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LEARN MORE ABOUT: Retirement Annuities
REVEALED: How To Invest During Inflation
HOW TO INVEST IN GOLD: Gold IRA Investing
HOW TO INVEST IN SILVER: Silver IRA Investing
Annuities are often touted as a safe and reliable investment option for those looking to secure their financial future. With promises of guaranteed income and peace of mind in retirement, many individuals are drawn to the appeal of annuities. However, the harsh truth about annuities is often overlooked and can leave investors feeling misled and disappointed.
One of the main drawbacks of annuities is their high fees and expenses. These can eat into the returns and reduce the overall value of the investment. With fees for administration, mortality, and investment management, annuities can be much costlier than other investment options. Additionally, surrender charges may apply if the investor needs to withdraw funds before a certain time period, making annuities a less flexible and accessible choice.
Another harsh truth about annuities is their complex and confusing nature. The different types of annuities, such as fixed, variable, and indexed annuities, can be difficult for investors to understand. The fine print and intricacies of annuity contracts can be overwhelming and may lead to misunderstandings and dissatisfaction with the investment.
Furthermore, annuities may not provide the returns that investors are hoping for. With low-interest rates and potential inflation, the guaranteed income from annuities may not keep up with the rising cost of living. In some cases, annuities may underperform compared to other investment options, leaving investors feeling disappointed and uncertain about their financial future.
It is important for investors to also be aware of the tax implications of annuities. The tax-deferred growth of annuity investments can sound appealing, but when the funds are eventually withdrawn, they are taxed as ordinary income. This can result in a higher tax bill for investors, especially if they are already in a high tax bracket during retirement.
Lastly, the lack of liquidity with annuities can be a major drawback. Once the funds are invested in an annuity, it can be difficult to access the money if the investor needs it for unexpected expenses or emergencies. This lack of liquidity can leave investors feeling trapped and limit their financial flexibility.
In conclusion, while annuities may offer the promise of guaranteed income and security in retirement, the harsh truth about them is often overlooked. High fees, complex nature, potential underperformance, tax implications, and lack of liquidity are important factors for investors to consider before investing in annuities. It’s essential for individuals to carefully weigh the pros and cons and consult with a financial advisor to make an informed decision about whether annuities are the right choice for their financial goals and needs.
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If you live your life understanding that generally insurance products are ripoffs, you save yourself a lot of money! Excellent video!
My funny story with Annuities was that I thought I had invented it lol. I was checking out investment for my retirement and I was like "This makes no sense!"
– Everybody grows old, so a individual strategy to a systemic collective problem make no sense.
– We don't know when we are going to die, but we all must plan as if we were gonna make it to a hundred (Very inefficient). Especially absurd when you consider you might not even make it to retirement.
– The fact that we basically have to leave it to chance that our investment strategy will work out.
– Everybody grow old, but very few people have a good understanding of investments.
And I was like "That's insurance!", it ticks all the boxes. We might not know when a specific individual will get into a car crash, be we have a fair idea for group. When dealing with a large group you can efficiently calculate how much should be set aside. No need to manage retirement accounts, deciding between index funds, etf or targeted retirement fund.
The reason I assumed annuities didn't exist was because in my naïve mind, if they did, it would be a no brainer and everyone would be on it. All you would need to ask was how old is the recipient, when did you plan to retire and what would be your target income.
On my 3rd time listening is soaking in.
Yall need a financial 101 class.
Good analysis on the IAs, spot on. The VAs can be great, even inside an IRA, if you get one with a premium based M&E. Much lower lifetime fees compared to AUM fees. Really depends on the product/company. Fixed income annuities are great because they cover retirement expenses, allow you to pursue greater growth with the remainder of your portfolio without worrying about sequence of return risks. Fixed deferred annuities are excellent safe money alternatives to bank CDs. It really is all about appropriate application.
It’s amazing how these guys don’t explain the unbiased realities of annuities. Please educate yourselves. There are some wonderful annuity choices out there, no fees, protection to the downside and unlimited upside.
What is ARF
Why on God's green earth would I lock-up or give my hard earned money to an insurance company for maybe 8% "return", when I can invest in high quality, qualified dividend paying stocks that will increase in share value that I can leave to my loved ones in a ROTH?.
I bought a number of blue chip stocks beaten down during the pandemic that pay 10%+ qualified dividends some of which (lly, mpc) that have gained as much as 1600% share price increase since I bought them.
Well… I learned a lot with this video.
I bought an annuity from a co-workers husband about 11years ago. In another year, I can start taking withdrawals without losing the bonus. The bonus is a doubling of what I contributed in the first year. I didn't know anything about annuities when I bought this, but I read the total contract and asked the seller all I could think of. He squirmed at some of the questions. I realized that the cap was bad for me, and the fees were high. It's that word "guarantee" that got me. He also said that I couldn't lose money because of the "protection ' against losses in the stock market. He said I'd get the advantage of all the upticks in the market, but the company would take all the losses. I bought it with about $50K. I added about $250 a month for a few months, until I had to start taking care of my terminally ill brother. I needed more money at hand for transportation, food, medicine, etc., so I stopped making those monthly payments.
Well… I have realized what a bad decision it was to buy the annuity, but I didn't realize how bad, until now, with listening to this video.
Now, in the meantime of when I bought it and now, I've become a nun. I'm not allowed to or supposed to keep private money. It has to go to the convent. I didn't realize I can't donate the annuity to the convent. Is there any way it can be done… like are there any circumstances at all that allow me to donate this to the convent? What about if donate every withdrawal as it comes? What happens then when I die? I need to get this whole annuity to the convent's good. Can you help me?
Guys, an hour? You need to package your content into 15 minutes or less.
Great breakdown of a complicated and confusing subject.
I took an adult education retirement class and when financial wealth management group tried to sell me an annuity I ran it past the instructor I had in the retirement class and his response was run from them and do not touch them with a ten foot pole. Insurance companies pay actuaries to come up with a highly complex and lucrative for them product that they want to sell you for their own benefit. Banks sell products that make them money. Credit card companies do the same. Pay day lenders etc. Bottom line- you are the only person that is acting in your best interest and if you do not have the knowledge to protect yourself you become the target of a business which needs to make a living off of you.
Thx guys
I'm 67 and retiring soon.Taking SS at 70 and have a 5 yr fixed annuity that I'm rolling into a immediate annuity at 70. My wife and I will have an 11000 a month income per month and still have savings and dividend stocks. If my stocks keep making money great but if they don't we still have dividends,social security and
an annuity and will sleep just fine! Aviod indexed annuities and income riders as the taxes are regular income that can affect your medicare IRMA and capital gains. I leaned the hard way and took a hit getting my funds out.
I just can’t understand why you wouldn’t by high dividend ETF’s where you make higher interest and own an growing asset. Annuities are dumb.
When I hear annuity I think high fees, being separated from my money, etc. As a result, my reaction id to RUN.
You didn't really touch much on when these products would actually be appropriate for a client. You mentioned buying a self-pension for fixed products. Any other reasons? Or how does that compare to the fixed-indexed annuities for income?
Very good points but just a tad too bias
What about registered index linked annuities? 0 fee, downside protection, upside potential, tax deferred grow and a lock In feature.
Tried contacting a large insurance company to purchase a SPIA. Guess it doesn't work that way. Sounds like I have to go through an agent. What the hell do I need an agent for a SPIA. The funds I have to invest are non-taxable. Looking more into a home bank. If you don't hold it, you don't own it.
I see a lot of my older family, in their 80's etc, that have "out-lived" their 401K money…she had a $175,000 balance in 1999 when she retired at 62, she'd of been better off to of bought an annuity….the people in my family often live to be 97-105….even with inflation–drawing a monthly check of anything is better than a 401K with $0.00/month..
Just remember that they would NOT be pushing any product (like an Annuity) unless it benefitted them and their company. It makes money for THEM, not you.
12:04 'Even if you don't pass away at age 85, your living expenses go way down' I'm assuming that this statement is for those in excellent health, right? My parents are on Eliquis and at least a dozen other meds (each) and their expenses are equal to or greater than their SS income each month. They downsized their home at retirement and the money from that sale is almost gone now, but the medical expenses go on and on.
whats the difference between a financial advisor and a vampire squid?
Hey guys, I realize this is old information, I’m 65 and getting ready to retire and I don’t really want to be in a volatile stock market, so what is your take on MYGA’s which is the annuity industries version of CDs, with rates as high as they are now to get stable income lockdown for the next five years at around 5%? Because I just want stable income to supplement other sources without eroding the nest egg
But if a fixed indexed annuity gets you a very low volatility 4.9%, isn't that good? If for instanceyou structure it so that it would pass on to your beneficiaries at death?I wouldn't expect it to match market returns over a long period, but it seems like it could be a good vehicle to diversify the part of your portfolio that you would want in bonds
I will take my USD to South America where it will go twice as far. Bye bye USA and inflation.
A useful tool in a variety of instruments.
Just don't rely upon it for most of your returns.