How much Money do you need in Annuities to Retire Securely?

This article is really about what you need for retirement versus what you want. Yes, we all would like to have astronomical returns and phenomenal **guarantees associated with every annuity and investment but reality can at times be somewhat sobering.

A recent survey of near retirees who were contributing to their 401ks were asked how much they would have to contribute to an annuity to **guarantee $500 per month in income for the rest of their lives, starting when they were 65. The scary thing is that 96% of them answered incorrectly (to a multiple choice question)! The vast majority of those surveyed, 72 percent, believed that $25,000 would generate $500 per month for the remainder of their lives. ( By the way, the correct answer is closer to $100,000) [continued below video…]

Video: Watch as Dick and Eric tackle the tough question of how much in annuities is enough?

 Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

 

Annuities utilized for securing income are excellent ways to create your foundational income. But you should not commit more to annuities than you need too. Unfortunately, if you don’t know what your foundational income need is you will be likely to fail miserably. No planner can hit the correct allocation number when he or she doesn’t even know the amount that’s needed for income.

So if you are ready to start retirement planning, take some time to find out how much income you will need to be comfortable.

A calculator can get you started but ultimately you will want to work with an annuity income specialist who can help narrow down the best options for you!

Helpful Retirement & Annuity Calculators

Our Most Advanced Retirement Income Calculator - Free

 

Here’s the video that inspired us from Joe Simonds at Annuity Think Tank.

Ready to become an industry insider? Here is a summary from InsuranceNews.Net that discusses the Cerulli report.

Consumer Confusion Begs for Advisors’ Direction on Annuities

By: Linda Koco

Cerulli analysts were struck by the naiveté they found in the answers to a survey of older 401(k) participants regarding retirement income expectations. Their conclusion produced an enlightening perspective on the need for advisor-sold annuities.

In 2013, the analysts posed the question to people age 55 and older who were active participants in 401(k) plans. Even though this study focused on retirement funds and variable annuities#, it was instructive for fixed annuity sellers. The respondents’ answers are valuable for any annuity seller, but they might also be important in considering the analysts’ conclusions about fee-based versus commission-based sellers.

The survey participants were asked to indicate the size of a one-time lump-sum premium they would hand over in order to receive $500 a month for life beginning at age 65. There was no mention of taxes, investment vehicle or feeds, the analysts said.

Would the participants hand over $25,000, $50,000, $75,000, $100,000 or $200,000?

(Before you read on – what would you guess?)

Survey Said!

The majority – nearly 72 percent – answered $25,000.

Coming in second place was $50,000, with nearly 18 percent of the group selecting this answer. Third place went to $75,000, chosen by nearly 6 percent of the group, and fourth place went to $100,000, with nearly 4 percent picking that answer.

The remaining answer – $200,000 – was selected by less than 1 percent of the survey participants.

The majority answer was pretty far off the mark. A $25,000 single premium immediate annuity “would most likely generate less than $150 per month for a 65-year-old female,” the Cerulli researchers said. And that assumed a single-life-only **guarantee.

Even when looking at the most aggressively priced products in that category, the same 65-year-old woman would most likely need to spend between $90,000 and $100,000 to generate $500 a month for life, without a death benefit **guarantee, they said.

This finding speaks to the complexity of annuities and the lack of awareness of how annuities function and the trade-offs that are involved, the Cerulli analysts continued.

“It also helps verify why annuities remain advisor-sold products and why less than 3 percent of variable annuity# sales were derived via the direct-to-consumer channel,” their report said.

Mixed Bag

The findings and conclusions drawn are among several points of interest in Cerulli’s new report, Annuities and Insurance 2013: Balancing Shrinking Supply and Increasing Demand for Guarantees. Those looking for an all-positive forecast for the annuity future will not find it in this report. The researchers present a mixed bag of potential annuity opportunities amid cautionary warnings, some with implications for advisors. [Read More…]

Helpful Retirement & Annuity Calculators

Our Most Advanced Retirement Income Calculator - Free

Using OutCome Based Planning™ for Your Retirement

"The Annuity Guys will never call you unless you request our assistance". When you are ready for specialized help we will be available to assist you.. We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio with annuities so you can meet your retirement objectives by "first identifying the least amount of your investments or savings that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.

"Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"

If you have done a little internet research, you are probably aware that you can choose from hundreds of annuity advisors/salespeople who will try to convincingly promise you that they have the best annuities and advanced strategies for all of your money. Indeed, there are many advisors who claim to have "that one best solution, best annuity or best strategy; this, however, is not the way we approach or recommend that you do retirement and income planning" since we believe that there are many good solutions for you to consider. Our recommended process is directed towards looking at several plausible financial strategies with different successful outcomes based on your financial situation. This process helps you to compare and select one of the best solutions "that you are most comfortable with.

This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.

When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is an independent, licensed insurance agent and (also a securities licensed fiduciary financial planner) who has access to many different companies and annuities in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on us.



Get Two Helpful DVDs & Our Library Edition - Annuity Reference Book


Based on survey feedback from advisor recommendations we made to our site visitors, we eliminated about two-hundred local advisors and now only recommend about six that we consider highly qualified Annuity Guys' Advisors on our national stage. Local advisors continually ask us to recommend them and they offer to pay us large fees for our referrals. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone and instead, we now primarily work with individuals that are comfortable leveraging today's internet technology to their fullest advantage by working with a select group of experienced and knowledgeable Annuity Guys' Planners.


Priority Mail - Shipping is Free Our Gift to You


After confirming your request for help and shipping address by phone, we will immediately send your FREE personally signed Library Edition of our popular Annuity Reference Book "The New Retirement" plus Two Fact-Filled DVDs!

Have a chat with Dick or Eric. "We will help you in determining which annuities, if any, might be best for you."


Speak to an *Annuity Guy's Vetted --Fiduciary Financial Planner-- "For Your Retirement's Sake"


Confidential, Secure, No Spam




“I wanted to thank you for your annuity guys advisor referral. He is a perfect match for us... If there is ever anything I can do for you please let me know. Thanks again and take care.”

John in PA

“Been so busy I haven't had the time to write and say thanks for the referral. She is awesome ... Thank you for your guidance.”

Alex in TX

“Dick, Thank you again for your referral. I am indebted to you for all your support ... ”

Jack in CA


Selecting the Best Annuity & Retirement Income Advisor

Are you willing to work with an Annuity Guys' retirement and annuity advisor based on their experience and expertise as a first priority rather than being limited by a local or regional area? The good news is that technology has forever eliminated our geographical limitations and leveled the playing field for everyone! As a result of today's technological advances, all of us can now work confidently with experts in any field including personal finance. We are no longer confined by regional or local boundaries limiting our choices and ultimate success. A high quality Annuity Guys® advisor is now as close as a click or phone call away.

Video:"Choose a National or Local Advisor"?
"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."
When you think about it, your money is almost always in some other state with a custodian; whether invested in the market or with an annuity insurance company, the advisors competence is primarily needed when positioning your money initially. So working with a specialized expert in a financial discipline like annuities or retirement planning is imperative. There are no undo buttons in retirement! Once the annuity or annuities get set up correctly, it is customary and more efficient for annuity owners to benefit by having direct access to the annuity issuer instead of having to go through the agent. And, of course any reputable advisor, local or national, is more than willing to assist their clients if needed after annuities are implemented.
Video:"Why These 3 Types of Annuity Advisors are Not Created Equal"
"There are no undo buttons in retirement so it is vitally important that you do it right the first time!"

We are fortunate to have a select few who we believe are truly the highest qualified annuity and retirement advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. The Annuity Guys advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best annuity options available for your retirement planning.

Video: "How Much of Your Money Should You Consider Placing into Annuities"?
"It takes an experienced expert to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage."

"Anyone can sell you an annuity; however, it takes a truly qualified and experienced advisor to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one annuity that can accomplish all of these objectives. It is how an annuity advisor structures multiple annuities in balancing your total portfolio that makes it possible to achieve your most important retirement objectives."

Video: "How to Choose a Great retirement Advisor"?

Why Searching for the Best Annuities on Your Own Can be so Frustrating...

Almost everyone nowadays turns to the internet for answers on everything - from buying new widgets to researching just about everything under the sun; and finding the best annuity is no exception!At first, it may seem that researching annuities will be straightforward but the more time you spend researching them, the more frustrating it can be. Why is this? First of all, it does not take long to realize that gimmicks abound - such as warnings and alerts from salesmen who just want your attention so they can sell you an annuity or the "too good to be true" claims of 8% to 14% **guaranteed interest and of course the claim that you can get the full market upside with no downside risk! If you have done any research you have heard all of these claims in advertising which are mostly half truths and not fully explained.So how can you find the best annuities on the internet? The truth is... you can't! And what is even more frustrating is all the conflicting points of view from so called experts. There are well over 6,000 different annuities - all designed for different reasons, so is it any wonder that the deck is stacked against the average researcher or do-it-yourselfer. Add to that the fact that annuities pay high enough commissions to attract a plethora of both good and bad agents. This does not make annuities good or bad; they are simply a financial tool that truly benefit those who use them correctly.How can you find the best annuities for your unique situation?
  • Use the internet cautiously;
  • Work with a vetted and experienced annuity specialist;
  • Do not settle for that one dubious best plan or annuity compare multiple Outcome Based Plans to decide on the one that is truly best for you;
  • Be keenly aware of scare tactics and hyperbole - avoid those advisors and websites;
  • Avoid websites that are focused on rushing free reports, rates and quotes to get your contact information they are rushing you to speak with them, instead, take your time and choose someone you are more comfortable with that works on your time-table;
  • Know the Five Vital Factors (listed above) that an experienced annuity specialist must answer before helping you select the best annuities for your situation;
  • Watch this telling video "Avoid Annuity Gimmicks, Amateurs and Charlatans"...


Video: "Avoiding Gimmicks, Scams & Charlatans"

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money. Annuities are insurance products that require a premium to be paid for purchase. Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.

*Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke retired from his Investment Advisory Practice in 2012 to focus on this Annuity Guys Website. He still maintains his insurance license and assists his current clients. Annuity Guys' recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)

Site Terms & Disclosure

  1. All annuity tools, videos or information visible on Annuity Guys website pages, television, or other media are for educational and conceptual purposes only.
  2. Annuity tools, videos or information are not to be considered investment advice, insurance recommendations, tax or legal advice.
  3. It is recommended that site visitors should work with licensed professionals for individualized advice before making any important or final financial decisions on what is best for his or her situation.
  4. Website comments are not considered investor testimonials those shown only relate to an insurance agent referral service, customer service, or satisfaction with the purchase of insurance products and are never based on any investment or securities advice or investment or securities performance.
  5. Please be aware that your feedback and compliments may be shared with our visitors or those that may be interested in our services we will never give out your full name or full address or phone number without your permission. By sending us your feedback & comments you agree to allow us full use in sharing your comments with others in public forums. Thank you for sharing.
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  7. Income is guaranteed by annuitization or income riders that may have additional costs or fees.
  8. http://www.annuityguys.net & http://www.annuityguys.com forward to http://annuityguys.org. - Further all disclosures and information are to be considered as one and the same for any and all URL forwards, and these same disclosures and information also apply to all YouTube videos featuring Dick & Eric where ever they are viewed.
  9. MarketFree™ Annuity Definition: Any fixed annuity or portfolio of fixed annuities that protects principal / premium and growth by remaining market risk free.
  10. Market Free™ (annuities, retirements and portfolios) refer to the use of fixed insurance products with minimum guarantees that have no market risk to principal and are not investments in securities.
  11. Market Gains are a calculation used to determine interest earned as a result of an increasing market related index limited by various factors in the annuity contract. These can vary with each annuity and issuing insurance company.
  12. Premium is the correct term for money placed into annuities principal is used as a universal term that describes the cash value of any asset.
  13. Interest Earned is the correct term to describe Market Free™ Annuity Growth; Market Gains, Returns, Growth and other generally used terms only refer to actual Interest Earned
  14. Market Free™ Annuities are fixed insurance products and only require an insurance license in order to sell these products; they are not securities investments and do not require a securities license.
  15. No Loss only pertains to market downturns and not if losses are incurred due to early withdrawal penalties or other fees for additional insurance benefits.
  16. Annuities typically have surrender periods where early or excessive withdrawals may result in a surrender cost.
  17. Market Free™ Annuities may or may not have a bonus. Some bonus products have fees or lower interest crediting and when surrendered early the bonus or part of the bonus may be forfeited as part of the surrender process which is determined by each annuity contract.
  18. MarketFree™ Annuities are not FDIC Insured and are not guaranteed by any Government Agency.
  19. Annuities are not Federal Deposit Insurance Corporation (FDIC) insured and their guarantees are based on the claims paying ability of the issuing insurance company.
  20. State Insurance Guarantee Associations (SIGA) vary in coverage with each state and are not to be confused with FDIC which has the backing of the federal government.
  21. Annuity Guys website is not affiliated with or endorsed by the Social Security Administration.
  22. *"Best” refers only to the opinion of Dick, the Annuity Guys site author; or the opinion of Dick & Eric in videos and is not considered best for all individuals.
  23. *"APO” refers only to the Annual Pay-Out of annuities in the guaranteed lifetime income phase. *APO is NOT an annual yield or an annual rate of interest.
  24. AnnuityRateWatch.com, is only a linked to subscription service, which is not affiliated with AnnuityGuys.com, it supplies and updates all Annuity Rates, Features Ratings, Fees and Riders. AnnuityRateWatch.com's information is available in the public domain and accuracy is not verified or guaranteed since this type of information is always subject to change.
  25. Dick helps site visitors when help is requested. Dick may receive a referral fee as compensation from an advisor for a prospective client referral. This helps compensate Dick for time spent assisting site visitors and maintaining this educational website.
  26. Eric Judy is both insurance licensed and securities licensed. Eric offers securities as an investment adviser representative through Client One Securities, LLC.
  27. Eric purchases prospective client referrals from Annuity Guys Ltd. and may be compensated by commission for helping prospective clients purchase annuities. Eric may also recommend these prospective clients to an annuity advisor and earn a referral fee or a referral commission split.
  28. Vetted annuity advisors refers to advisors that are insurance licensed and recommended based on referral experience from satisfied clients.
  29. Any recommendation of an advisor is only one aspect of any due diligence process. Each site visitor must accept full individual responsibility for choosing a licensed insurance agent/advisor.
  30. In the event that a recommended licensed advisor/agent is not considered satisfactory, Eric will make reasonable efforts to recommend other advisors one at a time in an attempt to satisfy a site visitors planning or purchasing needs.
  31. Dick is the http://annuityguys.org website author and editor, Annuity Guys Ltd. is the website owner; Eric is a guest video commentator. Videos gathered from other public domain sources may also be used for educational and conceptual purposes.
  32. There is NO COST to site visitors when they are given an advisor referral or recommendation.
  33. By giving the Annuity Guys your contact information such as email, phone number, address and etc. you are giving your permission to be contacted or sent additional relevant information about annuities, retirement and related financial information. Annuity Guys has a NO SPAM policy.
  34. Accuracy of website information is strived for but is not guaranteed.
  35. Freedom from virus or malware is strived for but is not guaranteed. Website visitors accept any and all risk associated with damage to any computer for any reason when using this website and hold this website harmless from any liability.
  36. Use this website like the vast majority of websites at your own risk. No risk or liability of any type are accepted by any business entity or any of the information providers for this website.

Are Annuities a Better Answer for The Impending Correction?

Sir Isaac Newton said it best, “What goes up must come down.”

As financial advisors, we work with clients to prepare for the worst and hope for the best. By preparing for the worst, we help clients utilize **guarantees to cover their income and retirement needs. If your foundational income is secure your retirement will be built on a foundation that is destined for success. [continued below video…]

Video: Watch as Dick and Eric have some fun discussing the often predicted – “impending market correction”.

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Continued… Why do we spend so much time focused on annuities as the foundation? We know that annuities can be the ideal solution for retirees who have been left to solve the retirement income dilemma without an adequate pension — which is more and more common with the rise of 401k plans and the elimination of many defined benefit plans and old fashioned company pensions. Annuities can provide safety and **guarantees for retirees worried about declining interest rates and volatile markets, negatively impacting their savings and investments. Once your foundational income is secure, then it makes more sense using other higher potential market allocations to enhance your income and retirement without living in constant fear of long term market corrections or recessions.

Many of the financial studies tell us that money toys with our emotions and that it causes us to make many poor decisions. We know we are suppose to buy low and sell high, but euphoria and panic cause the reverse to happen. So maybe this is a little contrarian but with the bull market still running all out, you may want to take the time to consider whether it might be the ideal time to take some of your profits and shore up your retirement foundation.

Unsure of a correction? Look at this review from Friday the 13th with a full moon. ☺LOL

 Luck won’t stop a correction

By Jeff Macke
Today is Friday the 13th and last night we had glorious full moon. The confluence of Friday the 13th and a full moon is relatively rare. We won’t see this mix again until 2049. The last time there was a confluence of a full moon and Friday the 13th was October 2000. On that day the Nasdaq rose 7.8%; a vicious snap-back rally in an otherwise dire year for stocks.

I’m not superstitious but I do believe in what Keynes called the “animal spirits” and their ability to control markets. In the long-term prices are rational but the here and now is more complicated. For the better part of the last month stocks have been rallying for reasons largely rooted in sentiment. Too many skeptics bought into the idea of selling in May and going away. Because Mr. Market is cruel the stock market rallied 5%.

Obviously the mood has changed. The scenes coming out of Iraq are chilling. Yesterday the Bank of England’s Mark Carney cautioned that central banks could be raising rates sooner than the market expects. Oil prices are screaming higher.

Based on the always-useful AAII.com survey of individual investors, this bad news is popping up just as sentiment becomes dangerously one-sided. At 44.7 the percentage of investors calling themselves “Bullish” hasn’t been this high since the day after Christmas of last year. [Read More…]

Helpful Retirement & Annuity Calculators

Our Most Advanced Retirement Income Calculator - Free

Using OutCome Based Planning™ for Your Retirement

"The Annuity Guys will never call you unless you request our assistance". When you are ready for specialized help we will be available to assist you.. We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio with annuities so you can meet your retirement objectives by "first identifying the least amount of your investments or savings that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.

"Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"

If you have done a little internet research, you are probably aware that you can choose from hundreds of annuity advisors/salespeople who will try to convincingly promise you that they have the best annuities and advanced strategies for all of your money. Indeed, there are many advisors who claim to have "that one best solution, best annuity or best strategy; this, however, is not the way we approach or recommend that you do retirement and income planning" since we believe that there are many good solutions for you to consider. Our recommended process is directed towards looking at several plausible financial strategies with different successful outcomes based on your financial situation. This process helps you to compare and select one of the best solutions "that you are most comfortable with.

This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.

When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is an independent, licensed insurance agent and (also a securities licensed fiduciary financial planner) who has access to many different companies and annuities in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on us.



Get Two Helpful DVDs & Our Library Edition - Annuity Reference Book


Why Should I Choose a Fiduciary Advisor? Does it really Matter? Learn more...

Based on survey feedback from advisor recommendations we made to our site visitors, we eliminated about two-hundred local advisors and now only recommend about six that we consider highly qualified Annuity Guys' Advisors on our national stage. Local advisors continually ask us to recommend them and they offer to pay us large fees for our referrals. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone and instead, we now primarily work with individuals that are comfortable leveraging today's internet technology to their fullest advantage by working with a select group of experienced and knowledgeable Annuity Guys' Planners.


Priority Mail - Shipping is Free Our Gift to You


After confirming your request for help and shipping address by phone, we will immediately send your FREE personally signed Library Edition of our popular Annuity Reference Book "The New Retirement" plus Two Fact-Filled DVDs!

Have a chat with Dick or Eric. "We will help you in determining which annuities, if any, might be best for you."


Speak to an *Annuity Guy's Vetted --Fiduciary Financial Planner-- "For Your Retirement's Sake"


Confidential, Secure, No Spam




“I wanted to thank you for your annuity guys advisor referral. He is a perfect match for us... If there is ever anything I can do for you please let me know. Thanks again and take care.”

John in PA

“Been so busy I haven't had the time to write and say thanks for the referral. She is awesome ... Thank you for your guidance.”

Alex in TX

“Dick, Thank you again for your referral. I am indebted to you for all your support ... ”

Jack in CA


Selecting the Best Annuity & Retirement Income Advisor

Are you willing to work with an Annuity Guys' retirement and annuity advisor based on their experience and expertise as a first priority rather than being limited by a local or regional area? The good news is that technology has forever eliminated our geographical limitations and leveled the playing field for everyone! As a result of today's technological advances, all of us can now work confidently with experts in any field including personal finance. We are no longer confined by regional or local boundaries limiting our choices and ultimate success. A high quality Annuity Guys® advisor is now as close as a click or phone call away.

Video:"Choose a National or Local Advisor"?
"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."
When you think about it, your money is almost always in some other state with a custodian; whether invested in the market or with an annuity insurance company, the advisors competence is primarily needed when positioning your money initially. So working with a specialized expert in a financial discipline like annuities or retirement planning is imperative. There are no undo buttons in retirement! Once the annuity or annuities get set up correctly, it is customary and more efficient for annuity owners to benefit by having direct access to the annuity issuer instead of having to go through the agent. And, of course any reputable advisor, local or national, is more than willing to assist their clients if needed after annuities are implemented.
Video:"Why These 3 Types of Annuity Advisors are Not Created Equal"
"There are no undo buttons in retirement so it is vitally important that you do it right the first time!"

We are fortunate to have a select few who we believe are truly the highest qualified annuity and retirement advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. The Annuity Guys advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best annuity options available for your retirement planning.

Video: "How Much of Your Money Should You Consider Placing into Annuities"?
"It takes an experienced expert to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage."

"Anyone can sell you an annuity; however, it takes a truly qualified and experienced advisor to know how to structure annuities for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one annuity that can accomplish all of these objectives. It is how an annuity advisor structures multiple annuities in balancing your total portfolio that makes it possible to achieve your most important retirement objectives."

Video: "How to Choose a Great retirement Advisor"?

Why Searching for the Best Annuities on Your Own Can be so Frustrating...

Almost everyone nowadays turns to the internet for answers on everything - from buying new widgets to researching just about everything under the sun; and finding the best annuity is no exception!At first, it may seem that researching annuities will be straightforward but the more time you spend researching them, the more frustrating it can be. Why is this? First of all, it does not take long to realize that gimmicks abound - such as warnings and alerts from salesmen who just want your attention so they can sell you an annuity or the "too good to be true" claims of 8% to 14% **guaranteed interest and of course the claim that you can get the full market upside with no downside risk! If you have done any research you have heard all of these claims in advertising which are mostly half truths and not fully explained.So how can you find the best annuities on the internet? The truth is... you can't! And what is even more frustrating is all the conflicting points of view from so called experts. There are well over 6,000 different annuities - all designed for different reasons, so is it any wonder that the deck is stacked against the average researcher or do-it-yourselfer. Add to that the fact that annuities pay high enough commissions to attract a plethora of both good and bad agents. This does not make annuities good or bad; they are simply a financial tool that truly benefit those who use them correctly.How can you find the best annuities for your unique situation?
  • Use the internet cautiously;
  • Work with a vetted and experienced annuity specialist;
  • Do not settle for that one dubious best plan or annuity compare multiple Outcome Based Plans to decide on the one that is truly best for you;
  • Be keenly aware of scare tactics and hyperbole - avoid those advisors and websites;
  • Avoid websites that are focused on rushing free reports, rates and quotes to get your contact information they are rushing you to speak with them, instead, take your time and choose someone you are more comfortable with that works on your time-table;
  • Know the Five Vital Factors (listed above) that an experienced annuity specialist must answer before helping you select the best annuities for your situation;
  • Watch this telling video "Avoid Annuity Gimmicks, Amateurs and Charlatans"...


Video: "Avoiding Gimmicks, Scams & Charlatans"

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money. Annuities are insurance products that require a premium to be paid for purchase. Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.

*Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping Annuity Guys website visitors. Dick Van Dyke retired from his Investment Advisory Practice in 2012 to focus on this Annuity Guys Website. He still maintains his insurance license and assists his current clients. Annuity Guys' recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)

Site Terms & Disclosure

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Avoiding Annuity Gimmicks, Amateurs and Charlatans

Everyone loves a good practical joke – unless the joker is the person that just sold you an annuity and your retirement ends up as his or her punch line.

To help you figure out if your advisor is a “joker”, we have put together a list of red flags to look for… (continued below video)

Video: Dick and Eric Discuss…So, what is the best way to avoid a bad advisor experience?

 Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Be aware of these leading indicators and work with proven experts by referral whenever possible.
Gimmicks:

Amateurs:

Charlatans’:

 

Helpful Retirement & Annuity Calculators

Our Most Advanced Retirement Income Calculator - Free

 

Here is an exerpt from the article – Here We Go Again: Annuities Promising 7 Percent Returns

It is too good to be true.

Understanding the **guaranteed returns takes time and perseverance.  From the products I’ve analyzed, the most common **guarantee involves two annually calculated values. The first is the actual value based on the underlying investment performance.  The second, or “**guaranteed value,” is increased by the predetermined return each year.  If the “**guarantee” is 7 percent per year, this value would, over a 10-year period, almost double the value for which you originally bought the annuity.

However, and this is a BIG “however,” you can not take the amount accrued over a 10-year period out of the annuity in a single lump sum.  You have to “annuitize” that value, meaning it must be paid out over the remaining years of your life (or some other time period).  When I calculated the advertised rate of return for one annuity claiming a “7 percent” **guarantee, I found that the rate of return paid out on the annuitized payments was less than 1 percent!  In total, the “**guaranteed return” was less than the current 10-year Treasury Bond yield … hardly a 7 percent **guarantee, and you paid some pretty hefty fees for the right to have it.

Another option offered by insurance companies allows investors to take a 4 to 6 percent payout every year for the rest of their lives instead of annuitizing.  Investors often confuse this payout with a **guaranteed return.  These are vastly different, as the former does not **guarantee the investment principal, which is still subject to investment risks. […read more]

Ten Annuity Surrender Charge Questions You Need Answered

Since David Lettermen retired we thought we should pick up where he left off, with an annuity themed top ten list! Here are the Top Ten Annuity Surrender Charge Questions You Need Answered… [continued below video]

Video: The Annuity Guys® Dick and Eric have fun discussing the top 10 annuity surrender concerns.

 Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

  1. …[continued] What is a surrender charge schedule?
  2. Why do surrenders exist?
  3. Why surrender charges are not always bad?
  4. How long do surrender charges last?
  5. Do surrender charges affect my bonus or earnings?
  6. How can I get around surrender charges?
  7. When surrender charges end, do I need to renew my annuity or buy a new one?
  8. Will my heirs get stuck with a surrender charge?
  9. How can I never pay surrender charges?
  10. Should I be focused on surrender charges as the primary factor in my decision or just one of the factors?

There has been quite a bit of news in the last year about annuity companies trying to “buy back” annuities they have **guaranteed. Check out this Wall Street Journal article on….

When to Surrender an Annuity

Your insurer may be trying to persuade you to sell your contract back.

Retirement-minded investors have snapped up hundreds of billions of dollars of variable annuities# with benefit **guarantees. Now some insurers are trying to persuade owners to walk away from their policies.

Variable annuities combine a 401(k)-like investment account with the equivalent of an insurance policy. They appeal to investors approaching retirement with a promise of **guaranteed regular payouts that could reset higher if the policy’s underlying investments fare well.

Yet the products usually have higher fees than plain-vanilla “immediate” annuities, which deliver an annual payout in return for a lump-sum payment. (Variable annuities are complicated enough—and consumers are confused enough about them—that the Securities and Exchange Commission issued an investor bulletin this month explaining how they work.)

Some insurers that sold products with rich **guarantees are trying to dissuade longtime customers from holding on to their contracts. In addition to offering to buy back variable annuities# with benefit **guarantees, insurers are limiting investment choices, raising fees and blocking additional account contributions.

The goal is to limit future payouts on accounts whose balances have tumbled at the same time ultralow interest rates hurt insurers’ own investment returns.

Insurers have sent out a flurry of letters in the past year informing annuity owners that their accounts are being shifted into more-conservative investment options—unless the owners opt out.

Michael Manon, a retired lawyer and entrepreneur who in March 2009 invested $120,000 in a variable annuity# with a **guaranteed-income rider, turned down an offer this month to sell the contract back to his insurer. His account is now worth more than $250,000.

“I still want the protection,” Mr. Manon says, pointing to the stock market’s January downturn as a reason why he values the **guaranteed payout.

He decided to turn down the buyout offer after consulting a financial planner with a specialty in counseling investors and advisers on the pros and cons of such annuities.

When should you consider getting out of an annuity with a **guarantee? If you aren’t seeking income as the main goal, if you have been diagnosed with a medical condition that severely shortens your life expectancy or if you have a dire need for a lump sum of cash, experts say.

Otherwise, consider holding on—as long as the contract still offers a broad range of stock investments, the income **guarantees are higher than what you could get for such a product if you bought it now, and you still want a steady income stream in retirement.

If you—or your parents—are holding an annuity and having second thoughts, here are some strategies to consider.

Stay aggressive.

Some insurers, including AXA Equitable Life Insurance, have sent letters to investors informing them that their assets would be shifted automatically from the growth funds they originally selected into lower-cost index funds, unless the investors opt out of the change.

“We were very clear that the offer was voluntary and that it may not make sense for everyone,” an AXA spokeswoman said. “But for some customers, their circumstances may have changed and it may make sense.” [...Read More at the WSJ]

Retirement Planning Calculator – Can You Afford to Retire?

Video Transcription:

Eric: Hi, I’m Eric.
Dick: And I’m Dick. We’re the annuity guys.
Eric: Are we looking at the most fun topic today that’s possibly discussed; “Ten annuity surrender charge questions that you need answered.”
Dick: Well, Eric, this seems to be, if you listen to the media, you listen to the financial editorials; this seems to be the thing that everyone should be most fearful of with annuities are those evil surrender charges.
Eric: Surrender charges bad. Annuities good, surrender charges bad. You know everybody is focus on those charges.
Dick: Annuities would have been wonderful if they didn’t have these stupid surrender charges.
Eric: That’s right. So, we’ve got ten questions here that everybody should be aware of when they’re talking annuities and surrender charges like, first of all, what’s a surrender charge schedule?
Dick: Well, a surrender charge schedule is what comes with every annuity and you could see it right upfront.
Eric: It’s not like an add on like bonus feature that you got to choose to add one or not to add one.
Dick: When you fill out your application folks, there’s a schedule of surrender charge.
Eric: Your one, ten percent; our two, nine percent; your three, seven percent. Whatever those numbers may be, they state them in black and white – unless it’s a car printer – what those exact amounts are going to be. So you have that awareness even before you send your money.
Dick: And if for any reason the adviser, the licensed agent doesn’t discuss that with you at that time or should have discuss it with you before that, but shows you that schedule; if they’ve avoided that conversation with you,  you should just exit the room because you have know what you needed to know about this person.
Eric: Exactly. and the other thing is people want to know why we have surrender charges at all? Why do they exist? And I think one other things people have to understand about insurance companies is that they have to reserve for the liabilities that they have. So when they take on a new contract, they owe you money. And annuities designed to pay you back interest or credits, so they have to then reserved those. So to have a surrender charge is actually – and I think I’m jumping ahead – it’s not actually a bad thing because it allows the insurance company to buy investment vehicles that are more long-term knowing that you’re – not want to say on the hook for a longer period –  because annuities are a long term vehicle
Dick: Right,right.
Eric: So they can buy longer-term bond or longer-term commercial investment to help cover that liability.
Dick: Exactly, Eric. It’s really there – the surrender charges – as much as it’s portrayed something bad; it’s there to protect you. You do not want the other policyholders that this company is relying on to **guarantee your benefits, to look at the short term and bail out of it.
Eric: Right, because let’s be honest, if we are rate sensitive; if all of a sudden rates start to go up everybody would dive out of these annuities that had been in a lower rate; and then what would happen? The insurance company would be then scrambling because they got bonds in position for ten- twenty years; all of the sudden what do they do with those bonds? That’s one of the reasons surrender charges are there. They’re not always bad.
Dick: Yes, exactly. So, I think we’ve answered that question about are they good or bad; but how long typically do surrender
charges go on for?
Eric: Well, their short is one year and I’ve seen as long as 20 years. Now, most common – seven to ten.
Dick: Ten to twelve maybe; and I think ten would really be the most common.
Eric: The most common for the vehicle we typically use for our retirement planning, ten is pretty common.
Dick: And I think that, you know folks, one thing that you would want to be aware of is that the longer the surrender a lot of times, the greater the benefit. So, you try to find the sweet spot in there were you get most of the benefits with the lowest surrender. Agree?
Eric: Yes, because you’re looking at when the insurance company knows that you’re more committed for long term…
Dick: Yes, more committed and sincere.
Eric: -They can offer more or future benefit to you typically.
Dick: Right. Eric, what about the bonus that folks get with annuities? I mean not all annuities come with bonuses but they come with.. a lot of them will come with the bonus and then the earnings that folks get, what’s subject to surrender?
Eric: Right, everything that is in your cash account is subject to surrender. So, if you received a bonus, if you had interest credited; if you’re going to surrender, its all on the table. And let’s be honest that with insurance companies if they’re giving you a bonus and you decide to walk away, they want their bonus money back.
Dick: Absolutely.
Eric: A lot of times with a bonus annuity, you’ll see a higher surrender schedule so they can recapture that bonus.
Dick: Or you’ll also see maybe a separate schedule that is called a bonus recapture schedule – which is still just a
surrender… a surrender chart.
Eric: Exactly. Are there ways that we can get around surrender charges?
Dick: There are several ways. One of the most obvious is a ten percent withdrawal feature that the vast majority of annuities have built into the contract.
Eric: Almost every annuity has some kind of a penalty-free withdrawal provision and ten percent is probably the most common; there’s a couple that are five. And there are a few that do not have that but it’s the very small minority; the vast majority are the ten percent penalty-free withdrawal.
Dick: Here’s a little bit more of an unknown thing about annuities; some annuities are what we call an MVA annuity or a market value adjustment annuity and that’s not a surrender charge. It’s actually an offset to a surrender. So it can actually increase your surrender charge or it can decrease your surrender charge. If you choose the opportune time with that market value adjustment, it can actually completely wipe out a surrender charge.You could actually surrender your annuity early; and I’ve had this experience with some of my clients who actually get out at their old annuity which wasn’t performing well, use that MVA to allow them to move to a much better annuity and actually make money.
Eric: It’s one of the most misunderstood aspect of annuities in surrender charge process.
Dick: It really is.
Eric: -Is that market value adjustment. And I do want to point out one other way that you can avoid paying a surrender charge and that is getting to maturity aspect of your annuity.
Dick: So you mean this won’t go on forever.
Eric: So you don’t have to pay that surrender charge.
Dick: So there’s some point where you actually have an annuity but your surrender charge is gone.
Eric: And then, this is a common misconception. The clients want to know: So my surrender charge is up, my seven or ten years…
Dick: Yes, is over.
Eric: Now what happens to my annuity? They don’t realize that it doesn’t stop.
Dick: Throw it away and get a new annuity.
Eric: Annuities doesn’t stop when surrender charge ends, it continues on. Its strange but some people think that when that ten years is up, the annuity stops. It’s a lifetime product.
Dick:  When you buy it, you buy it exactly as a long-term retirement answer; it’s a solution for your retirement so at the end of the surrender charge, you just have the opportunity to get your money out at any time you want with no penalty; but that company is still on the hook.
Eric: They’re contractually obligated to you and there’s something there that will actually provide you with lifetime income
strangely enough.
Dick: We already touched on this a little bit but how about the heirs? You pass prematurely, you’ve still got surrender
charges, what happens to the heirs?
Eric: Well, I was going to say this is one, I would say, big benefits a lot times on annuities is that ninety-nine point nine percent of annuities; when you pass, that surrender fees typically goes away and all the cash is able to pass to the heirs.
Dick: And everything else in that account goes to the heirs penalty-free and I have had so many folks that were so relieved to actually know – they’ve had the misconception because of all the bad press out there about surrenders that they had to have that annuity for this length of time or their heirs were going to loose all this money. It’s not true!
Eric: In fact, I think in view of your shared story where you had somebody look at coming and buying a bonus annuity; so you know you’re getting a big up front perk, and if they were not long of this world, what they’ve done is really buy an enhanced death benefit in some ways. Now, we’re not suggesting you do that because the insurance companies will all basically get onto it very quickly and all benefit would go away; but it is a strategy.
Dick: Eric, how can folks never pay surrender charges. I mean how can they just flat-out never pay a surrender charges?
Eric: Well, the first thing is you plan properly.
Dick: Exactly.
Eric: It’s all part of how you structure your retirement plan. When you purchase an annuity, you know it’s part of a long-term process. And so, if you plan for when you’re going to take withdrawals, you plan for how things are going to come available; you never pay a surrender charge because you outline what’s going to come out, when it’s going to come out, how much are you going to pay, how much are you going to receive so that you never pay a surrender charge.
Dick: Exactly. You know the saying, Eric. “Proper planning prevents pitifully poor performance.”
Eric: That’s exactly what I was thinking.
Dick: So, okay…
Eric: Should we be focused on surrender charges when we’re buying annuities?
Dick: Eric, I don’t think it should be the focus.
Eric: You don’t come in and say “let’s only pick the ones with the shortest surrender charges. I don’t care about my income benefits. I don’t care about lifetime income.”
Dick: Solve your retirement objectives first and look at the surrender charge as one of those factors.
Eric: I was going to say unless you find a surrender charge and I really haven’t found one that is overly punitive, then you would wipe it off the table; but I would say “you know what, surrender charges are part of the equation but they’re there to protect you and they’re not the main factor when you’re deciding to buy an annuity.
Dick: I agree

Annuity Fees and Commissions – The Inside Story

Let me just give it to you straight – annuities pay commissions and some of them have fees. Now that we have those unpleasant facts out of the way, let’s figure out if those facts make annuities a bad choice!

When it comes to a properly designed retirement plan, does it matter what you pay if you’ve hit all your financial targets and fulfilled all your income needs? Of course it matters – nobody wants to overpay, but most people do not have trouble paying a fair price for good financial instruments or planning and assistance. When it comes to annuities 99 percent of  them are…[continued below video]

Video: Watch as Annuity Guys Dick and Eric elaborate on the inside story about fees and commissions!

 Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

[continued]…sold by advisors or agents who will earn a commission. Unfortunately, this means that as a consumer you have to be wary of the unscrupulous agent who sells you an annuity just to earn a commission; not because it was the right product or strategy to meet your planning goals. Good advisors are not afraid to share with you a variety of annuity options that may be under consideration to meet you goals – irregardless of what commission they  pay.

Early in life, my mother told me “You get what you pay for.” I think that was her way of telling me that if you always buy the cheapest option you might not be happy.

The same can be said of annuities. You get what you pay for and some annuities will cost you more. Fees on annuities are typically tied to benefits. The most common fees we discuss are the income rider fees that are added onto fixed and fixed index annuities to provide clients an opportunity to have lifetime income **guaranteed without having to annuitize.

Unfortunately, the media loves to focus on variable annuities# when it comes to discussing fees… as well they should; however, they tend to go one step to far and lump all annuities into the same category. After all variable annuities# usually have the largest and most costly fees for the benefits they provide. They also place the insurance company at the biggest potential risk. Variable annuities allow your principal account balance to rise and fall with the markets; however, most VAs have riders that **guarantee future income and death benefits. So, if the account balance has dropped and the company is on the hook for a significant portion of lost account value the only way they can cover the potential losses are with fees – lots and lots of fees.

Are the fees worth it? Some, definitely. Just be wise high fees can truly be detrimental. If your goal is to protect your retirement income, are you willing to give up something for a certain level of protection? If you answer yes to that question, then reasonable fees should be worth it.

 

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Looking for more information on annuity fees and commissions, check out this article by Stan the Annuity Man.

Can I Buy Annuities With No Fees or Surrender Charges?

Written By: Stan the Annuity Man

Question: Can I buy annuities with no fees or surrender charges? Are there no load annuities like no load mutual fund^s?  Ron in Roanoke, Virginia.

Answer: Phenomenal question Ron!  The annuity industry is very late to the party when it comes to “no load” type offerings that are common in the mutual fund^ industry.  No load can mean a few things.  It can refer to no fees for buying a strategy, no fees to keep the strategy, and no fees to sell the strategy.  Let’s cover all 3 as they apply to annuities, and the one annuity that covers all of these issues.

No fees to buy an annuity

Here’s where agents blur the lines when it comes to fees and commissions.  All annuities build in the agent’s commissions into the annuity so that you will see 100% of your money go to work.  Regardless of the type of annuity (immediate, indexed, variable, fixed, etc.), for example….if you put in $100,000, you will see $100,000 go to work.  Just be aware that this doesn’t mean that the agent didn’t get paid.  They did!

No fees to keep an annuity

Some agents might tell you that fixed rate annuities, or indexed annuities have no annual fees, and technically they are correct if these annuities are bought with “no extras.” However, most deferred annuities are sold with attached benefits (also called riders), which always come with an annual fee for the life of the policy.  Single Premium Immediate Annuities and Longevity Annuities (aka: Deferred Income Annuities) have no annual fees, but provide little or no liquidity.

No fees to sell an annuity

Here’s where the rubber meets the road, and where the annuity confusion starts in some cases.  The majority of annuities sold today are deferred annuities.  With deferred annuities, there are surrender charges to get your money out of the product.  For example, if the surrender charge on an annuity was 7% and your accumulation (i.e. walk away) value was $100,000……..you would receive $93,000 if you fully surrendered the policy.  In my opinion, surrender charges are “fees” and should be considered when making an annuity buying decision.  If you sell a deferred annuity that is past its surrender charge, then there are no fees to sell.  But if you sell your 10 year deferred annuity in year 5, then you will be charged a fee to sell.  Always remember, surrender charges are fees.  As a caveat to this issue, Single Premium Immediate Annuities and Longevity Annuities are not “sellable” strategies and in turn have no surrender charges……but also no liquidity.  If you are considering these 2 types of annuities, make sure that your money is allocated properly and you do not need to access the funds lump sum.  [Read More…]

 

Variable Annuities Compared to Hybrid Annuities

Suze Orman came by the office the other day… Okay, so, she was actually on the cover of Success magazine, but she does fit in well with this weeks topic. Suze really doesn’t like variable annuities#. We, on the other hand, try and take a bit more balanced position when reviewing the variable annuity# compared to the most popular Market Free® hybrid annuity that many folks are incorporating as a must have annuity in their retirement plan.

Watch as Dick and Eric discuss the pros and cons of these two competing annuities.

Locate The Best Hybrid Annuities Now

 

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Annuities

This is the great blanket investment to cover you when you’re about to retire, or retired, right? Not so fast. Even though this is an investment that so many financial advisors just love to sell you, and lots of people just love to buy, more myths circle this investment than almost any other investment I know about. In some cases, annuities make sense, and in others they do not, but sooner or later someone will try to sell you these investments, so I want you to read this section very carefully. Getting into an investment is easy. Getting out is a different matter entirely.

Variable Annuity

With mutual fund^s gaining such ground in the recent past, receiving billions of investors’ dollars, the insurance companies wanted to get into the act. So they created what they called a variable annuity#. A variable annuity# is also a contract with an insurance company for a specific period of time, but when you deposit money into a variable annuity#, the money is used most often to purchase different mutual fund^s within the insurance contract. A variable annuity# can have many funds for you to choose from, or just a few, depending on the company. The main draw of a variable annuity# is that, as is the case with all annuities, you enjoy the so-called privilege of tax deferral. Even if you buy and sell a different mutual fund^ every day, you will not have to pay taxes on your gains until you actually withdraw funds from the annuity. This always appears to be a great benefit of the variable annuity#, especially if you have large gains in a mutual fund^ not held in a variable annuity# that you have wanted to sell, but haven’t done so, because you’d have to pay so much in taxes. If you had invested in the same mutual fund^ within a variable annuity#, you could sell it and, if you did not withdraw any money, still not pay any taxes until you did. Another so-called advantage is that in variable annuities#, even if you invested 100% of your money in a risky mutual fund^ within the variable annuity#, you are **guaranteed that in the end you will never get back less than what you originally deposited or whatever the current value of the account is, whichever is more. In a regular mutual fund^ not held within a variable annuity#, there is no such **guarantee.

Who might get sold a variable annuity#?


[Read all of Suze Orman’s Annuity thoughts at her site here.]

Advanced Retirement & Annuity Calculator – Can You Afford to Retire?

Annuity Guys® Video Transcription:

Dick: Hello, I’m Dick.

Eric: And I’m Eric, and we’re the annuity guys.

Dick: Eric, this is an everyday subject for us when we’re talking to folks on the phone about “what’s better, a hybrid annuity or variable annuity#? Because there’s a lot of sales agents out there that are really pitching these variable annuity#.

Eric: Well, it’s the accumulation specialist… A lot of times that’s the only type of annuity they’ve had access to.

Dick: Right.

Eric: So, what better way to give you an annuity than to give you the variable annuity#.

Dick: Well, that speaks to some of the volume a variable annuities# that are out there. There’s a lot more distribution channels for those; but recently the hybrid annuity, over the past five years, has just gain tremendously in popularity. And variable annuities#, sales have been dropping and just the opposite the curves been straight up for the the hybrid or fixed index annuity.

Eric: Yes, exactly. And I guess we should probably differentiate between what the differences between a hybrid style…

Dick: Break them down, simple so folks can understand.

Eric: So we talked about the hybrid being built on the fixed annuity chassis so you got the **guarantees, no backup, principles protected. That’s the cornerstone of kinda the hybrid model. A lot of times you get an income rider which is the part that **guarantees the income for life. So that’s your basic on the hybrid style.

Dick: On the hybrid.

Eric: Now, the variable annuity# it’s really built on a more about mutual fund^ platform, I like to call it.

Dick: I agree.

Eric: -where you’re getting your underlying sub-accounts; you’re actually investing in the stock market, in insecurities, in mutual fund^s and ETFs, and some of the newer accounts. So, that’s the cornerstone of the variable annuity# – that both have tax deferral aspects, so there somewhere in that way. But then you get to add a little rider pieces on each one… you know; it’s like picking options on a car, you want flames on the side..

Dick: So, if we are to summarize and just kind of simplify between the two, folks; on me fixed indexed annuity which is the hybrid style annuity – the company accepts all the risk on that. There’s at all to the client.

Eric: Right, investing risk.

Dick: Exactly, all the investment risk. And with the variable annuity#, it’s just the opposite – the client, the annuitant…

Eric: Good luck with those investment choices…

Dick: -takes all the risk and there can be reasons why folks would choose a variable annuity#… but at let’s talk about what’s driven the popularity recently of the hybrid annuity and what’s driven down the popularity of the variable annuity#?

Eric: It’s pretty simple… you don’t want to lose money and that’s that caveat with the fixed indexed and hybrid style – you don’t go backwards.

Dick: Your principal is protected.

Eric: So, if you have another 2008 roll up on you where the market dropped thirty percent, well guess what? You get the zero maybe but you don’t go backwards.

Dick: Exactly. And the other thing, Eric, well, there are several other things I want to mention here, but one is that the **guarantees for the variable annuities# over the last five years have continued to drop considerably and the **guarantees for the hybrid annuity have continued to increase. And that comes down to simple mathematics folks. The variable annuities# have sub-accounts that lose money. The fixed annuities have …

Eric: But they gain money too..

Dick: -yes, they have unlimited upside, they have unlimited downside… but the fixed annuities and the fixed indexed annuity, hybrid annuity is invested in very safe investments – a government treasuries, investment-grade securities and it’s very regulated, and and that’s why they can give the better **guarantees because the underlying investments are not at risk in the way that the variable annuities# are.

Eric: And sometimes get people confused because you hear the indexes and a lot of the indexes are popular securities terms like the S&P 500, the Dow, the Nasdaq… you get selected index perhaps to participate with but your dollars are not actually invested in that index. The insurance companies taking care of you and they’re sharing the benefit, so you’re going to go backwards.

Dick: This is where we use the term market free because a market free annuity means that you have no market risk at all; and so it is a market free hybrid annuity and the other determining factor that I think separates the variable and the hybrid are the fees.

Eric: Ohh yes. Well, on the hybrid style, you’ll see typically fees of no more than 1 percent. I mean occasionally a little bit more…

Dick: And sometimes no fees…

Eric: No fees… and we should be fair; we’re starting to see some spread fee starting to come up on the hybrid style that more recently that are right around two percent…

Dick: But they give you more upside.

Eric: Right. you’re using the no cap version.

Dick: So if we compare the variable to somewhere in the neighborhood two percent to… clear up to five percent. I mean two percent is kind of hard to find unless you’re going for…

Eric: Discounted brokerage…

Dick: Yes, the discounted brokerage.

Eric: – the Vanguards, the Fidelity’s that are less than a half percent but they don’t have the other rider at all. They don’t have the **guaranteed minimum death benefit, the **guaranteed minimum income benefit.

Dick: Yes, that would be a place where a variable annuity# would fit very well; someone that’s a little bit younger; has money outside of IRA’s and 401Ks.

Eric: Well usually you’re capped off those contributions, you’ve maximized those, you still want to contribute to some place where you can get tax deferral. Well here’s another avenue for you to put unlimited amounts of money…

Dick: And folks who really like to trade a lot, they like to be active in management, they don’t want to pay a lot tax; they can put that into that variable annuity# shell and especially like you say a vanguard, or fidelity or something… there is no load, no commission paid off of it and the actual fees are very, very small.

Eric: Right. I mean, you have to have a mortality and expense fee and every one of them has that fees I believe. So you’re going to pay that no matter where you are. That’s what makes it an annuity… that keeps it tax compliance…

Dick: And I did say no commission and there is a possibility that they’ve worked to commission into it somewhere for somebody…

Eric: And most of the bigger players do have… you have to realize the fees are kind of added on a block at a time. Here’s your M and E and then you add this for your income rider, this for your debt benefit…

Dick: So many times you’re not looking at all of the fees. You’re looking at the portion of the fees and you have to look at all the fees and it’s kind of surprising how high the fees can get you.

Eric: I was going to say what you don’t typically realize is that each of those sub-accounts also has a fee associated with it as well depending on your investment selections. You could be paying even more than what you think your being disclosed.

Dick: Eric, would it be fair to say that folks that are maybe a little on the younger side might want a good, no load variable annuity#; but when you start getting up near retirement and you’re more concerned about maximizing income and being very secure with your principal that a hybrid annuity typically makes more sense.

Eric: Yes. I’m a big fan of hybrid annuities for people that are very… I say within ten years retirement.

Dick: Or right in retirement.

Eric: – Where you can set it and forget it based on **guarantees. Now, you can do that with a variable annuity# as well because you can set.. buy one with an income rider and say you’re going to get this but a lot of times you’re being sold the potential there. You’re saying “hey, you’re going to get at least a six percent roll up or a five percent roll up…

Dick: And if you compare the contractual **guarantees, what you know you can rely on very seldom have I ever seen a variable annuity# beat what’s now available in the hybrid annuity.

Eric: Yes and what i don’t like is you see a lot of variable guys saying “Here’s the best thing. When you start taking income when the market goes up, you get an increase in your income.” But when you look at the actual facts, when you start taking your five or six percent withdrawal combined with five or six percent fee…

Dick: Even if it’s a three or four percent fee, you put that with a five percent or 6 percent withdrawal; how in the world is the market going to continue to… you’re not going to see that gain and that’s what I hate to have people told that.

Eric: Because it’s your principal… you’re withdrawing your principal; you have to get a fifteen-percent gain with almost every year…

Dick: Well, they’re not lying, it is possible but they’re definitely not maybe saying what’s probable because probability is not very good that you’re ever going to see an increase.

Eric: Right. Just be aware of what the simulation show you. Yes, the rosy pictures are rosy for a reason but just be a realist that when you turn on that income it’s probably going to be pretty close to that amount for the rest of your life.

Dick: Right, so if you stick with the contractual **guarantees, folks, you will not be disappointed and you just have to fairly compare the

Should You Choose a Variable Annuity?

Occasionally, we get requests from our site visitors and viewers to help them review a particular annuity – like that from Larry below.

Dear Annuity Guys®,

I asked my broker about annuities and he is recommending a variable annuity# from @%#^#. What is your opinion of this annuity?

Larry T.

Watch as the Annuity Guys® discuss who should choose or even consider a variable annuity#?

Get Experienced Annuity Specialist Help

 

**Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

Typically, we try and provide an answer that highlights the pros and cons about the specific annuity in question. However, there are some aspects regarding variable annuities# in particular that need to be made clear prior to even considering variable annuity#.

Here are fourteen questions to consider prior to selecting a variable annuity#.

  1. Is any annuity really the right choice for you?
  2. Are you comfortable with your principal being at risk?
  3. Is your reason for buying a variable annuity# for growth and/or tax-deferral?
  4. Are you planning on using this annuity for lifetime income?
  5. Is your advisor/broker an annuity specialist? (Did they offer and discuss various types of annuities?)
  6. What are the fees – including the hidden fees, that do not appear on the statements?
  7. Do you understand the pros and cons associated with living benefit riders?
  8. Will you have adequate liquidity?
  9. How many ways and how soon can you access your money?
  10. What is the surrender period and the associated charges?
  11. What are the costs associated with the investment accounts?
  12. Who is responsible for selecting the investment accounts?
  13. What is the minimum **guarantee?
  14. What is the death benefit?

These are a few of the topics we would recommend discussing prior to finalizing a variable annuity#. Due to the popularity of these annuities, they are frequently highlighted in the media – for both their positives and mostly negatives, for the way in which they are abused. If you are in the market for or have been proposed a variable annuity#, please be sure to read this article from the Securities and Exchange Commission on variable annuities#.

Variable Annuities: What You Should Know

Variable annuities have become a part of the retirement and investment plans of many Americans. Before you buy a variable annuity#, you should know some of the basics – and be prepared to ask your insurance agent, broker, financial planner, or other financial professional lots of questions about whether a variable annuity# is right for you.

This is a general description of variable annuities# – what they are, how they work, and the charges you will pay. Before buying any variable annuity#, however, you should find out about the particular annuity you are considering. Request a prospectus from the insurance company or from your financial professional, and read it carefully. The prospectus contains important information about the annuity contract, including fees and charges, investment options, death benefits, and annuity payout options. You should compare the benefits and costs of the annuity to other variable annuities# and to other types of investments, such as mutual fund^s.

What Is a Variable Annuity?

A variable annuity# is a contract between you and an insurance company, under which the insurer agrees to make periodic payments to you, beginning either immediately or at some future date. You purchase a variable annuity# contract by making either a single purchase payment or a series of purchase payments.

A variable annuity# offers a range of investment options. The value of your investment as a variable annuity# owner will vary depending on the performance of the investment options you choose. The investment options for a variable annuity# are typically mutual fund^s that invest in stocks, bonds, money market instruments, or some combination of the three.

Although variable annuities# are typically invested in mutual fund^s, variable annuities# differ from mutual fund^s in several important ways:

First, variable annuities# let you receive periodic payments for the rest of your life (or the life of your spouse or any other person you designate). This feature offers protection against the possibility that, after you retire, you will outlive your assets.

Second, variable annuities# have a death benefit. If you die before the insurer has started making payments to you, your beneficiary is **guaranteed to receive a specified amount – typically at least the amount of your purchase payments. Your beneficiary will get a benefit from this feature if, at the time of your death, your account value is less than the **guaranteed amount.

Third, variable annuities# are tax-deferred. That means you pay no taxes on the income and investment gains from your annuity until you withdraw your money. You may also transfer your money from one investment option to another within a variable annuity# without paying tax at the time of the transfer. When you take your money out of a variable annuity#, however, you will be taxed on the earnings at ordinary income tax rates rather than lower capital gains rates. In general, the benefits of tax deferral will outweigh the costs of a variable annuity# only if you hold it as a long-term investment to meet retirement and other long-range goals.[…Read the rest of the article from the SEC]