Don’t believe what you’ve heard!

All you’ve heard about annuities are talking heads tell you about how bad they are, but that’s NOT the truth! Annuities provide a contractual obligation by an insurance company to do what they say they’re going to do. What that is depends on the type of annuity you’re buying.

SO LET’S DIG IN…

Types of Annuities

SPIA

SPIA or Single Premium Immediate Annuity provides payments immediately and provide lifetime income. These have been around for a very long time and provide a good option for someone needing income now.

MYGA

MYGA or Multi Year Guaranteed Annuity are also known as Fixed or Fixed-Rate annuities provide a fixed rate for a fixed number or years and have a similar function to a CD or Certificate of Deposit. This can be a great solution and alternative to CDs if you’d like to lock in a rate of return.

FIA

FIA or Fixed Indexed Annuity offer potential return on your money tied to an index, like the S&P 500 while also providing a contractual obligation to provide 100% protection of your principal amount. Gains can also be permanently locked in as the index performs.

Income Rider

An Income Rider can be attached to an indexed annuity to provide a lifetime income stream. It can also have income enhancements in the event of health issues. This is a great way to add protection instead of spending money on long term care insurance, which can be very costly.

MYTHS

Don’t believe everything you hear!

  • Reality: Comparing annuities directly to investments like stocks or mutual funds is not apples to apples. Annuities offer a guarantee of income and protection against the risk of outliving your assets, which traditional investments do not. The value of an annuity lies in its security and income stability, not just potential returns.

  • Reality: Annuities are not primarily investments but insurance products designed to provide a steady income stream in retirement. They offer a way to hedge against the risk of outliving your savings by providing guaranteed income for life or for a specified period.

  • Reality: While some annuities come with high fees and expenses, not all do. There are low-cost options available with fees varying, depending on the type of annuity, the rider options you choose, and the provider.

  • Reality: This depends on the type of annuity and the options you select. Many annuities offer death benefits or refund options that ensure that if you pass away before receiving payments equal to your premium, your beneficiaries will receive the remaining value.

  • Reality: While insurance companies do benefit from selling annuities, these products also provide significant benefits to the annuitant, such as risk transfer and income guarantees. Choosing the right annuity can be mutually beneficial.

  • Reality: Some annuities, like immediate annuities, do lock up your funds in exchange for a guaranteed income. However, there are also flexible annuities, such as variable and fixed-indexed annuities, that offer options for partial withdrawals and liquidity features.

  • Reality: While some annuities do not include inflation protection as a standard feature, many offer riders that can adjust your annual income payments for inflation. These inflation-adjusted annuities can help preserve your purchasing power over time.

  • Reality: Annuities can be complex, but they're not inherently incomprehensible. With research and guidance from a financial advisor, you can understand the basics of how annuities work and determine if they fit into your retirement planning.

  • Reality: Annuities can be beneficial for individuals at various wealth levels. They're particularly valuable for middle-income retirees who are looking for a way to secure a steady income stream and protect against the risk of outliving their assets.

  • Reality: Comparing annuities directly to investments like stocks or mutual funds is not apples to apples. Annuities offer a guarantee of income and protection against the risk of outliving your assets, which traditional investments do not. The value of an annuity lies in its security and income stability, not just potential returns.

  • Reality: While annuities are often used as part of a retirement income strategy, they can also be beneficial for younger individuals in certain situations. For example, someone with a lump sum of money who wants to ensure they have a steady income stream in the future might consider an annuity. Deferred annuities allow your investment to grow tax-deferred until you start receiving payments.

  • Reality: While annuities are designed to be long-term commitments, there are often provisions for early withdrawal or surrender, though these may come with penalties or fees. Some annuities also offer free withdrawal options up to a certain percentage of the account value each year.

By now you probably understand that what you may have been told was most likely disingenuous and more than likely from someone only interested in collecting recurring fees from you. That’s not what we do! Our job is to make sure you have a retirement income plan that allows you comfort and peace of mind. That plan doesn’t always include annuities… it’s tailored to meet YOUR needs, not everyone’s needs!

You may also have an existing annuity and want to find out if there’s a better option. We can help!