different types of annuities, but the one Rosalind bought didn't provide payouts right away.
She let the money sit, earning interest, for 20 years. She didn't think about it until she moved into an assisted living home and needed more money.
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While Rosalind may have thought of it as similar to a savings account, annuities are very different. Each one has what's called a "maturity date." When Rosalind's annuity reached maturity, she needed to decide what to do with the money. AIG sent her two letters to warn her, but there was a problem.
"She is legally blind, so she cannot read a document. She has to trust whoever is dealing with her," her son Jerry said.
Rosalind did speak with AIG by phone. She told them she needed to talk to her children about it. She never did, and missed the deadline to tell the company whether or not she wanted all her money back.
AIG says the original contract she signed back in the '90s stated that if she didn't make a decision at the end of the contract, her money would roll into a new annuity. The new one would give her a guaranteed income stream over 10 years. Rosalind needs more of her money now.
"I'm going to be 98 on my next birthday," Rosalind said.
A 10-year annuity for someone in their 90s doesn't make sense, Clark says.
"There is not a circumstance I can ever imagine, that someone past, pretty much age 80, should ever be put into an annuity,” he said.
AIG representatives say they ban sales of annuities to people over 90, but that didn't apply to Rosalind, because she signed her original contract when she was 78.
When Channel 2 and the AJC contacted AIG about Rosalind's problem, they gave her all her money back. The company sent us a statement that said "Our priority is always to help our customers ensure they plan well for retirement and can enjoy financial security no matter how long they live. We're glad to have worked with Mrs. Davidson and her family to resolve their concerns."
Clark says there's a lesson for all of us. Families with elderly parents need to talk about finances.
Rosalind's children now have power of attorney, which allows them to act on her behalf.
"This stuff needs to happen early, rather than later," Clark said. "Unfortunately, most kids and most parents, aren't comfortable with the rolls reversing."
Rosalind is happy to get her money back, and doesn't blame anyone but herself.
"I was stupid. I handled it myself, but I've always handled things by myself," she said. "But this time, I should have gone straight to the kids when this came up."
Cox Media Group
