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When is Zero Good News for Hybrid Annuities?

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Have you called someone a “good-for-nothing” and thought you were being derogatory?

With hybrid annuities, being good for nothing in the bad years is actually one of the best features! There is a phrase in the hybrid annuity world, “zero is your hero”, and it is derived from the feature of fixed index annuities which allows you to participate in the upside of a stock market index without suffering any losses due to…[continued below video]

Video: Watch as Annuity Guys, Dick and Eric, look at the power of zero for retirement security.

 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]…poor stock performance or even serious losses. For example; many hybrid style annuities are linked to the performance of the S&P 500 and when the S&P 500 was down over 38% in 2008, those indexed annuity holders were credited with a 0. Which would you have rather had, a loss in your $500,000 portfolio of $190,000 or simply zero gains and your $500,000 stays intact during that same time period? In 2008, you were most likely bragging about your zero – if you were that fortunate.

The next question when trying to determine if a hybrid or fixed index annuity might be right for you is what are you willing to give up in exchange for never having any losses due to market downturns? Would you accept a limitation on your growth potential? The answer for many retirees has been a resounding YES. The research shows that retirees who can avoid significant losses to their portfolio in the first 5 to 10 years of retirement have a great chance of never running out of money. The reason is simple math. For example, a couple with a $500,000 portfolio who can comfortably withdraw $20,000 out annually to meet their income need only needs a 4% annual average gain to maintain their principal balance and lifestyle without fear of running out of money. However, what happens if the market corrects and they lose 30% of their portfolio ($150,000) and they now have $350,000? Do they keep withdrawing the $20,000? Hoping and waiting for a market rebound – considering that they will need a market rebound of about 43% – if your portfolio has a loss, it takes an even greater return to overcome the loss to get you back to where you started.

Hybrid annuities help retirees take the risk of stock market loss off the table and smooths out the volatility of the markets. Fixed Index Annuities can offer solid growth allowing retirees to capture a portion of the market upside while insulated from market corrections. Are you are ready for “zero” to be your “hero” for a foundational portion of your portfolio?

Here is a similar article by Anton Hendler at Annuity123.

Pros and Cons of Fixed Index Annuities

“Beauty is in the eye of the beholder”, so the saying goes. So it is that with an article of this nature, it depends on who is writing it and that persons perspective as no two people will share the same opinion. So let us nail our colors firmly to the mast, so to speak, and share with you that we promote Fixed Index Annuities (FIAs) to our clients and are firm believers in their place in any Retirement strategy.

Now that we have our ‘disclaimer’ out of the way, let’s turn to the subject at hand. We will not even attempt to provide a comprehensive list here of all the pros and cons (in no particular order) but will merely touch on what we believe to be the major points and, again, these may differ from another person’s view.

Pros of Fixed Index Annuities

  • The power of annual reset. What this means is that every year on the anniversary of the policy, any gains in the market (based on the strategy which you have chosen and an index such as the S&P 500) will be credited to your policy and then ‘locked in’. So if the market goes down in the next year, not only will your value not go down (you will stay level) but the gains made in the previous year that were locked in are yours as well. This can be compared to a ratchet on a jack for your car. As you move forward (up) you are protected from slipping backwards (down) by the ratchet (click here to learn more about annual reset).
  • No downside risk. Following on from the first bullet, it follows that whilst you share in a portion of market gains (and these are locked in every year) you do not share in market losses. If the market goes down in any year, your prior year ‘locked-in’ value will stay level. That is, it will not go down or up, but will remain at the prior year’s value.
  • Sharing in the market upside. What one has to remember with FIAs is that you are not invested directly into the market. As such, you do not get the full amount of any increase in the market, but share in the growth in any year. Your growth is limited by devices such as participation rates and caps so if the market goes up by 8% and you have a 100% Participation rate with a 5% cap, then you will get 5% growth in that year. Funds are not invested by the insurance company directly in the market, but they buy options in the market. If the market goes up then the insurance company exercises those options and pays you your percentage of the increase. If the market goes down then the insurance company essentially ‘burns’ the options and you get nothing.
  • The power of zero. Getting a return of zero in a down year sounds, at first, like a con but it is a very significant pro. Take the example of a market that goes down by 20% in year one. In year two, you will need it to go up by 25% just to get back to where you were. So the power of staying level in that down year suddenly looks very compelling compared to taking a ‘hit’ and having to climb your way back up to where you were before you can start to show gains in your principal again. [Read more at Annuity123]


 

 

High Annuity Fees & High Annuity Commissions – Hear the Inside Truth

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We’ll just give it to you straight – some annuities pay high commissions and some of them have high annuity fees. Now that we have those unpleasant facts in the open, let’s figure out if this makes annuities a good or 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 fulfill all your income needs? Of course it still 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 commissions. Unfortunately, this means that as a consumer you have to be wary of the unscrupulous insurance agent who sells you an annuity just to earn a commission; not because it was the right product or financial instrument to meet your planning goals. Good advisors are not afraid to share with you a variety of annuity options that may be worth consideration to help you meet your retirement goals – irregardless of what commission they may earn.

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 wise.

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.

Looking for more information on annuity fees and commissions, you may want to check out this article.

Can I Buy Annuities With No Fees or Surrender Charges?

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.


Using OutCome Based Planning™ for Your Retirement

We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) 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.

"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available.
"Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"

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 independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies 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 our commitment to serve all client's with a high standard of excellence in financial planning for retirement.

Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. 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 with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.


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Selecting the Best Annuity & Retirement Income Advisor

Are you willing to work with one of our retirement and annuity advisors 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 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 investments or retirement planning is imperative. There are no undo buttons in retirement! Once the annuities get set up correctly, it is customary and more efficient for owners to benefit by having direct access to the 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 they 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 advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best 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 them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an 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 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 one 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 they 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 specialist;
  • Do not settle for that one dubious best plan. 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 specialist must answer before helping you select the best options 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.
They 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.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and 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.)


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  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 contract. These can vary with each annuity and issuing insurance company.
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Annuity Undo Buttons – Using Your Free Look!

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Most big ticket purchase come with a warranty or a **guarantee – including annuities. Did you know that all annuities come with a money back satisfaction **guarantee?

Annuity owners are permitted to terminate their annuities contracts without penalty or surrender charges during their free-look period. The free-look period differs by state and by carrier but typically last for a period of not less than…[continued below video]

Video: The Annuity Guys, Eric and Dick examine one of the most unknown and misunderstood aspects of an annuity purchasing decision.

**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.

…10 days. If the annuity owner decides to surrender the contract during this period, they can receive a full refund of premium paid thus releasing them from the contract which allows them to re-consider their options or pursue other alternatives.

The free-look provision provides annuity purchasers an extra level of comfort knowing that they can “undo” their decision if they find something discomforting or unexpected in their contract at the time of delivery.
Investopedia explains ‘Free Look Period’
During the free look period, the purchaser can continue to ask the insurer questions regarding the contract in order to better understand the policy. If refunded, the amount given back may equate to the value of the account at cancellation or to the amount of purchase payments, depending on the state.


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How are Annuities Affected by the New 2015 Rollover Rules?

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The Internal Revenue Service is changing the IRA rollover rules this year – if you don’t know about this change it could hurt you.

Beginning in 2015, you can only make one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own. The limit will apply by aggregating all of an individual’s IRAs including SEP and SIMPLE IRAs, as well as traditional and Roth IRAs effectively, treating them as one IRA for purposes of the limit.

Does this mean you are limited to a single transfer from a 401k or IRA to a new investment or annuity firm in 2015? No. There is no limit on custodian to custodian transfers – sometimes referred to as rollover transfers.  The rollover situations that are impacted are those where an IRA custodian creates a check and disburses those funds to the account holder. Once the account holder takes possession of their funds, the account holder has… [continued below video]

Video: The Annuity Guys, Dick and Eric, discuss the new IRS rollover rules and how it could impact your money movement in 2015.

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. 

…sixty days in which they can “roll” the funds over into another IRA to avoid paying taxes or penalties on the disbursed dollars. (The IRA account holder previously had the ability to rollover an IRA once per year per IRA; however, at present, it is only once for all the IRA account holders aggregated IRAs.)

Why does this matter? There are a number of advisors who prefer to do rollovers so they can more efficiently expedite the movement of funds from a custodian that is being replaced into their control. Doing this now still works… but if you do this twice – knowingly or unknowingly – you could trigger a taxable event on ALL the dollars involved in all of your aggregated IRAs..

Want more information, here is an article from the IRS…

IRA One-Rollover-Per-Year Rule

Beginning in 2015, you can make only one rollover from an IRA to another (or the same) IRA in any 12-month period, regardless of the number of IRAs you own (Announcement  2014-15 andAnnouncement 2014-32). The limit will apply by aggregating all of an individual’s IRAs, including SEP and SIMPLE IRAs as well as traditional and Roth IRAs, effectively treating them as one IRA for purposes of the limit.

  • Trustee-to-trustee transfers between IRAs are not limited
  • Rollovers from traditional to Roth IRAs (“conversions”) are not limited

Transition rule ignores some 2014 distributions

IRA distributions rolled over to another (or the same) IRA in 2014 will not prevent a 2015 distribution from being rolled over provided the 2015 distribution is from a different IRA involved in the 2014 rollover.

Example: If you have three traditional IRAs, IRA-1, IRA-2 and IRA-3, and in 2014 you took a distribution from IRA-1 and rolled it into IRA-2, you could not roll over a distribution from IRA-1 or IRA-2 within a year of the 2014 distribution but you could roll over a distribution from IRA-3. This transition rule applies only to 2014 distributions and only if different IRAs are involved. So if you took a distribution from IRA-1 on January 1, 2015, and rolled it over into IRA-2 the same day, you could not roll over any other 2015 IRA distribution (unless it’s a conversion).

Background of the one-per-year rule

Under the basic rollover rule, you don’t have to include in your gross income any amount distributed to you from an IRA if you deposit the amount into another eligible plan (including an IRA) within 60 days (Internal Revenue Code Section 408(d)(3)). Internal Revenue Code Section 408(d)(3)(B) limits taxpayers to one IRA-to-IRA rollover in any 12-month period. Proposed Treasury Regulation Section 1.408-4(b)(4)(ii), published in 1981, and IRS Publication 590, Individual Retirement Arrangements (IRAs) interpreted this limitation as applying on an IRA-by-IRA basis, meaning a rollover from one IRA to another would not affect a rollover involving other IRAs of the same individual. However, the Tax Court held in 2014 that you can’t make a non-taxable rollover from one IRA to another if you have already made a rollover from any of your IRAs in the preceding 1-year period (Bobrow v. Commissioner, T.C. Memo. 2014-21).

Tax consequences of the one-rollover-per-year limit

Beginning in 2015, if you receive a distribution from an IRA of previously untaxed amounts:

  • you must include the amounts in gross income if you made an IRA-to-IRA rollover in the preceding 12 months (unless the transition rule above applies), and
  • you may be subject to the 10% early withdrawal tax on the amounts you include in gross income.

Additionally, if you pay the distributed amounts into another (or the same) IRA, the amounts may be:

Direct transfers of IRA money are not limited

This change won’t affect your ability to transfer funds from one IRA trustee directly to another, because this type of transfer isn’t a rollover (Revenue Ruling 78-406, 1978-2 C.B. 157). The one-rollover-per-year rule of Internal Revenue Code Section 408(d)(3)(B) applies only to rollovers.

 


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Annuities Make Life Better for Retirees – Study Reports

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Would you rather be happy and optimistic in retirement or worried about spending too much? We know it sounds like a silly question; but, what if we told you that retirees who have a greater percentage of their retirement income coming from **guaranteed sources are happier than those who do not. So, now you know – owning an annuity can make you a happier retiree.

One factor confirming this conclusion is the study from Towers Watson that tracked retirement happiness among retirees from 1998 to 2010. Their survey results showed…[continued below video]

Video: The Annuity Guys, Eric and Dick examine why annuities may enable happier retirements!

**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] …that all things being equal such as health and wealth – retirees who have more  from pensions or annuities are happier in retirement.

We also know from our own clients that removing the anxiety of worrying about the volatility of their retirement assets improves their attitude, especially when stock markets are in a free fall and their annuity checks are not affected – they just keep showing up every month like a steady paycheck.

We recently heard Tom Hegna tell a similar story that he shares with people when trying to describe the value of lifetime income in retirement.

Can you imagine driving a car through the middle of a remote forest, enjoying the scenery with your family, admiring the changing foliage and wildlife around the road, and enjoying the peace and serenity. Many hours into your trip you realize that you are hundreds of miles away from civilization and your gas tank will surely be empty before you get to your destination. You start to get stressed and the family starts arguing about what speed you should drive to be more efficient. No one is able to enjoy the peace and serenity around anymore because they are all fixated on the gas gauge and the dropping needle. This is synonymous to retirement for most retirees when they become fixated on watching a decreasing asset base- knowing that if they live too long, will eventually run out of money. Conversely, owning an annuity is like having a never ending supply of gas that can guide you smoothly down the road, eliminating the fear of your car suddenly stalling.

Are we suggesting that all your money should be in annuities? No. Use annuities first to take care of your core income needs including some luxuries that make retirement more enjoyable and then you can allocate the remainder of your assets for further safety or in securities that could lose money but will instead (hopefully) provide you with some “bonuses” that you can use to splurge on additional luxuries or allow you to leave a larger legacy.

Enjoy this video by Tom Hegna where he articulates the importance of annuities in retirement.


 

Want to see more on the study referenced in the blog…

Annuities and Retirement Happiness

by Steve Nyce and Billie Jean Quade at Towers Watson

Prolonged economic uncertainty and high unemployment have been wreaking havoc on the American retirement dream. Over the last five years, most Americans have suffered losses to their retirement savings and home values, while the rising cost of essentials, such as food, gas and health care, is squeezing many household budgets. This Towers Watson’s analysis examines retirement satisfaction over the last decade, including the cushioning effects of annuities.1

The financial crisis and recession that followed put new emphasis on the value of financial security and the risks of market dependence. While adverse economic conditions have affected all workers, older workers and retirees face additional risks, such as outliving their savings (longevity risk) and having less time to wait for markets to rebound. Annuities protect retirees from longevity risk and establish a floor of income — beyond the modest annuity paid by Social Security — safe from investment losses.

While for some retirees, a substantial portion of retirement wealth is annuitized through defined benefit pension plans, the increasing scarcity of these plans leaves more workers staring down retirement with a 401(k)-style lump sum. Many retirees and older workers are wondering whether to buy an annuity and how much of their savings to annuitize. With 76 million baby boomers making or about to make annuity decisions, the stakes are high for everyone — retirees, policymakers, employers, even taxpayers.

Many Americans consider annuities as illiquid and expensive and thus have avoided them in the past, even as research has shown that the security provided by annuities boosts retirement satisfaction. A 2003 study found that retirees with a higher percentage of annuitized income were happier on a cross-sectional basis and maintained higher levels of satisfaction over time than their less annuitized counterparts.2 A 2005 study found that retirees receiving annuities from defined benefit pensions were happier than those without pensions and those with only a defined contribution plan.3

KEY FINDINGS
  • Retirement satisfaction has steadily declined over the last decade.
  • Satisfaction is highest among those with high levels of wealth and income who are very healthy and annuitize their income.
  • Among retirees with similar wealth and health characteristics, those with annuitized incomes are happiest.
  • Annuities provide the biggest satisfaction boost to retirees with less wealth and those in poor health.
  • Despite variations, the satisfaction effects of annuitized income and general decline in retirement satisfaction are long term and extend across all respondents. […Read more at Towers Watson]


Using OutCome Based Planning™ for Your Retirement

We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) 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.

"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available.
"Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"

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 independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies 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 our commitment to serve all client's with a high standard of excellence in financial planning for retirement.

Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. 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 with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.


Fiduciary Retirement Review
Priority Mail - Free Shipping!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 Fact-Filled, Full Video Access!


Selecting the Best Annuity & Retirement Income Advisor

Are you willing to work with one of our retirement and annuity advisors 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 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 investments or retirement planning is imperative. There are no undo buttons in retirement! Once the annuities get set up correctly, it is customary and more efficient for owners to benefit by having direct access to the 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 they 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 advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best 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 them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an 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 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 one 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 they 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 specialist;
  • Do not settle for that one dubious best plan. 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 specialist must answer before helping you select the best options 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.
They 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.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and 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 tools, videos or information visible on this website's pages, television, or other media are for educational and conceptual purposes only.
  2. 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.
  6. Media logos are not any type of endorsement, they only imply that one or more of the Annuity Guys have written for, been quoted by, or appeared on the listed news outlet, broadcast or cable channels, or branded programs for non-advertising and/or advertising purposes, to offer educational and conceptual information about retirement issues.
  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 https://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 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 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. This website is not affiliated with or endorsed by the Social Security Administration.
  22. *"Best” refers only to the opinion of Dick, this site's 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 this site, 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. Eric may also recommend these prospective clients to an advisor and earn a referral fee or a referral commission split.
  28. Vetted 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 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 us 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. We have 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.

Can Hybrid Annuities Beat Market Returns?

By

Do you remember the story of the tortoise and the hare? Hybrid annuities might be compared to the tortoise in Aesop’s fable because often slow and steady does indeed win the race.

Just like  the tortoise in Aesop’s story, hybrid annuities are steady and consistent in their pace; and while they may take an occasional break, they never go backwards. Like our friend, the hare, the equities markets at times run so fast and hard – they occasionally get out of control and crash…[continued below video]

Video: Annuity Guys, Dick and Eric, discuss hybrid annuities competing with the stock market.

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. 


 
…and when the (market) hare crashes, the tortoise just keeps on going and can get to the finish line first.

Will the tortoise win every time? No. Nor will the hybrid or fixed index annuity beat the equities markets most of the time. Like our friend, the tortoise, index annuities are designed for steady consistent results.

There are thousands of varieties of index annuities and strategies that can be chosen and some have more growth potential than others based upon their design . Everyone would like to have their cake and eat it too; but let’s be frank, some annuities perform better for income and others have greater growth potential – while others try to balance both growth and income (unfortunately, not excelling at either). Now, we don’t mean to shock you. But all of these annuities can beat the market – given the right conditions.

In a down market, even an annuity that only credits a zero surpasses the losses of 20 or 30 percent. Hybrid style annuities (aka fixed index annuities with an income rider) have the best opportunity to beat the  popular market indexes during periods of higher volatility because they can capture a portion of the upside market gains without experiencing any of the losses. So when the market acts like a roller coaster – shooting up and down  – index annuities have an advantage by periodically locking in their gains. However, based upon history, we can assume that eventually the markets will surpass the gains made by any annuity – given that you have enough time. Unfortunately, many retirees don’t have time to recover or the fortitude to accept the uncertainty of what the future may hold.

The elimination of investment risk and pension style income **guarantees are key factors for most retirees. Annuities can provide safety, security and peace of mind to retirees who know they may need their money to last twenty to thirty years or more while enjoying this stage of life. Hybrid annuities may occasionally beat the market but it is their rock-solid contractual **guarantees that more often than not make them attractive options for retirees.

Would you like to see the  Wharton Study Dick mentioned in the video – Wharton Study of Index Annuity Returns.


Using OutCome Based Planning™ for Your Retirement

We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) 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.

"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available.
"Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"

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 independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies 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 our commitment to serve all client's with a high standard of excellence in financial planning for retirement.

Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. 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 with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.


Fiduciary Retirement Review
Priority Mail - Free Shipping!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 Fact-Filled, Full Video Access!


Selecting the Best Annuity & Retirement Income Advisor

Are you willing to work with one of our retirement and annuity advisors 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 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 investments or retirement planning is imperative. There are no undo buttons in retirement! Once the annuities get set up correctly, it is customary and more efficient for owners to benefit by having direct access to the 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 they 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 advisors out of about two hundred licensed insurance agents that we eliminated. Your survey feedback is what helps us make these tough decisions. Our advisors have an independent financial practice, specializing in annuities and retirement planning, which helps ensure that you are given the best 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 them for income, inflation, growth, return of principal, and tax advantage. Typically, there is not just one that can accomplish all of these objectives. It is how an 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 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 one 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 they 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 specialist;
  • Do not settle for that one dubious best plan. 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 specialist must answer before helping you select the best options 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.
They 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.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.

  *Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and 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 tools, videos or information visible on this website's pages, television, or other media are for educational and conceptual purposes only.
  2. 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.
  6. Media logos are not any type of endorsement, they only imply that one or more of the Annuity Guys have written for, been quoted by, or appeared on the listed news outlet, broadcast or cable channels, or branded programs for non-advertising and/or advertising purposes, to offer educational and conceptual information about retirement issues.
  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 https://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 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 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.
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Can a Hybrid Annuity Uncapped Index Pay Higher Interest?

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Should annuity buyers be giddy because they can own an annuity with no limiting upside cap and of market loss? Well, maybe, since we are now in the new annuity era of the low volatility index.

If you are a prospective annuity buyer you should consider this new strategy for good reason. First and foremost, these are uncapped indexes with seemingly unlimited upside potential; however, before any irrational exuberance kicks in… [continued below video]

Video: Annuity Guys Dick and Eric discuss the pros and cons of the new low volatility indexes.

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. 

and you sign the next annuity contract you see, please understand that each of these volatility control indexes does have some limiting factors. One such limiting factor used to increase upside potential is the result of a mathematical formula that works similar to a tactically managed investment account that moves in and out of market allocations based upon predetermined triggers. For example: in times of higher volatility these indexes will often move more toward a safe money strategy of weighting more of the index in a cash or bond position. Conversely, when the volatility is low the index will be weighted more toward the equities side.

Another limiting factor of these uncapped indexes is the ability for the insurance company to apply a standard fee or a spread charge. The spread charge/fee is the most common cost associated with these uncapped indexes. It allows the insurance company to take the first few percentage points of growth (typically 2-4%) and then credit your account with everything above that amount. For example: if the spread is 2.0% and the index gains 8.0%, your account will be credited 6.0%. What makes these spread fees more attractive than other charges? If the index has a down or negative year, there is no charge or cost to your account. Just to be clear, with all fixed index annuities your principal is protected and if the index finishes negative, your account will be credited at 0% – it will never reduce your account balance.

Not all of these uncapped indexes were created the same – some are easier to track and have ticker symbols and locations you can find online. Others appear to have been created just for the insurance company and the only research available on them is available through the insurance companies brochures.

Perhaps the biggest warning we can share with these uncapped volatility indexes is the need for realistic expectations. We have seen the historical numbers showing annual gains of 15-20% and they look wonderful, but don’t be wowed by the outlying numbers. Realize that these indexes were designed to provide modest gains that should allow you to share in a portion of the success of the index in the good years while protecting you from losses in the bad years. If you enter an annuity contract expecting stock market type returns, you will likely be disappointed.

This strategy is the current “rage” in the industry. It seems like every insurance company has released a new annuity or a new indexing strategy which utilizes an uncapped low volatility index. So you need to understand how these newer indexes work and if this strategy fits your risk profile.

As annuity guys, we appreciate this innovation and this strategy because it is easier for most clients to understand and grasp than explaining participation rates and index cap limits.

 


 

Hybrid Annuity Sales Hit All Time Highs! Do You Know Why?

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Record numbers of retirees and savers are flocking to fixed and fixed index annuities – why?

For many baby boomers , the great recession is still ingrained into their thoughts as they make plans for their retirement. The thought of losing 30-40% or more of their portfolio in the stock market has sent them out seeking safer growth options; while other baby boomers seek the safeguard of knowing that they will have lifetime **guarantees for their foundational income in retirement.

The insurance industry is on pace to issue $100,000,000,000.00 (that’s one hundred billion dollars) in just fixed and fixed index annuities this year alone! With banks offering safe money rates that hover just over zero, we should not be surprised by the number of people flocking into contractually **guaranteed growth and income options. However, this is most likely not the only reason for this level of annuity sales growth. Annuities have traditionally paid better rates than the banks so the growth of sales should not be based upon higher interest rates alone. [continued below video…]

Video: Annuity Guys, Dick & Eric, discuss why it seems like everyone wants a “hybrid” Fixed Index Annuity!

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. 

According to AARP, about 8000 people will turn 65 everyday from now until 2029. These baby boomers have seen one of the greatest bull markets of all time during the eighties and nineties followed by substantial market volatility and more recently a “lost decade” of market gains. They appear to be interested in preserving their wealth and income in retirement and many are willing to give up some of the market’s upside potential to protect against market backslides. There may not be empirical evidence to support the fact that retirees are valuing the **guarantees that annuities offer, but the dollars seem to be speaking loudly that boomers believe that annuities are a good option for retirement planning.

Is now the right time to join the crowd moving a portion of one’s savings into fixed or hybrid fixed index annuities? It depends – do you feel the need to protect retirement dollars from losses resulting from the next big correction in the equities market? Do you want a predictable, stable income stream that you cannot outlive? Do you wish you had your parents company sponsored pension plan? Does the fear of outliving or losing your money keep you up at night? If you answered yes to any of these questions, you may want to join the millions of satisfied annuity owners who value the way these financial products secure their retirement.

The inspiration for this weeks entry came from our friends at the Insured Retirement Institute.

IRI Second-Quarter 2014 Annuity Sales Report: Industry-Wide Sales at Highest Level in Three Years

Indexed Annuities Power Fixed Annuity Sales to Five-Year High; Variable Annuity Sales Up from First Quarter

WASHINGTON, D.C. – The Insured Retirement Institute (IRI) today announced final second-quarter 2014 sales results for the U.S. annuity industry, based on data reported by Beacon Research and Morningstar, Inc. Reaching the highest mark in three years, industry-wide annuity sales in the second quarter of 2014 rose to $59.9 billion, a 6.8 percent increase from $56.1 billion in the previous quarter and a 9.9 percent increase from $54.5 billion in the second quarter of 2013.

Fixed annuity sales – supported by record fixed indexed annuity sales – increased to $24.3 billion in the second quarter of 2014, according to Beacon Research. This was a 7.6 percent increase from $22.6 billion in the previous quarter and a 41.6 percent increase from $17.1 billion in the second quarter of 2013. Variable annuity total sales reached $35.6 billion in the second quarter of 2014, according to Morningstar. This was a 6.2 percent increase from $33.5 billion in the first quarter of 2014, but a 4.6 percent decline from $37.3 billion in the second quarter of 2013.

“These are the highest industry-wide sales we’ve seen in three years, and on the fixed side of the market, the highest in five years,” said Cathy Weatherford, IRI President and CEO. “We continue to see moderate growth, driven by consumer need for protection and income, in all types of retirement income products, and more robust growth in certain products based on the macroeconomic conditions of the day. For example, the market is currently experiencing a surge in the sale of fixed indexed annuities that – in addition to offering upside potential with downside protection and access to **guaranteed lifetime income – can be used by consumers as an alternative to traditional fixed income investments without the interest rate risk.”

According to Beacon Research, continued growth in fixed annuity sales were largely supported by a surge in fixed indexed annuity sales, which hit a new quarterly record of $12.9 billion in the second quarter of 2014. This represents a 14.8 percent increase from first-quarter 2014 sales of $11.2 billion and a 41.5 percent increase from second-quarter 2013 sales of $9.1 billion. Income annuity sales also rose during the second quarter of 2014, topping $3.39 billion – a 3.2 percent increase from nearly $3.29 billion in the previous quarter and a 32.7 percent jump from $2.56 billion in the second quarter of 2013. For the entire fixed annuity market, there were approximately $12.5 billion in qualified sales and $11.8 billion in non-qualified sales during the second quarter of 2014. [Read More…]

 


 

Are Hybrid Annuity Income Riders Stacked in Your Favor?

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We must own up to our play on words this week. One of the more recent popular income riders strategies is referred to as the “stacking” strategy. Of course we found our title quite witty while most of you are probably thinking – these guys really need to get out more.

However, most of us given the choice of having the odds of success stacked in our favor will undoubtedly at least consider benefiting from those odds. Does that mean this stacker strategy is superior to the traditional roll-up strategies that have been standard on most hybrid style annuities for the last six or seven years? Well, yes and no. What you have available with a stacking income rider is typically better income potential but you give up some of your contractual **guarantees in the trade-off. The income rider with a stacker works by providing a smaller roll-up growth **guarantee – typically three to four percent (instead of six to eight percent) and then stacking on the index growth for that period. Based upon historical illustrations the growth potential typically exceeds that of the traditional **guaranteed riders. However, they are based on probability and potential instead of absolute **guarantees. [continued below video…]

Video: Annuity Guys, Dick & Eric, explain some newer income rider strategies.

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. 

The ongoing low rate environment has squeezed insurance companies and limited their ability to provide greater income benefits without incurring crippling long-term liabilities in today’s depressed rate environment. To combat this, they created a stacker strategy which partially relieves the insurance company of the need to reserve as much money for an income rider liability by creating an opportunity to give that benefit only when the client has growth from the index – so they can pay as they go, sharing the profits with you.

Should everyone start to elect the stacker strategy on their annuity income riders? Not necessarily! The strength of annuities are their contractual **guarantees and if you like the idea of being able to own a “set-it and forget-it” style of annuity – knowing that it will roll-up to increase your future income on a **guaranteed level each year, then you will probably want to stick with a more traditional style income rider.

Are these just the two primary income rider strategies to choose from? No, again.

Another option is what we have termed “enhanced” income riders which offer minimal or no growth income **guarantees. However, you may be surprised to learn that these enhanced income riders have the potential to provide even greater income than the stacked income rider. While again not the ideal option for those requiring absolute **guarantees, they provide excellent potential for higher income based upon historical performance and some even offer an opportunity for increasing income for an inflation hedge.

As you evaluate your retirement, don’t feel as if you can only choose one of these strategies – often times the best results come from balancing multiple income strategies.

 


 

Are Annuity Complaints on the Rise?

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Mom always said; “If you don’t have anything good to say, don’t say anything at all.”

Well, we want you to know that this rule does not apply to annuities. As Annuity Guys®, we may be a tad-bit more sensitive to reading the negativity spewed by some writers when it comes to annuities; however, it does appear that any increase in complaints by investors or consumers just comes down to one particular type of annuity – the variable annuity#.

Watch as Dick and Eric discuss complaints on annuities and other financial products.

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**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.

Overall, annuity complaints actually decreased in 2013, but for the popular media it appears to be a lot more fun to talk about the high commissions, high fees, and bad advisors that offer theses products. You really have to dig to find an article that compares the number of complaints from mutual fund^s and stock transactions — which far outpace those from annuity sales.

As Annuity Guys®, we are on record as stating that an annuity is not where you should put all your money, but it can be a great location to place dollars that will used to fund retirement income. Annuities are a financial tool and when used properly can alleviate risk to your portfolio.

You would never guess this article cites the fact that nine out of ten annuity owners are at least somewhat satisfied…

 Angry Annuity Clients Seek Damages

By Matthew Heimer

When stock markets are humming along nicely, customers are less likely to complain about their brokers and financial advisers: 2013 was on pace to be the fourth year in a row of sharp declines in the number of arbitration cases filed with the Financial Industry Regulatory Authority (Finra), the brokerage industry’s self-regulatory body. But as Matthias Rieker reports this week in The Wall Street Journal, complaints about one kind of investment remain stubbornly high. The outlier: Variable annuities.

Variable annuities usually offer a retirement saver a **guaranteed future payout, along with a chance of increasing the value of the saver’s initial investment depending on how markets perform; investments in many of these annuities can be tax-deferred. But they’ve long exasperated consumer advocates because of their relatively high commissions and fees, along with their often-impenetrable rules about what, exactly, an investor’s account is worth at any given time.

As Rieker reports, “In 2012, the variable annuity# was the only class of security for which arbitration claims increased”; last year, the total number of annuity complaints dropped about 20%, but complaints in other asset categories dropped far faster. […Read More at MarketWatch]

Video Transcription:

Dick: And I’m Dick.
Eric: Hello, I’m Eric and we’re the annuity guys.
Dick: Well, Eric, are annuity complaints on the rise.
Eric: No… Yes.. No… Ours? no!
Dick: Depends on which annuity complaints you want to talk about.                                                                       Eric: And that’s exactly the case. And then we see the black eye of the industry coming out in the open ever again with the old variable annuity#.
Dick: Well, and that’s something that has been on the rise are variable annuity# complaints and it runs the gammon from the fees and the surrender charges and loosing money when stocks go the wrong way.
Eric: You can loose money.
Dick: But what’s very interesting is the fixed annuities which would take in that hybrid annuity and everything. We’ve seen those complaints go down steadily. They kinda of hit the peak somewhere around 2006 – 2007; roughly around 200 complaints. And folks, when you think about this, 200 complaints over ten of thousands of folks that buy annuities in a given year; that’s not a lot of complaints. But now, they’ve actually  tapered down. Fixed indexed annuities sales have been way up and their complaints have tapered down to – last year – i think around 54 complaints for the entire year.
Eric: Even when we look at the variable annuity# complaints – one hundred sixty-five complaints on variable annuity#.
Dick: That is not a huge number.
Eric: And we should very clearly clarify here that when somebody complains about annuity, it’s typically not because of the annuity design, it’s  not the insurance company; unfortunately, it’s guys like us.                       Dick: Annuity guys.
Eric: Annuity guys or people that want to be annuity guys…
Dick: I beg your pardon.
Eric: -Who don’t fully understand the product. They don’t explain it very well, so they have consumers confused and they don’t know which direction they’re going; and their inability to articulate what product….
Dick: And Eric, this does not show up later when the person has the policy ans they have some need. They need to get additional money or they need to turn their income on or whatever; and it does not work the way they were told that was supposed to work.
Eric: They get caught with the sizzle side perhaps; the 5 percent **guaranteed roll up for income and deferral.
Dick: Or they though they’re going to earn 5 percent every year, **guaranteed. They see their account dropped a couple of years in a raw and they’re like “hey, this is not what I bought?”
Eric: That’s right! “That’s not what you’re told me”… and that’s where the complaints come from. And I guess, really to be fair to the annuity industry, we should say the number of complaints in comparison to the mutual fund^s…
Dick: Or the securities industry… and that literally, looking at the reports that we’ve been looking at I think the SEC last year had over ten thousand total complaints. Now, that’s a lot of complaints. And we tend to not see that. What’s interesting about this is that we don’t see that in this financial articles a lot; we don’t a lot who talked about that.
Eric: I think we don’t want to talk about the thing we don’t want to know.
Dick: But we see a lot of talk about “ohh, this annuity this, this annuity that.” And I’ve seen now that the populous has become a little more educated about annuities; a little more understanding us out there; I’m seeing less of these negative articles showing up.
Eric: Well, I wish I could say I see less of that. Maybe I’m drawn to… it’s like everybody has a newspaper article or blog like to pick on it. The topic of this one, “Angry annuity client seek damages.” Now, that does not say “you know, really…” If you look at proportion, it’s not nearly as bad as the people with stocks that are three, four or five times as many complaints. It’s people…. the highlights….
Dick: It crabs attention and it sells advertising; and this is part of the industry. And folks, really, when you get down to why annuities are so popular and why they have so few complaints? It is because they actually do the opposite of what the market does; they make your money safe.
Eric: Right. Safety first.
Dick: It’s right.
Eric: And that’s why i always qrench when I see people that have newspaper articles – I’m not going to mention their names because they don’t deserve the heck. They’re like ohh, I like the brokers advice until they recommended an index annuity.
Dick: You would not be thinking about Malcolm Berko.
Eric: Yes, I would. I’m thinking of him too. It gives us bad names because we are in the index annuity world; we understand how they work, we understand where the benefits are and unfortunately, people that don’t live in our world…
Dick: And if you’re just, as Bill O’Reilly says “fair and balance”, there are ways that annuities can be used wrong, ways that are used correctly; they’re just simply a financial tool.
Eric: That’s exactly right. Annuities are great way to make sure you don’t live too long. It’s longevity, it’s guarding against outliving your money and we talked about that being the strength in the cornerstone.
Dick: The principle of protection; protecting what you’ve put into an annuity in terms of premium and you know that you’ll never go backwards – we’re talking about fixed annuity – and obviously, the variable is.
Eric: And we have some issues of the variable annuities# ourselves because we don’t like to loose money and we don’t like for our clients to loose money.
Dick: Yes, we don’t like for our clients to loose money. So, are they on the rise or it depends on rather you’re talking about which type of annuity?
Eric: It depends if you’re in our office because in our office, not so much.
Dick: The complaints are under control.
Eric: That’s right.
Dick: Thank you.