Shortly after I wrote a recent blog post titled Why I Hate Annuities, a reader of our blog said the following: “I have determined after several years of evaluation that you will never be my financial advisor because of your one-sided view of annuities.” The reader went on to say that “immediate fixed annuities should be a part of every retiree’s income stream”. So, in today’s blog post I will answer the question of “Are Fixed Annuities A Good Idea?” and provide you with some of their pros and cons. Read more “Are Fixed Annuities A Good Idea?”
Last week in my blog post titled Why I Hate Annuities, I talked about a client who is in an unfortunate situation with her annuity. What I didn’t mention was that she has an Indexed Annuity. These types of annuities are structured in way that significantly tilts the advantage to the insurance company instead of the investor.
I was recently reminded why I hate annuities so much. A client of ours needed to withdraw some money from an annuity (that was sold to them by another advisor of course – sorry, had to get that in). However, in working with this client, I was reminded just how complex and detrimental annuities can be for people.
Throughout the week, I run across articles written by other people that may be of interest to you. This week I am sharing an article from Mike Piper of Oblivious Investor on whether it’s a good idea to add a guaranteed withdrawal rider to an annuity.
I’m sharing this article because over the next two Wednesday’s my weekly financial planning blog will be on the topic of annuities. My inspiration for this is a client who has a very undesirable annuity that was sold to them by another advisor. She’s had this annuity for over 10 years and it literally has a $55,000 surrender penalty if she were to get out of the annuity. And the sad part is that this surrender penalty NEVER goes away.
If you’ve read my blog, you know I’m not a fan of annuities. Ric Edelman of Edelman Financial Services does a great job highlighting the dangers in this article.
Please click here to read Ric’s article.
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Have you ever had the thought, “Should I buy an annuity?” If so, you’ll appreciate this actual client story. A client of ours purchased an annuity from someone else many years ago. But before I tell you this story, let me briefly explain what an annuity is and how I feel about them.
WHAT IS AN ANNUITY ANYWAY?
Annuities can take many forms. But in general an annuity is an investment product sold by an insurance company. The insurance company will generally “guarantee” that the annuity will never lose value and that you could potentially receive an income from your annuity for the rest of your life. But, let me warn you that you should not fall into the trap that annuities are 100% guaranteed. Read more “The Annuity Nightmare”