Annuity Guys®

Annuity Rates, Features & Ratings: America's trusted annuity resource. Compare best options for hybrid, index, fixed, variable & immediate annuity quotes.


Helping You Create Great Results Your Retirement Deserves!



(217)753-1515
  • Home
  • About Us
    • About Us
    • Contact Us
    • Site Terms & Disclosure
    • Privacy Policy
  • FAQs
    • Most Frequently Asked Annuity Questions
  • All Annuity Guys Videos
  • Annuity Types
    • Best Annuity Reviews
    • Market Free™ Annuities
    • Choosing an Annuity
    • Deferred Annuities
    • Hybrid Annuity Choices
      • Hybrid Annuity Pros&Cons
      • Hybrid Income Riders
      • Hybrid Annuity Guarantees & Strategies
    • Fixed Annuity Choices
      • Fixed Annuity Performance
      • Better Fixed Annuities
      • Fixed Deferred Annuities
      • Fixed Rate Annuities
      • Fixed Annuity Alternatives
      • Fixed Annuity Pros & Cons
      • Fixed Annuity Negatives
    • Index Annuity Choices
      • Fixed Index Annuity Features
      • Fixed Index Annuity Performance
      • Better Fixed Index Annuities
      • Fixed Index Annuity Alternatives
      • Fixed Index Annuity Pros & Cons
      • Fixed Index Annuity History
      • Fixed Index Annuity Negatives
    • Immediate Annuities
      • Immediate Variable Annuity
      • Immediate Fixed Annuities
    • Variable Annuities
      • Variable Annuity Features
      • Better Variable Annuities
      • Variable Annuities Disadvantages
      • Variable Annuity Alternatives
      • Variable Annuity Negatives
      • Variable Annuity Performance
    • Pre-Issued Annuities™
      • Hybrid Annuities versus Pre-Issued Annuities ™
    • Annuity Glossary
  • Articles
    • How Do MarketFree™ Annuities Work?
    • Are Annuities Safe?
    • Living Benefits
    • FIA Performance
    • Beware of FIAs?
    • Annuities & Retirement
    • Annuities & Estate Tax
    • Rollovers & Annuities
    • Annuities & Tax
    • Charity & Annuities
    • The Lost Decade
    • Best Annuity Videos
    • Social Security Benefits
  • Calculators
    • Retirement Planning Calculator — Basic
    • Retirement Shortfall Calculator — Basic
    • Immediate Annuity Calculator & Quotes
    • Fixed Index Annuity Calculator & Fixed Annuity Calculator
    • Variable Annuity Calculator & Hybrid Annuity Calculator
  • Blog
    • Annuity Guys® Weekly Annuity Video Blogs
  • Get Annuity Guys Help
    • Request Annuity Guys’ Planning Help Today
You are here: Home / Archives for Annuity Rates

Do Fixed Annuities Beat Bank Interest Rates?

November 2, 2013 By Annuity Guys®

Ever since my days of playing the board game of Monopoly, I have wanted to beat the bank. Remember drawing the card that said “Bank Error in Your Favor”? Collect $10…. 10 bucks – sweet and no jail time either.

Nowadays, it seems nearly impossible to beat the bank — unless you are talking about their interest rates paid to a saver!

Retirees have been pummeled by an artificially depressed rate environment which filters down to interest offered by banks. Good thing, there are alternatives to traditional bank rates paying next to nothing. Insurance companies and the payments on annuities have also dropped off, although they still manage to consistently offer substantially better yields than their bank counterparts.

So, do fixed annuities beat bank interest rates? Simply compare and you will see that they do quite handily!

Is now a good time to place money into an annuity? Watch as the Annuity Guys® -Dick and Eric, discuss how the political and economic decisions of today impact annuities and retirees.

**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 Annuity Guys® believe a lot of the future economic impact will be based upon the decisions of Janet Yellen, read more about her in this Washington Post Ariticle.

Nine amazing facts about Janet Yellen, our next Fed chair

By Dylan Matthews

Janet Yellen will be appointed Fed chair tomorrow. Neil and Ylan already wrote the definitive profile of her, but here are the main things you ought to know going into her confirmation hearings.

1. She is perhaps the most qualified Fed chair in history.

Paul Volcker is the only Fed chair who even comes close to Janet Yellen’s level of experience.

Just look at the competition. When he was appointed chairman, Ben Bernanke’s only prior government service was three years on the Fed board and six months as chair of the Council of Economic Advisers (CEA). Alan Greenspan had three years as CEA chair.

Yellen, by contrast, has served for three years as vice chair, headed up the San Francisco Fed for six years, ran the CEA for two years, and before that did a three year stint on the Fed Board of Governors. She also did a stint as an economist at the board in the late 1970s, for good measure.

Only Paul Volcker — who had a multi-decade career at the New York Fed and the Treasury — even comes close to that, and he had nowhere near as much exposure to the highest echelons of the Fed system as Yellen has. If experience is your main criterion, Yellen is hard to beat.

2. She’s been a powerful voice for the unemployment hawks on the Fed.

In various speeches — perhaps most notably at the AFL-CIO — and in Fed deliberations, Yellen has been clear that she thinks subpar growth and too high unemployment are the biggest problems facing the Federal Reserve. “Maximum employment,” she has emphasized, is the main goal of the Fed at this point in time. In her words, “With employment so far from its maximum level and with inflation currently running, and expected to continue to run, at or below the [Federal Open Markets] Committee’s 2 percent longer-term objective, it is entirely appropriate for progress in attaining maximum employment to take center stage in determining the Committee’s policy stance.”

3. But she’s more than willing to crack down on inflation when the situation requires it.

As Evan Soltas and Matt O’Brien have noted, Yellen is plenty hawkish when the situation requires it. In the mid-1990s, when she served on the Fed Board of Governors, she made it clear that she thought unemployment was dangerously low, low enough that employers have to hike wages, which in turn leads to higher prices, i.e. inflation. “We have an economy operating at a level where we need to be nervous about rising inflation,” she said at one meeting. “We can’t dismiss the possibility that compensation growth will drift upward, raising core inflation and in turn inflationary expectations. This is a major risk. Obviously, we need to be vigilant in scrutinizing the data for signs of rising wages and salaries.”

So inflation hawks, take heart — if and when it’s actually worth worrying about inflation, Yellen will be ready to handle it.

4. She’s pretty darn good at predicting where the economy’s headed.

Yellen’s predictive record is the envy of the Fed. As Ezra noted, she was one of the few voices at the Fed in December 2007 warning that recession could be around the corner. At a time when most thought the worst of the subprime crisis was over, she was skeptical. “The possibilities of a credit crunch developing and of the economy slipping into a recession seem all too real,” she warned.

It was far from the only time she got it right when her colleagues didn’t. Indeed, an analysis by the Wall Street Journal revealed that Yellen had the best predictions of any Fed policymaker in recent years. [… Read More at the Washington Post]

Transcription:

Eric: Hi, I’m Eric.

Dick: And I’m Dick. We’re the annuity guys.

Eric: And we’re going to examine today whether or not fixed annuity rates, will they’ve really beat bank interest rates?

Dick: You know Eric, to set the stage for that a little bit, we’ve got a nomination coming up here of Janet Yellen…

Eric: Ohh, so Uncle Ben, we’re throwing out Uncle Ben way and bringing her in?

Dick: New Federal Reserve Chairman and I think that we have to talk about where interest rates have been and where I think that they’re going to go, and then answer that question.

Eric: My general belief and I’ll start with – typically you see annuities are paying a higher return than banks are.

Dick: Well, historically.

Eric: Historically. So you’re fees are here and traditionally annuities are going to pay somewhat higher

Dick: But right now; the savers, the retirees, the folks that have been diligent in putting their money away – preparing for this time in their life…

Eric: welcome to the penalty mess… you no longer being treated like royalty.

Dick: So, we got this upside down world now where you’ve done everything right and now you get penalized with very, very low interest rates; and it would appear appearances that we’re building a nice bubble up into the stock market and just a very securities where that money is flowing instead of into savings nationally. Who would want to put money in a bank account that’s getting…

Eric: That’s getting zero…

Dick: Half of percent, a percent…

Eric: And people don’t really think about these terms but when put money into a CD or a money market account, you’re actually losing money because the effect of inflation is actually eroding what’s there. Your spending power is decreasing every year.

Dick: And folks who would maybe otherwise not put money in the market? They have no place to put their money that can earn anything. So, they’ll maybe take more chances and go a securities route. And that’s where we do find a lot of folks will turn to annuities and again looking for “hey, what’s got at least some comparison in terms of safety but gets a better interest rate?”

Eric: There’s a misnomer a little bit about fixed annuity rates because a lot of times; it’s going back to the term fixed; they tend to think the annuity rate is the same every year when they start out. It’s not necessarily always that case. Your first year rate is fixed and then the insurance company goes back to the next year with another year fixed-rate. Now, those rates can change already at all-time lows, would not be advantageous to say select an annuity where the rates could actually…

Dick: where you get a good initial rate. We call it a teaser rate or introduction rate. But they ask the idea that your rates could increase that does have an attraction to some; and then to others, they want that concrete, that absolute **guarantee that if I put my money in here I’m going to at least get XYZ. And, it would be the CD style or the multi-year **guaranteed annuity.

Eric: The nice thing is annuities have that flexibility in saying “hey, if you want that same rate **guarantee over a period of time, that’s an option.” If you think that interest rates are going to come up and you just don’t have another place to go, well, here’s a place where you can park money and get a market return each year based on what the companies willing to offer based on the market condition.

Dick: Yes. So, it can go up, but conversely, it can also go down. Well and back to that we’ve started with originally discussing where rates are going; with Janet Yellen, being the nominee for the Federal Reserve Chairman to replace Ben Bernanke; the concern is that she has a lot of the same strategies and thoughts, she’s going to follow that same line to pumping a lot of money into the economy, artificially holding rates down trying to pump up employment; and this is the biggest experiment we’ve ever done with monetary policy on this level that could really backfire on us in a big way. It does appear it’s going to hold rates down for a long time.

Eric: Well and I think the statement that’s been made by the Fed that says “until we get to an unemployment level of 6.5, below that level we’re going to keep rates where they’re at.

Dick: That could be a long, long time.

Eric: And we’ve talked to people consistently. They’re on the sideline; they’re park in cash, they’re park in zero percent basically returns because they expect rates to go up. They just can’t foresee this poor rate environment lasting but we’ve got people that are basically in charge of all rates telling us they’re going to keep them here until we get to this.

Dick: And Eric, this is why it does make sense, I believe, just financially – just doing this simple math; that if you keep money parked at a half of a percent and you got the opportunity to earn 3 percent or three and a half percent or something of that nature; by putting it in a shorter term type of an annuity and you made all those gains for the next year or two to three years before that rates tend to go back up; so, now if they do go up a little bit higher than your three, three and a half percent; at least you didn’t lose anything during those years. You had your money working and there’s just that nice offset to getting your money working today and then knowing that you can still do something later.

Eric: Well and I’m a big fan of laddering. I talked about laddering. In fact, I talk about laddering MYGA’S in the terms multi-year **guarantee annuities. We’ve got decent rates at five, six, seven percent. Well, five, six, seven years…

Dick: I was waiting where you’re going on that one.

Eric: But looking at those, by staggering those terms, you have money becoming available. It may take some shorter terms now but always having kind of that circular nature. Rates when they change are not just like flipping a switch and all of a sudden it’s going to be 5 percent tomorrow…

Dick: Right.

Eric: You’re going to see gradual changes. It’s best to get money in a place right now where you’re getting at least a competitive return to combat inflation and having that ability to kind of just keep recycling those ladders as they come available.

Dick: I agree and a lot of folks who have done that for many years have CDs and other types of banking instruments; and so, using them with annuities should not be anything unusual. And right now, it is a fact that annuities are considerably higher than bank rates, and there are some shorter-term annuities that give you a little more flexibility in the event that the rates do eventually take off.

Eric: I look at the average 5-year CD before we started. We are at one point three is the average.

Dick: And we’ve seen recently three, three and a half percent from five year annuity.

Eric: MYGA style. So, there are better options available…

Dick: Than the banks.

Eric: In my opinion.

Dick: Thank you.

Filed Under: Annuity Commentary, Annuity Guys Blog, Annuity Guys Video, Annuity Rates, Annuity Returns, Retirement Tagged With: annuities, Annuity, Bank Interest Rates, Fixed Annuities, Inflation, Janet Yellen, retirement, Yellen

Government Shutdowns Affect Annuities

October 12, 2013 By Annuity Guys®

Can you feel the impending doom of the government shutdown?

Every night, it seems that the media cannot wait to tell us how bad it will be when it happens – and whose fault it will be. One talking head tells us the sky is falling followed by a response from another talking head telling us that it is not likely that we will let the sky fall all the way – because no one in their right mind really wants to see that happen.

So, rather than spread the doom and gloom, the Annuity Guys® look to answer the questions that really matter to people who are getting ready to retire and those considering annuities for a portion of their retirement.

Watch as Dick and Eric discuss:

  • What is going to happen to your retirement if the political wrangling in Washington continues?
  • How would a federal government default affect bonds and annuities?

 

**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.

Obama Says Real Boss in Default Showdown Means Bonds Call Shots

By David J. Lynch and Cordell Eddings | Bloomberg

President Barack Obama knows who is the boss: the bond market.

“Ultimately, what matters is: What do the people who are buying Treasury bills think?” the president told reporters this week, when discussing measures he could take to end the threat of a historic default on the nation’s debt.

Even with the U.S. budget deficit down by more than half since 2009 as a percentage of the economy, the Congressional Budget Office says the government this fiscal year will need to borrow an average of almost $11 billion each week. That’s why Obama is so sensitive to what investors will tolerate.

“The market is the final arbiter of any policy, the ultimate barometer and enforcement mechanism,” says Russ Certo, a managing director at Brean Capital LLC in New York. “The market holds risk-takers and policy makers accountable.”

After weeks of confidently expecting a resolution of the standoff in Washington over the government shutdown and the debt ceiling, bond investors this week began to betray nervousness in their approach to short-term government borrowing.

The yield they demanded at the Oct. 8 auction of four-week Treasury securities almost tripled from a week earlier, Treasury Secretary Jack Lew highlighted in testimony before the Senate Finance Committee yesterday. The government was forced to pay 0.35 percent for four-week borrowings, up from 0.12 percent.

Endorsing Deal

The White House yesterday endorsed a short debt-limit increase with no policy conditions attached, signaling potential support for a Republican plan that would push off the lapse in U.S. borrowing authority through Nov. 22 rather than Oct. 17. Rates for all Treasury bills maturing through Nov. 14 fell in response, while those with due dates between then and Jan. 2rose. At a meeting with Republican leaders later in the day, Obama neither accepted nor rejected the party’s plan. The two sides will continue discussions.

Obama’s deference to bond investors is reminiscent of the last Democratic president, Bill Clinton, whose economic agenda in 1993 was eclipsed by demands for deficit reduction. The belt-tightening was followed by four straight budget surpluses later in the decade, prompting Alan Greenspan, the then-Federal Reserve Board chairman, to predict the end of the Treasury market. Bond buyers’ clout ebbed.

More than a decade later, surpluses are a fading memory and the bond market has regained its swagger. Yet unlike in the Clinton era when the danger of rising yields kept government spending in check, the market now is exercising discipline only after several years of record federal outlays and borrowing.

‘2008 Event’

“The one market that is behaving more as if a 2008 event is around the corner is the T-bill market — one must wonder if this is the proverbial canary in the coal mine,” David Rosenberg, chief economist at Gluskin Sheff in Toronto, wrote to clients this week.

Investors’ sudden awareness of the danger in Washington also can be seen in the difference between what banks pay to borrow from each other and the yield on one-month U.S.government debt. This so-called TED spread turned negative this week for the first time since Bloomberg began collecting such data in 2001, meaning investors regard banks as a better credit risk than the U.S. government.

Jack McIntyre, who oversees $44.5 billion at Brandywine Global Investment Management LLC in Philadelphia, said slow economic growth, low inflation, and accommodating central banks explain why 10-year Treasury yields are little changed from Obama’s first month in office, even as federal borrowing has soared. […Read More at Bloomberg]

Transcription:

Eric: Hi, I’m Eric.

Dick: And I’m Dick. We’re the annuity guys. And Eric, big government shutdown.

Eric: Government shutdown. We’re talking about right now obviously the United States is kind of imperil I guess where the people is like threat… the looming…

Dick: We’re on the threshold… we’re on the brink of disaster…

Eric: That’s right. Here comes the default, we’re all going to the heck of a hand basket. You know, we’ve already seen what happened in Greece and all of Europe over the last couple of years…

Dick: Which is very real and stronger markets into total mess and we’re feeling a little of it.

Eric: Yes. So, the threat of default a lot of times we go through this political pressure in the economic market and what we see is how they react and they keep on trying to anticipate what they think the government is going to do…. and I think we finally saw the first the market is kind of blink just here recently and it’s like they said “I don’t know if I want to own your death?

Dick: And political will tends to waiver very quickly and we were reading an article on that this morning; but political will is very quickly dictated to by the markets and politicians think that somehow they’re going to dictate a policy just based in a vacuum of what they want and they realize real quickly that they can’t do that.

Eric: Well, and I guess we should get a little bit history when we start talking about annuities and how annuities are impacted by bonds, it’s kind of a mixed bag really because you would toy to think when bond rates go up so do the rates on annuities which is generally because you have insurance companies are buying bonds to basically pay off their annuity holder.

Dick: Yes.

Eric: but when you have annuities that are ricocheting up and down and you have instability in the market, that’s really what makes a lot of people nervous.

Dick: Right. Well and the annuities, generally speaking Eric, what they do so well is they insulate against the volatility of the market and the risk in that is in most portfolios, and as you well know when you go back to the just the standard portfolios that we’ve all been recommended is generally everywhere all over the internet… you need a mix of bonds, you need a mix some stock, and just talked about it regularly.

Eric: Yes, just a rule of thumb – it’s all based of your age, you take your age and subtract if from a hundred and there’s your mix of bonds and equities. I’ll be honest. I’ve been having conversations with people telling them that they may want to consider eliminating some of their bond possessions – maybe all of them – and replacing them with annuities for the very reasons you’re just mentioning. That when you look at you know, you can eliminate the market declines in this kind of pingpong effect… you don’t have to worry about default risk because you own the annuity, you’re not worried about the bond defaulting or the federal government not paying its debt… and they got couple bonuses like for life…

Dick: Oh yes, that will be nice, why not?

Eric: And how about not having initially pay a management fee to somebody that’s managing a bond portfolio.

Dick: Well case in point Eric, go back to when the market took the big nose dive or 2008 the Great Recession, well, what do we think? We thought that based on conventional wisdom if we have at this stock bond mix, then sure the stocks are going down but the bonds are going hold us up!

Eric: Right.

Dick: What happen? It all went down. So now, here we are in probably the most vulnerable position potentially in all of history but at least in recent years – the last century, where the bond markets are facing this inverse relationship to interest rates were interest rates have nowhere to go… but straight up and what’s going to happen to the bottom market, to the yield?

Eric: Who wants to own a one percent bond when all of the sudden they’re going start to pay two percent or 3 percent? Nobody’s going to be able to get rid of those bonds!

Dick: Yes, it’s a hot potato. And why not let, you brought it up… why not let the annuity companies manage that risk because that’s what insurance companies do best. They manage risk and they basically hire the cadre de army of managers that’s needed to manage bond risk.

Eric: Right. They’ve done this for hundreds of years.

Dick: And they do it long-term, they’re not in it for the short-term treasury.

Eric: It’s just not for your lifetime which sounds a little funny but they have managed it for multiple lifetime. So, they look much bigger much larger…

Dick: Some of these companies, one in particular I’m thinking of, survived over the last three hundred years and it’s a rated A company today…

Eric: Couple World War and…

Dick: France take over… Napoleon Bonaparte… and the list just go on and on… So, the truth of the matter is that government shutdowns; rather they’re perceived, they’re real; the austerity measures we’ve seen in Europe, they have a dramatic effect on interest rates and interest rates have a dramatic effect on annuities; and interest rates have a dramatic effect on volatility in the market.

Eric: So, let’s put this in summary, I guess. Is it a good thing to hold an annuity or being an owner of annuity when there’s a government shutdown?

Dick: I think that that would be where I would want my portfolio to be; a portion of it anyway in annuities – a foundational portion – so that when these kind of things happen, which they’re going to or something new that we’re always blind sided with something new…

Eric: That’s something that’s never happened before…

Dick: We think we’ve got it all figured out, we’ve got all the stress tests then low and behold the next crisis comes along that blind side us… that’s why it make sense to have a portion of the annuity – a foundational portion, so that when these things happen you can weather the storms without stress… sleep well at night…

Eric: Some safety, some security, some annuities.

Dick: Agree.

Filed Under: Annuity Commentary, Annuity Guys Blog, Annuity Guys Video, Annuity Rates, Annuity Safety, Retirement Tagged With: annuities, Bond, Government, Government Debt, Government Shutdown, United States Public Debt

Annuity Rates, Caps and Fees

July 13, 2013 By Annuity Guys®

“What are your best annuity rates?” This is how about 50% of our phone calls from website visitors start out after they visited AnnuityGuys.org .

As independent advisors, fortunately, we are able to offer our clients the best fit from dozens of companies including those with the highest rates, best caps and lowest fees. So, if you find an annuity with the best **guaranteed rate, the highest cap and the lowest fee, you have found the best annuity – right? Probably not. We do not believe that one perfect annuity exists for achieving the most common retirement objectives.

There may be a best choice to accomplish a chosen goal with one specific annuity, whether it be growing money safely and consistently; generating a secure and increasing income; or passing wealth to children. However, trying to use one annuity when three are actually needed often causes frustration in looking for that one best annuity solution.

Video: Annuity Guys® Dick & Eric explain rates, caps and fees can impact your retirement.

**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.

Review 3-Best Retirement Annuities for Your
GROWTH, INCOME & SAFETY!

 
As Annuity Guys®, we get excited about the increases in rates and caps from many of the most popular companies. In addition, many companies are developing innovative strategies to allow for additional growth opportunities and added benefits.  Yes rates are going up, caps are going up and fees have stabilized; but we recommend you consider annuities for what they **guarantee, not what they “potentially might do” if things go well.

Five Retirement & Annuity Calculators

Best Advanced Retirement Income Calculator - Free
  • Advanced Retirement Annuity Income Calculator
  • Advanced Financial Planning
    Retirement Income Calculator
    Save Reports & Planning Docs!
  • This powerful calculator doesn't guarantee accuracy or any future results. You should use a licensed financial planner to confirm all of your calculations.
    Instant Access - Confidential - Easy Opt-Out
  • This field is for validation purposes and should be left unchanged.


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"
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"

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.


Get Full Video Access & Our Library Edition - Annuity Reference Book
Fiduciary Retirement Review
Is Your Annuity Advisor a Salesman or a Fiduciary?
2025 Advisor Report
  • *FIDUCIARY RETIREMENT REVIEWS
    No Cost or Obligation - Annuity Guys
     
    "For Your Retirement's Success"
     
    Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Fiduciary Advisors 10% - Sales Advisors 90% 
     
    2025 Financial Advisor Summary Report
     *Fiduciary Financial Planners we estimate at less than 10% of total US financial advisors.
    The other 90% of advisors are salespeople such as brokers, bank reps, registered reps. & insurance agents.

     Advisors licensed only as a sales oriented securities broker, registered rep, or insurance agent, ARE NOT Fiduciaries! They work on a much lower legal standard of Suitability which does not require full disclosure and only requires a suitable product sale, NOT what's actually best for their client!

      Fiduciary Financial Planners by law are subject to the highest standard of financial planning and investment advice accountability.
      Hence, clients of a fiduciary can know that their advisor is required legally to work strictly for their highest benefit.

      This is also referred to as the prudent man rule, which in simple terms means that by licensing as a Series 65 Investment Advisor / Financial Planner they must give clients the best advice they are capable of based on all the knowledge they possess and information they have access to, in the same way they would advise and help close friends or family members.

      Fiduciaries also must disclose all known conflicts of interest that could potentially bias their advice, such as - selling financial products that pay them higher  commissions with higher fees or costs, and their lack of investment product availability for their clients' needs, just to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"

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!

Learn the 3 Best Annuities to Help
ASSURE YOUR RETIREMENT'S SUCCESS!

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.

Filed Under: Annuity Commentary, Annuity Guys Blog, Annuity Guys Video, Annuity Rates, Retirement Tagged With: annuities, Annuity, Annuity Fees, Annuity Rates, Best Annuities, Guaranteed Rate, High Rate, Rate

How do you Choose the Best in Class Annuity?

June 1, 2013 By Annuity Guys®

The latest issue of Barron’s proclaims to know and list the Top 50 Annuities. Being the Annuity Guys® that we are, we quickly located the article and tables to find out if they were right. What criteria would they use to choose the very best. Finally we would have the answer that all of our readers and callers need so desperately.

Unfortunately, their best in class annuities may do more harm than help.

Annuity Guys® – Dick and Eric, evaluate Barron’s Top 50 annuity article and their best in class annuity selections.

**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.

Don’t get us wrong, we are grateful that this publication largely dedicated to investing in stocks and bonds or other securities has dedicated some time to cover a financial instrument that should be considered for at least a portion of most retirement portfolios that need safety, income and modest growth. However, consumers hoping to find answers about the top annuities will only know a small part of the story. Their hypothetical examples only apply to a very tiny segment of the annuity buying population.

While we hate sounding like a broken record, you should know that with annuities there is not a “one-size fits all” model. Sure you can use a list like the one found in Barron’s to ask for a comparison, but an expert advisor who specializes in income and retirement planning will be more likely to come up with better annuity choices when your specific scenario is fairly considered.

Here is an excerpt from the Barron’s article that made us shake our heads sideways.

Top 50 Annuities By Karen Hube

The once-dominant variable annuity# is getting a bit of competition from cheaper iterations. These stripped-down products offer some surprising advantages, though.

Armand Baughman, 71, a retired Continental Airlines pilot of Valley View, Texas, has always viewed annuities as too complex, illiquid, and expensive to warrant his consideration. But last year, he socked $200,000 into a tax-deferred variable annuity#, calling it “the best thing since Cracker Jacks.”

What changed? As part of an effort to lift sagging profits after years of challenging market conditions, firms are giving the oft-maligned annuity a makeover: an ultralow-cost, variable annuity# that offers a broad array of alternative investments, including hedge funds, currency funds, managed futures, and other strategies.

Annuity companies are trying to make a comeback after years of struggling to remain financially sound under the cloud of low interest rates and high stock-market volatility. With annuity sales down 8.4% last year, to $211.8 billion, the lowest level since 2005, annuity providers are aggressively designing and marketing annuities that — like the low-cost variable annuities# — appeal to very specific investor goals or needs.

“For years, companies offered products that tried to do everything at once — give the highest rates, best liquidity, best income **guarantees, and benefits,” says Ken Nuss, founder of AnnuityAdvantage.com, which has free listings of fixed index and income annuities. “But that’s over. They’re getting better at fulfilling a specific goal more effectively.”

To help sort through a breadth of products, Barron’s surveyed annuity companies and industry experts to come up with the 50 most competitive contracts in popular annuity categories. The results, based on common investor assumptions and goals, are detailed in the table, right.

Low-cost variable annuities# with alternative investments earned a new category entry in the top-50 survey this year, thanks to the growing number of these contracts and their potential benefits to investors.

ANNUITIES, WHICH ARE TAX-DEFERRED INVESTMENT vehicles that allow you to turn on an income stream either immediately or years from now, come in two basic categories: Variable annuities have payouts that fluctuate along with their underlying investments; fixed annuities offer a **guaranteed interest rate for a specified number of years. [Read the full article at Barron’s]

Transcription:

Dick: Hello, I’m Dick.

Eric: And I’m Eric and we’re the annuity guys. Today Dick, we’re going to look at best in class annuities. Now, that sounds awfully high pollutant there. What’s best in class mean? Sounds like a horse racing term.

Dick: Well, Eric, one of the problems that we’ve had in our videos and we’ve been criticized at times; we had folks say…

Eric: No.

Dick: Why don’t you guys tell us what a company; which annuity and that type of thing? Well, let’s just give some disclosure here. Folks were in the most tightly regulated, most highly compliant industry; and if we start mentioning company’s names, we actually have to go out to get their approval first.

Eric: We need a lot more leave time to be able to tell you what the company name is.

Dick: Before we can do a video.

Eric: We have to get approved by the company and then they take about six weeks to banter back and forth; and then they come back, they usually say, no.

Dick: And then there’s another problem, if we start mentioning companies Eric…

Eric: Because it’s wrong as soon as we say it.

Dick: After we’ve said it, it’s wrong the next day. And that’s because the best in class annuities; Eric and I have certain annuities that we tend to favor or better than others, and certain companies…

Eric: It’s based off of historical performance that typically is better than others

Dick: But we may have a client one week that’s pretty similar to a client two or three weeks later; and we have to use a different product because some things either change with that annuity or that person’s situation is just a little bit different.

Eric: That’s right. It can be as simple as one is male, one is female. You would think there would not be that much difference?

Dick: So, what got us going on this subject today?

Eric: Well, It varies. I love them, but I hate them right now. You know it’s nice of an investment kind of publication that we typically think up to feature annuities in the top fifty annuities on the cover of that…

Dick: Well, they’re so biased. A lot of times they won’t even talk about annuities.

Eric: That’s right. So, we love the fact that they’ve decided talking about you which are the top fifty annuities. Now, I’ll have you know, they’re wrong.

Dick: Take it with a grain of salt and read it with a critical eye.

Eric: That’s right because as soon as I look at their list, I said “oh no!” Now, they had to make assumptions. They assume within their first section here that everybody two hundred thousand dollars exactly.

Dick: They’re all sixty years old.

Eric: Six-years-old and male. So, this list is probably very good for the time the article was written if you’re sixty and had two hundred thousand dollars. Now, if you’re 63 and female, the list is wrong.

Dick: Or all you have is two hundred thousand in your name; or what if you had a million to your name? All those variables change. Suddenly, that isn’t the right annuity because there’s other reasons you’d be doing this.

Eric: So, it did address some of the issues in the different pieces but we would tell you that when you first look at this, don’t assume everything here is going to apply to your situation. There’s typically not just one best annuity.

Dick: No! And then when you start talking about working with an advisor that really gets it, they’re going to take a much more sophisticated approach and it’s good not going to be one best in class annuity; it’s going to be three or four or five; and they’re going to have to all work together.

Eric: Right. It’s a balancing act of usually giving you an option. Maybe this one is lower rated but has a slightly better pay out for what your intention is.

Dick: Yes, yes.

Eric: This one has a higher rating but maybe slightly lower or may have to hold it a little bit longer…

Dick: This piece over here works well in a tax-free environment for growth and there’s the maybe starting a portfolio out of a good immediate annuity might make sense out there. So, again, being able to structure this properly, I would say to get best in class annuities, there’s no substitute for working with an expert.

Eric: And that’s where you rely on somebody in their expertise to define for you, what fits your situation. I know I sat down and run numbers and I’ve had what I thought was going to be the best one going in. And all of a sudden I said I run numbers and for this particular unique situation it had to be somebody that was exactly this year old and got to hold it for this long, one specific annuity all of a sudden jumps out of package you never expect. Nothing pay’s to go back and look at the analysis and…

Dick: Exactly. And it doesn’t hurt folks; never, never think that Eric and I are saying “don’t do your own research.” Look at the company’s ratings; get in our rate vault and look at all of the different annuities and the different features, and ratings, that type of thing; and do some comparison. But then, there comes a point where you do get involved with a an expert, an agent that works with these on a regular basis; and they’ll be able to look at the subtleties, the real differences and that’s where you really can find the best in class annuities.

Eric: And as we’ve spoken, there’s no reason why you can’t pull out a list like this and say “hey, what about company X here? I see that they were best in class on variance. What’s that look like?” The advisor can then run the numbers give you the idea of why what they’re proposing may be better or you know…

Dick: Eric, even with our expertise, we’ve had situations where somebody’s come to us and said “you know I was reading about this or that or whatever”; and maybe we haven’t even opened our eyes to something that they brought to us. And then we started utilizing it for other clients because it looks like they were right. You know, I’d like to think that we have a lock on all the knowledge but it’s working with people on a regular basis that keeps us on our toes and keeps us at the top of our game.

Eric: So if I’m looking for best in class annuity, where do I go?

Dick: You go first of all to our website…

Eric: Which you are here for a long time…

Dick: And you begin your research; and then you work with an expert advisor.

Eric: Yes and that’s the key; it’s getting the facts from somebody that works in this area all the time.

Dick: That’s right!

Filed Under: Annuity Commentary, Annuity Guys Blog, Annuity Guys Video, Annuity Income, Annuity Rates, Annuity Returns, Retirement Tagged With: annuities, Annuity, Annuity Companies, Annuity Providers, Annuity Sale, Equity-indexed Annuity, Income Annuities, Indexed Annuity, Life Annuity, Marketing Annuities, retirement, Variable Annuity

What do Annuities Really Earn? No Hype…

January 19, 2013 By Annuity Guys®

Apples and oranges – what do they have in common? Both are fruits!

Why would we start a discussion about annuity earnings with apples and oranges? When people start looking at annuities, they invariably want to compare them to mutual fund^s or other securities. Commonly, they will start the discussion about the merits of a particular annuity by asking about the “upside” or growth potential. Let us state this clearly – thinking of annuities as accumulation products by comparing them to securities is just plain wrong in the vast majority of scenarios. So let’s not mix apples and oranges.

Do annuities have growth potential? Sure, but do not decide to purchase an annuity expecting high single digit or double-digit gains, especially with today’s economic conditions.

Annuities are safety and security products that should be viewed in the light of their **guarantees. Dick and Eric examine what annuities really earn in this weeks video.

[embedit snippet=”video-specialist-button”]

 

**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.

In addition to your questions, this weeks inspiration came from…

Behind the indexed annuity curtain

By Stan Haithcock at MarketWatch.com

We all saw the original Wizard of Oz movie when they went to see the powerful Oz and were totally in awe until the dog, Toto, pulled the curtain back to show that it was just some goober running a sound board.

That curtain needs to be pulled back on indexed annuities as well because “the show” is getting to be a little overwhelming on the lunch seminar circuit and with the increasingly aggressive online annuity promoters.

First of all, let me explain the details of an indexed annuity (also called an equity-indexed annuity, fixed-index annuity, hybrid annuity). An indexed annuity is a fixed annuity with a call option on an index, usually the Standard & Poor’s 500 Index. The vast majority of the call options are one year in length, but can be as long as five years. The S&P 500 index represents over 90% of the index option choices even though other index selections (Dow, Nasdaq, etc.) can be found in some product offerings. These call options allow you limited participation in the upside of the index (not including dividends).

When indexed annuities were developed a couple of decades ago, they were designed to compete with CD returns, not market returns. They were never put on the planet to be a pure growth product, even though they are sold that way by agents and the online annuity spammers. Realistic and historical (yes agents, these are also called facts) return expectations for indexed annuities should be around 3% to 5% annually. Those annual gains, if any, are locked in at the contract anniversary date, and then a new index option starts.

Please understand that indexed annuities are complex products, and the majority of agents are unable (or unwilling) to properly explain them and usually just focus on a few sizzle points. Below I have listed some of the positive and negatives of indexed annuities and where they might work within your portfolio.

Positives

  • Used with Income Riders for target date income planning

This is how I use indexed annuities for my clients. I also attach contractual death benefits or confinement care benefits when that is the ultimate goal.

  • Downside protection

Because your potential gains are attached to a call option, if the markets go down and the call option expires worthless at your contract anniversary date, then you will not lose any money. Agents use the phrase “Zero is your hero.” That’s a pretty goofy way to put it.

  • Gains locked in

This is a very good feature of indexed annuities. If you have gains from your index option, that gain is locked in permanently, never to go below that amount. Just remember that your upside potential is very limited, regardless of what your agent tells you.

  • Possibility to capture market dips

As an example, if the S&P 500 index goes from 1,300 to 900 in one year, your index option for that year would not credit any gains, but you would start the next index option year at 900 on the S&P 500.

  • Higher actuarial payout for income

Most indexed annuities, when used for lifetime income purposes with attached income riders, have a higher actuarial percentage payout than similarly structured variable annuities#. [Read More…]

Annuity Guys® Video Transcript:

Dick: Today we want to talk about annuities, and we want to get all the hype out of the way, Eric.

Eric: The hype? There’s hype in annuities? Oh my gosh.

Dick: Well, this was inspired by Richard out in Massachusetts, one of our folks that had used the website and we had given him a referral. He sent in a question that basically said, “You know, I’ve been looking at different blogs on the Internet, and they’ve talked about the return, and the annualized return doesn’t seem to be that high.” And that’s true, isn’t it?

Eric: This is where people have the challenge. When they first start looking at annuities, they’re coming from a world where they’ve been focused on accumulation.

Dick: Right.

Eric: When we look at the mutual fund^ industry, everybody talks about, “I did this return, 20%, 30%.” “Oh, I beat the S&P.” That’s the accumulation world. The focus there is on numbers, the return I’m getting.

Dick: Exactly. Right. Is there a little hype in that world?

Eric: Oh there’s a lot of hype. You know, glossy pages with the charts that go like this. Oh my gosh.

Dick: Well, and we can look at DALBAR studies that talk about the individual investor and what they actually do earn, and it’s down below 5%, considerably below 5%. So it’s all over the board.

Eric: But must people have been conditioned to focus on the return.

Dick: Of accumulated money. Right.

Eric: Yes. I’m making this much. I’m making this much. I’m getting this much. That’s not what an annuity is about. It’s not about taking and trying to grow the asset so much as preserve it, because you’ve already done the saving part.

Dick: You’ve already done the work. You’ve built the nest egg.

Eric: What’s the goal of saving? It’s future spending. Saving is really, in this case, future spending.

Dick: Right. So would it be fair, Eric, to say that an annuity is more about security and cash flow?

Eric: Yes. Yes, it would. I would say that would be fair.

Dick: So if we were to boil it down and just get rid of all the hype, and when I say “hype,” I mean the way its presented, it may not really be hype, but it does sound good. We talk about 7% rollups on the income account and 8%. W talk about 5% payouts and 6% payouts. But if we really got down to the life expectancy and drawing the income off an annuity . . . well, first of all, let’s just talk about an immediate annuity. What would the real internal rate of return be on an immediate annuity overall?

Eric: One, two percent.

Dick: Max. One to two percent.

Eric: My thing, when we start talking about annuities, and we’re doing it now, talking about rate of return, first question I have to ask you is: When are you going to die? Then I’ll tell you what your return is going to be.

Dick: Exactly. The insurance company has this figured out statistically, and they know that, overall, your rate of return on this annuity in a statistically generalized averaged sense is going to be in the neighborhood of a couple of percent on an immediate annuity. Right now, with today’s rate, even a little less than that. Yet billions and billions of dollars of immediate annuities are sold. Why do people do that?

Eric: Safety, security, cash flow. We’re going to repeat ourselves a lot here. If you’re going to be focused on return, don’t go here.

Dick: Exactly. I know we both have got a lot to say here. But one thing that comes to my mind is all of the sure bet things that are out there in the investment world, the things that you are told you cannot lose, such as Enron, Lehman Brothers. What are some others?

Eric: Well, GM was always the . . . I grew up in a world where they always said buy GM stock, and you never have to worry.

Dick: Right. Enron? Madoff? So these are things that all look good, but those are all followed by this caveat of past performance is no indicator of future results. We tend to gloss over that and say, “Oh, they just say that.” But that’s there for a reason.

Eric: Right. But it’s a risk-reward aspect. You’re chasing the reward there and are willing to take some of that risk. What we talk about when we look at annuities, we want to take that risk and diminish it significantly so that you have that safety, you have that **guarantee.

Dick: Yes.

Eric: And that’s what we’re focused on with annuities.

Dick: And that’s not for all of a client’s money.

Eric: Not all of your money. That’s right. Asset allocation, spreading the baskets out.

Dick: It’s a further diversification, another layer of protection and safety completely. And now if we get into the very popular indexed or hybrid annuity, there are a lot of things to talk about in terms of that income rollup and how it gets your income up to a certain level by a certain age, which would not be **guaranteed if you were in the market. You maybe couldn’t take that big of an income without depleting your principal much faster. So there is that aspect. But if we just talked about the overall rate of return of that hybrid annuity, we took it like some of these guys do, and they’re very good at their math and their spreadsheets. They spread it out and they show if you start a guy out at 60 years old and you defer him for 5 years or 10 years, with this 7% rollup, you turn it on, and he lives to age 90. What’s his return going to be?

Eric: Like two, three, four, five percent, perhaps. That would be on the high end.

Dick: On the real high client.

Eric: It depends on when you start.

Dick: Two percent on the low and maybe, like you say, four to five on the extreme high, but more like two to there percent would be like the max. They’re are part of the rule.

Eric: Part of what we’re looking at is we’re looking at pieces in today’s environment. Caps right now are structured around what today’s caps are.

Dick: Right.

Eric: So when we’re looking at things, we like to today’s numbers. Now, we expect caps will increase in the future. Can we **guarantee it? No.

Dick: No.

Eric: And that’s what, when we work with annuities, we really like to talk about **guarantees. Because if you’re satisfied with the **guarantee, then anything above and beyond is good.

Dick: That’s right.

Eric: And the same thing is true on the indexing side of these components. Look at what the **guarantee is. That indexing component offers a little bit of a bump. But, focus on the **guarantee.

Dick: Right. Well, folks, I think for today’s topic we want to thank Richard. Thank you Richard for that good question. Eric and I added something at the first of the year that you may not have seen on the blog site. So when you’re through with this, if you’d like, you can actually ask us a question.

Eric: That’s right. We’ve put it out there in a couple different spots. We encourage you . . . as we come up with topics, sometimes it’s nice to know what you want to actually hear about.

Dick: Right. We tried to dispel the hype here and get down to the real rate of return is and then talk about the real reason that you do an annuity and choose an annuity.

Eric: No hype, just answers.

Dick: Thank you.

Filed Under: Annuity Commentary, Annuity Guys Video, Annuity Rates, Annuity Returns Tagged With: annuities, Annuity, Equity Index Annuity, Equity-indexed Annuity, Fixed Annuities, Fixed Indexed Annuities, Hybrid Annuity, Index Annuities, Indexed Annuity, Life Annuity, Online Annuity, retirement, Variable Annuity

Are Annuities Improving With The Economy?

January 11, 2013 By Annuity Guys®

Annuities have been on a significant growth upswing since the equities market started tanking in 2008. So if annuities were more popular when the market dropped, will they lose favor if the economy improves? Don’t tell the mutual fund^ industry, but it would appear that increased annuity allocations are here to stay. Since 2008, consumer surveys of retirees have shown over and over that sentiment has shifted… retirees are no longer focused on just maximizing returns but rather **guaranteeing that their retirement savings will last as long as they do. Dick and Eric look at some of the changes in the annuity marketplace and what those changes mean for you.

[embedit snippet=”video-specialist-button”]

 

**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.

Read the “Annuity Perspectives” Article by Jack Marrion, that inspired this weeks entry.

The End Of The Beginning

In recent months I’ve been looking at the fixed annuity space; from new products to changed older ones, at recent surveys showing how consumers feel about and are using annuities, at census data and at how economic variables are affecting everyone from the individual consumer to the carrier to the global economy. I’ve also talked with people in the annuity world that are disheartened by the events in 2012 and pessimistic about the future of the industry. And yet as I did more research I became more optimistic. In fact the phrase “the end of the beginning” kept resurfacing in my thoughts.

In the early days of World War II Britain experienced a series of defeats. However, in the fall of 1942 they defeated Erwin Rommel’s Afrika Corps at El Alamein and Egypt was saved from invasion. Shortly thereafter Winston Churchill gave a luncheon speech at the Lord Mayor’s house in London. In the speech Churchill said this victory did not mean that the war was ending or even that it was the beginning of the end, but that it was, perhaps, the end of the beginning of the bad times. Now, I am not trying to equate the struggle of wartime Britain with recent difficulties in the annuity industry. What I am saying is that I believe the annuity industry has faced and is working through its problems. While the fixed annuity sector may not quickly soar back to the previous heights we are at least almost done falling – it is the end of the beginning of the bad times. I’d like to share why I believe this to be so.

Bond Yields Have Bottomed

Bond yields reached their cycle low at on 7 December 2012 at 9:43 AM. Well, I might have gotten the time wrong, but there are indications that bond yields have fallen as far as they’re going to. Two indicators of interest rates, yields spreads and leverage, show that financial conditions are much looser than they have been. When the St. Louis Financial Stress Index and the National Financial Conditions Index are positive it indicates there is stress in the financial markets and lending is tight. The charts on the next page clearly show the tension during the 2008 financial crisis. However, for the last several months these indicators have been negative showing that money is available. Indeed, November 2012 was a record month for corporate bonds issuance showing that corporations believed that there would never be a cheaper time to borrow money than now [The Economist, 8 Dec 12. page 74].

Even though the Federal Reserve Board stated in December that they would keep short-term rates low until unemployment is substantially reduced, the reality is the Fed had already shot their bolt and this announcement will have little additional effect on rates. The driver for increasing bond yields is an improving economy. The economy will improve as 2013 progresses and bond yields will also increase. Another factor helping overall rates is that yields on U.S. Treasury bonds and notes are abnormally low relative to corporate debt yields – a hangover from concerns stemming from the 2008 crisis. Even if overall bond rates stay the same Treasury yields will move up as investors realize they priced too much risk into corporate bonds. As long as the U.S. avoids a full-scale recession bonds will pay more interest as 2013 progresses. [Read More…]

Annuity Guys® Video Transcript:

Eric: Today, we’re looking at whether or not the annuity world is improving at the same pace the economy is.

Dick: Well, that depends on what we want to judge the economy’s pace.

Eric: Is the economy improving? I guess is the first question most people would ask there.

Dick: I think generally speaking, folks are optimistic right now about the economy coming back somewhat.

Eric: Here we’re really foreshadowing into 2013. We’re looking, as we expect things to improve if our projections are right and the band aids get applied. We have that nice new skin that we’ve now in the economy.

Dick: Eric, one thing that’s prompted us this week, is this article that we have here by Jack Marrion and he’s looking at different aspects of annuities and how they’re affected by the bond market and by consumer sentiment the popularity or the supply and demand.

Eric: First of all we should talk about how insurance companies make money. It’s pretty basic. They take in and they buy an investment, they get it here, and then they have to pay you out, whatever they make between what they have got there.

Dick: Between a bond yield and their expenses.

Eric: The expense of the annuity payment is where they make their money. They make their money on the spread. What we had seen in the last couple of years is the pull back of benefits. Boy, they really tightened down the minimum **guarantees and all those pieces, almost to the point that some people are saying there is no benefit at all.

Dick: Maybe they even overreacted, that’s what Jack said.

Eric: That’s what Jack is saying here. Here’s the good news. Even if the bond market does not change much or if we do not have that much improvement in the economy, we’re likely to see an improvement in the annuity world, solely because some companies pulled back further and tighter than they needed to. That’s not saying every company did.

Dick: One thing that excites me about this is that obviously, when it comes to new annuities we like to see new benefits or new or better earning possibilities, but what really excites me is that those folks that already purchased a hybrid or a fixed index style annuity as things loosen up, their caps and ability to earn will continue to increase and improve.

Eric: And a lot of people do not grasp that concept. Those cap rates are not set for the life of the annuity.

Dick: Exactly.

Eric: They adjust on an annual basis, typically. Some of them are a biannual, but you’ll see adjustments in those caps. So yes, some people get mad when things go down or lower than when they started, but they also have the potential to go higher than when you started. So if you are a new entrant in the last couple of years, don’t panic. There is a good chance that those caps will increase with you.

Dick: That’s right. Really what’s more important for most folks, like our clients that we have worked with, is really the contractual **guarantees on the income, is more important than the caps or the cash accumulation.

Eric: We always say the **guarantee is what you hang your hat on, so if you can live with the **guarantee and that’s not going to change. Those **guaranteed pieces don’t change.

Dick: For those of you who already have your annuity, your contractual **guarantees are probably even better than what’s going to be there in the future.

Eric: The other change that may not be so positive in a sense, is that a lot of these rollups and ratchets we’ve seen in the last couple years 7.0-8.0%. Those are the things that make…

Dick: They’re now thinking about pulling those back.

Eric: Because those are long-term pieces.

Dick: They’re liability. Folks, a lot of times and we’ve sat and talked with different ones that have been a little skeptical. Like “Well, the insurance company’s making money. They’ve got it all figured out and they can afford to do this 7.0% or 8.0% or whatever.” Well, when they sit down and they work the numbers out, sometimes they have to pull back on those, because it is too generous.

Eric: So if you’re looking at one of those hybrid styles right now. We do not want to tell you to wait to look for something better, because the better may already be here on that side.

Dick: Right, on the contractual **guarantee side.

Eric: What we’re hearing is kind of what the expectation for the changes in the upcoming year may be more cash values, more increases in cash potential and benefits, based off of actual cash, rather than these **guaranteed withdrawal benefits.

Dick: Right, which is really the pension aspect of the annuity that so many people use effectively.

Eric: And talking about pensions. Jack talks about the changes in people’s perceptions. Ten years ago, when people were actually offered company benefits about half of them would take the pension style and the other half would take the lump sum.

Dick: Right. It’s changed a lot.

Eric: Today, almost 90% of the people or about 90% of the people are taking the pension benefit, so what’s that saying?

Dick: They’re saying “I want the annuity.”

Eric: They want the **guarantee and I think that’s the aspect that their attitudes are changing. They’re not worried about accumulation, so much as worried about having money that’s around as long as they are.

Dick: Well, even annuity owners in the studies that he mentions in here, and folks we will put this out on the blog, so that you can look at it.

Eric: It should be down below, portions of it anyway.

Dick: But one thing that Jack points to from one of his studies, is that of the people who actually own annuities, about 73-75% of those people actually, feel that that’s a very important part of their retirement plan. It’s a strategic allocation to their overall retirement strategy.

Eric: It’s not going to be part of what we are talking about here, but I just read another study that talked about the inclusion of a fixed indexed annuity in a retirement plan and the probability for success and having money at the end.

Dick: Right, I was looking at that also.

Eric: Your probability of success when it includes a fixed annuity versus, either a variable annuity# or just using stocks and bonds or mutual bonds, your probability of success is greatly enhanced, when you had a combination of those pieces. We’re starting to see more and more people consider annuities as a replacement for bonds.

Dick: For bonds right, for that portion of their portfolio.

Eric: Because it takes that degree of risk from the increase in the bond prices or the change in the bond prices.

Dick: Well, there is another layer of insulation, between the bond market and the investor and the consumer.

Eric: You put that portion of liability, really on the insurance company to manage.

Dick: It also gives another aspect which is of protection, which is the longevity aspect the insurance company takes on the longevity risk.

Eric: The last point that I want to make, as far as what Jack talked about. He talked about so few consumers truly understand how annuities work, and that’s probably why you’re sitting here listening to us at this stage, is you’re wanting to learn more about how annuities and how work and how they function. With all these innovations and these changes, the one thing we always say is work with a local financial advisor, because they’re the ones that keeping up on the innovations. It’s their job to take what you’ve learned now, and enhance your ability to pick the right product and right solution for your needs.

Dick: According to the study, less than half of the people feel like they have any knowledge about annuities that are all in this retirement group. It’s the largest group of retirees that are facing retirement that we’ve ever seen. Less than half of them have any real knowledge and only about 5.0% feel that they’re very knowledgeable, so there’s just a lot of room, folks to learn about annuities and know how they’re going to fit.

Eric: So can annuities be part of a successful retirement plan in 2013?

Dick: Absolutely and I do think that as the economy improves that these annuities will take their place and continue to innovate and improve and also very fortunate, for those who already have an annuity that it’s going to be able to keep up.

Eric: Good deal. Thank you very much, for tuning in today.

Dick: Thank you.

 

Filed Under: Annuity Commentary, Annuity Guys Video, Annuity Rates, Annuity Returns Tagged With: annuities, Annuity, Equity-indexed Annuity, Fixed Annuities, Improve Economy, retirement, Using Annuities

Stop Annuity Procrastination: New Years Resolution!

December 29, 2012 By Annuity Guys®

Procrastination – or the act of replacing high-priority actions with tasks of lower priority.

We always hear of people who spend more time planning their annual vacations than they spend planning their retirement. An annuity may or may not be one of the strategies you will use to plan a comfortable and secure retirement; do yourself and your family the benefit of resolving to develop a plan for retirement this year.

Watch Dick and Eric in this light-hearted video as they wish you Happy New Years and discuss why we all tend to put off planning for retirement.

[embedit snippet=”video-specialist-button”]

 

**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.

Read More about Financial New Year Resolutions…

This Year We’re Serious About New Year’s Resolutions

NEW YORK (TheStreet) — Americans make all kinds of New Year’s resolutions.

Losing weight, pledging fidelity to faith and family, and/or improving their career all items that are high on the list of New Year’s resolutions.

But this year, money matters may trump all of those self-directed promises.

So says Fidelity Investments, the Boston-based mutual fund^ giant.

The investment firm uses this time of year to take a look at American’s New Year’s resolutions, and 2013 should bring renewed focus on personal financial matters, with 46% of consumers interviewed by Fidelity promising to improve their financial situation next year.

At first blush, that sentiment might seem like it belongs in the “master of the obvious” category.

But in actuality, the number of Americans targeting financial issues as a resolution is up remarkably over the past few years. In fact, Fidelity says the number of Americans focused on finances come Jan. 1 has grown 31% since 2009. [Read More…]

By Brian O’Connell of The Street

Annuity Guys® Video Transcript:

Dick: Eric and I would like to first of all wish everybody a happy New Year, and we’d like to help you avoid that procrastination aspect of annuities.

Eric: It’s that time that to start setting your New Year’s resolution. It’s what do you need to do to get your financial house in order, perhaps? I think what we see a lot of times, especially right now with the low rate environment, problems in the economy, people are saying, “I’m just going to wait.” I’ve talked to people now that have been waiting for 18, 19, 24 months.

Dick: 23 years waiting for it to get better.

Eric: It’s going to change. I don’t want to know it now because . . .

Dick: How long have they waited in Japan for it to get better?

Eric: They’re going on 20 years right now.

Dick: I don’t think that we’re Japan. I don’t think, folks, that we necessarily have to use that as a true analogy, but the fact of the matter is that we’ve had 4 years or so of . . . we’ve seen the market rebound and do better, but we’re still in really a secular bear market and our economy still hasn’t gotten up to what it was back in the late ‘90s.

Eric: There’s strategies you can use, especially within annuities. If you’re afraid of making a wrong decision, you can at least make a decision with an annuity that has a return-of-premium aspect. If nothing else, a couple years from now, you start over again. There’s things you can do, strategies out there, and pieces that can allow you to move off the couch, so to speak, and get going.

Dick: The goal isn’t just to go out and get an annuity. Eric and I are not proponents of everybody needs an annuity, or everyone needs to make a quick decision. It’s just the opposite. If your situation, your goal, your objective is for the type of things that annuities can help you with, and you’ve been investigating it; what we call in industry, and it’s used a lot, a term is . . . go ahead.

Eric: Analysis paralysis. It’s my favorite term.

Dick: We see it all the time where, for one reason or another, it’s just easier to put it off.

Eric: The fear of making a bad decision puts you in a position where you make no decision. I’m making no decision because if I make a decision, it’s going to be a bad one, so by default.

Dick: By default, many times, you do make a bad decision. Again, when you’re wanting to get into the annuity aspect, you want to make sure you have weighed everything over to a reasonable degree, done your research. Then if it makes sense, the key is Eric, wouldn’t you agree, that if you’re meeting your goals and your objectives you’ve really solved the problem?

Eric: Yeah. That’s exactly . . . we always talk about working backwards. If you know what you want to achieve in the end, it helps you design and put the pieces in place that help you get there. You have to have a target. I always used to quote Zig Ziegler, and he said, “You’ll never hit a target you can’t see.” That’s true of your financial house. As a financial resolution, perhaps this 2013; start thinking about what your targets are. Where do you want to be? When do you want to be there?

Dick: Once you’ve identified the targets, you’ve identified the solution; it’s okay to move forward. You don’t have to keep analyzing and the paralysis of analysis. There is a certain level of becoming comfortable and making a decision. Folks if you’re anything like the clients we work with and most people that we’ve had experiences with, once you’ve made that decision, you’re going to want to second-guess yourself, you’re going to lose a night’s sleep or part of a night, and yet at the same time, you’ll feel a sense of relief that you’ve made the decision.

Eric: Work with a professional. Sometimes when people log into our site, and they say, “I look at all the annuities out there.” There’s almost 3,000 annuities there. How can I chose?

Dick: Just completely overwhelming.

Eric: What we say is, “That’s where you need to work with somebody that’s a professional because they’ll help you narrow down your selections and give you a much more reasonable pool to work within because they know what you are trying to achieve, and they can pinpoint what the best opportunities to help you get there are.”

Dick: Research on the internet of that nature, Eric, is a great place to start. What it really does more than anything, I believe, is it helps you folks to be able to ask the right types of questions to an advisor, to have knowledge of what you’re looking for in a general sense. That way, the advisor can start to narrow down in a much more specific product or antisense of what’s going to actually solve the problem.

Eric: Resolution: Take action, even if the action is making a plan.

Dick: That’s right.

Eric: It’s your retirement. You get to do once, do it right, but don’t let inaction be the plan, because it doesn’t work that way.

Dick: Exactly. Eric, in this video, we haven’t talked a lot about specific annuities. I think it’s good to have a good general discussion like this, where we just kind of share the holdbacks that we see with different individuals that we work with. Also, I just want to add this to it; we see a lot of folks that make a decision, that have done their research, they’re very comfortable with their decision, and they’re very glad they did. Years later, they’re very appreciative of everything that they’ve accomplished.

Eric: It’s the safety security. When you make that decision, sometimes, you feel like you’re giving something up, but you’re not just giving something, up you’re creating the first step in creating a plan.

Dick: Right. Folks, make that New Year’s resolution, not necessarily to run out and buy an annuity, but to go forward and do something that’s very constructive, that’s going to make a difference this year.

Eric: Sounds good. I resolve to see you in 2013.

Dick: Thank you.

Filed Under: Annuity Commentary, Annuity Guys Video, Annuity Rates, Retirement Tagged With: annuities, Annuity, Life Annuity, New Year's Resolution, Planning For Retirement, Procrastination, retirement, Secure Retirement, Spending Plan

Is a Pre-Issued Annuity right for you? – Part 1

June 28, 2012 By Annuity Guys®

This is a two part blog on Pre-Issued Annuities. In part 1 we will examine some of the reason why someone might consider a Pre-Issued Annuity for a portion of their portfolio.

Is a Pre-Issued Annuity right for you? If you think like most people in this low interest rate environment the answer is a resounding YES!

[embedit snippet=”video-specialist-button”]

 

**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.

Once you understand the high yielding yet safe nature of these financial vehicles it becomes apparent quickly that most of us have money that would be well suited to this type of strategy. The biggest question most individual investors have is how do I get started  without making a mistake that I will regret. The key is using an expert that specializes in this field having a legal and fiduciary interest towards you as the client. The best advisor for this will have experience in the industry, inside sources for access to the best available contracts, and be a practicing attorney to follow and assure the validity of the court order process.

PRE-ISSUED ANNUITIES ™ have several positive attributes in common that make them currently in high demand:

  •     High Yields – typically 4.5 to 8.5 percent.
  •     Safety – payment streams are **guaranteed by highly rated insurance companies
  •     Safety – Court order process protects both buyer and seller
  •     Safety – Issuers – regulated by State Insurance Commissions with **guarantee associations .
  •     Fixed and reliable income streams
  •     Diversification for portfolios of sophisticated investors
  •     Truly a non-market correlated asset
  •     IRA or Qualified Account compatibility
  •     Estate transfer to heirs
  •     Twenty year plus successful transaction history

Is a PRE-ISSUED ANNUITY™ right for you? [Read More…]

Annuity Guys® Video Transcript:

Eric: Today, we’re going to talk about pre-issued annuities, safety, and high-yield. High yield; we’re chasing numbers right now. In this day and age, everybody calls up and they say, “Where can I get . . .” and of course, it used to be, “Where can I get 5%?” now it’s, “Where can I get 3% or 4%?” Is there a place we can get 5%? Especially when they call us up, and based off the Annuity Guys® website, we get a lot of call that say, “Give me a number. Give me 5%”

Dick: This is probably the most frequent call that we get, folks. A lot of folks that are looking for CD alternatives, because CDs, as you know, Eric, what are we now? About 2% would be the max, 2 or 2½ on a really long-range CD. What we’re seeing more frequently is maybe ½%.

Eric: I was going to they all start with a dot in front of the number, unfortunately; 0.8.

Dick: Then when we come down to the new-issue annuities, new-issue annuities, again, are severely affected by this low-rate environment, which may be with us for quite some time because of our fed.

Eric: Just recently, companies are coming out and making predictions that this is the rate environment; get used to it. We’re going to see this for the next 2 to 3 years.

Dick: I’ve often brought this up, but Japan has seen this for the last 15 to 20 years and they’re the second-largest industrialized nation, their GDP, in the world. Is it possible that this becomes an extended 5 or 10-year cycle, because we’re trying to get out economy booted up and it doesn’t happen? Where can good, honest people go to get a good, fair return? That’s the big question.

Eric: The retail environment has always been, “This is what’s available to the consumer.” The nice thing is we’re breaking down some barriers and we’ve got some things that were just available for institutional buyers, banks, multimillionaires, basically people of means, or institutions of means, they dabbled in these markets before. Now you’ve got access for the consumer market.

Dick: If we go back and just do a little brief history, we’ll do something more in-depth later, but just a little brief history. Pre-issued annuities, which are called structured settlements.

Eric: Secondary market annuities.

Dick: Lottery annuities.

Eric: Life-contingent annuities.

Dick: Pre-owned annuities. There’s so many different terminologies, but pre-issued is a pretty accurate way to describe these annuities. Someone bought this annuity originally and they don’t need it anymore, or they were in an accident, they got some type of a settlement, or they won the lottery. They don’t need the income stream, but they do need some money upfront. Folks, you’ve probably seen Imperial Structured Settlement and some other ones out there that regularly advertise on television. Some of these will come through that type of avenue, or distribution. The whole idea of this is that somebody is willing to sell their payment stream for considerably less than what it’s worth, in terms of those final payments throughout the maturity.

Eric: It’s basically, ‘I have an income stream or an annuity that I’m going to eventually get this much money for. I’m willing to sell you that payment stream, or that lump sum, and you’re going to give me a lump sum now.’

Dick: You might sell $200,000 worth of payments for $100,000, that I’m going to collect over a period of maybe 10 years, which comes out to in the neighborhood of about 7%, maybe even a little more than that. That’s a way that I can get a very substantial yield and you can your lump sum of money that you need, that’s kind of the gist of how it works. Like I said, going back in history, a lot of these companies that you see advertising on television to buy these large settlements, they will actually package these up, securitize them, sell them to institutional investors, pension funds and the like, and investment banks, and they have lots of large buyers standing in the wings. Guys like you and I, Eric, and our clients, we couldn’t have access to these, just maybe 5 years ago.

Eric: The market wasn’t there. We didn’t even know it existed, probably, until the advent of . . . from an individual consumer talking to our clients.

Dick: Folks, what really happened was we went through this financial crisis and all the credit dried up, and now all of a sudden, these institutional advisers, Eric, they just weren’t walking in and buying these bundles of securitized pre-issued annuities, so what were they going to do? They found a new avenue to sell it to.

Eric: Yes. Now we have a lot of brokers, independents, going out there and basically finding these pieces out there that are available for purchase. They’re buying them and remarketing them. You’ve got brokers online that are all over the place.

Dick: There’s some negatives that we probably need to talk about, but maybe, let’s break it down and let’s talk about positives and negatives.

Eric: Let’s highlight just first the positives, Okay? Yields: We’re in a low-rate environment right now, so a new-issue annuity, if just were looking at a [inaudible: 06:11] or CD-style, you’re only going to see a return in that 0 to upward . . . 10 years will get you almost 4%. Here, we’re looking at yields.

Dick: We start at 4, 4.5, and we’re well-connected, we know the source that we can go to. We can do considerably better, and on some of different types of pre-issued annuities, they’ll pay out a little more, like the life-contingents. We can get upwards of 8.5% over a good length of time. It’s a huge difference in yield.

Eric: So the yield is much higher.

Dick: Yes. Then we come down to safety.

Eric: We got multiple levels of safety. Who may buy these, who’s underwriting all these contracts? Where are they coming from?

Dick: The ones that we recommend, or the attorneys that we work with, recommend are really coming from A-rated, A+ rated, A++ rated . . . I guess we can do a little name-dropping here, but maybe Allstate, Prudential . . .

Eric: John Hancock.

Dick: These are really strong quality companies.

Eric: We’re not just picking for our clients, it’s not just taking anything, there is a certain requirement of what we’re looking for, from a safety standpoint. They’re safe from the underwriting of that. Somebody owns these annuities. How do they get transferred into my name, if I want to buy them?

Dick: That’s another layer of protection, another layer of safety, and it’s the court-ordered process. When this whole industry got started, like we talked about, approximately 20 years ago or so, it was a little bit like the Wild West, and it was anything goes. A lot’s changed since then, and there’s been some rulings and things that protect the person that’s actually trying to sell their lump sum. Now, this all has to go through a court-ordered process. It really protects both the buyer and the seller. It’s also very important that you have some type of legal representation as it moves through that process, that it’s done where all the I’s are dotted and the T’s are crossed properly.

Eric: That’s safety from . . . so you got a court agreement that’s been placed, so the contract is basically a court-underwritten piece?

Dick: Exactly, and it really directs the insurance company, the A-rated or A+ rated company, where there payment streams are now going to. By court order, they are to pay those to the new owner of those payment streams, not to the new owner of the annuity. The owner of the annuity remains the initial person that had the annuity issued, and that’s why we call it a pre-issued annuity. It was issued previously, and all this person is doing is selling their payment stream.

Eric: It’s not taking the ownership away; it’s really just taking the ownership of the income stream and passing it off.

Dick: Exactly. Then we have the layer of safety that all of these A-rated companies, I should say highly-rated insurance companies, they are regulated by the states, The State Insurance Commission.

Eric: The State Guarantee Association.

Dick: They each have a State Guarantee Association. I would say, folks, you have to individually look into that, what your state does, but it is another layer of protection. You’ve really got about 3 very serious layers of protection. There’s another 1 or 2 that we could talk about, and I’m not going to get into it, it’s a little bit more complex from the structured settlement side, but there’s another layer of protection, sometimes, that becomes into play.

Eric: Are these like just buying them off the shelf, in the sense of who’s buying them?

Dick: This is the trick. Folks, you can go out and Google ‘pre-issued annuities’, you can look structured settlements and the like, and you will find some companies available out there on the internet that have a retail list of what’s available. Unfortunately, the best pre-issued annuities typically never hit the internet; they’re actually taken right from the source when someone wants to sell their payment stream or their lump sum. Again, this really makes a difference if you can be connected to a good attorney, someone who knows right where the source is and can kind of cut out the middle man, cut out the brokers that are in between, because typically, you’ll have anywhere from 2 to 4 brokers involved in sharing the profits before it actually get to the clients. The more that you can cut out of that, the higher yield you’re likely to have.

Eric: Less hands in the pockets, the more [inaudible: 11:26]. These are sophisticated instruments. How would they fit in a portfolio, in a sense? Is it . . .

Dick: This is still, even though there’s a certain level of sophistication to it, it’s like anything that you do in the investment world. If you look at your prospectus what, how many pages are in an average prospectus, Eric? You’re securities guy?

Eric: The phone book? [inaudible: 11:54] pages.

Dick: 100, 150.  You could say that investments are pretty technical, pretty sophisticated, and that would be true, we’ve just become familiar with them, we understand them; our stocks and our bonds, that type of thing. These, likewise, once you understand them, you realize that they’re very safe. The companies that are backing them, you can actually know your yield. You have a very reliable payout in the income stream. There’s really no volatility in it like there would be in an investment?

Eric: I think the key here is diversification, just like anything out there; it’s a key piece, to diversify your portfolio. You said it; it’s a non-market correlated asset. In today’s market, as we watch it bounce like a Wham-O ball, up and down, it’s taking that volatility out. You know exactly what you’re going to get from either the lump sum aspect or the payment stream aspect, so it becomes a nice piece to smooth out the waves with the rest of your portfolio.

Dick: I think we should also mention that it’s IRA-compatible. You’d have to setup a self-directed IRA, which there’s many different custodians out there that’ll help you with that, and we can recommend one to folks that we work with. It is just nice to know that it’s IRA-compatible. Then if you would end up passing early before you’ve received your lump sums or your payment strings, it can be paid directly to your estate or to your heirs.

Eric: Lots of pieces out there that make it an attractive option, especially for these people that, for me, this is for somebody who’s been in the CD world for a long time. They want safety, security, but they want a larger return, and it’s something that’s just going to be parked there.

Dick: It could be for somebody that’s been in the stock market, that are reaching, that are near-retirement age. They’re wanting something that’s much safer, takes the volatility out of it, but they still want to get the yield. That’s all the good things we’ve talked about.

Eric: There are some limitations. Those are on the con side.

Dick: We have to be fair about it.

Eric: We don’t have to, but it should, it makes the video that much better when we’re balanced.

Dick: Fair and balanced. We don’t want to take this away from Bill O’Reilly.

Eric: That’s right.

Filed Under: Annuity Commentary, Annuity Guys Video, Annuity Income, Annuity Rates, Annuity Returns, Pre-Issued Annuities Tagged With: annuities, Annuity, Equity-indexed Annuity, High Yield, Indexed Annuity, Pre-Issued Annuities, retirement, Strategy

Annuity Timing – Jump in or Wait?

June 1, 2012 By Annuity Guys®

Annuity Guys®, Dick and Eric examine the question on the mind of many people when comes to selecting an annuity in today’s depressed rate environment – should I jump in now or should I wait?

[embedit snippet=”video-specialist-button”]

 

**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.

Read the article that stimulated this weeks topic…

Why Indexed Annuities Keep Charging Ahead

In the first quarter, indexed annuities topped the charts in sales growth among all annuity lines as compared to first quarter 2011.

The sales volume still did not surpass that of more traditional annuity products, such as variable annuities# and fixed deferred annuities, but in terms of sales growth, the products were definitely the leader of the pack, and by a substantial margin.

What’s behind it? The answer is in the sales results themselves.

The sales results

First quarter indexed annuity sales reached $8.1 billion — up 14 percent compared to first quarter 2011, according to estimates from LIMRA.  AnnuitySpecs.com is reporting similar results — first quarter sales of $8 billion in 2012, up by more than 13 percent from first quarter last year.

The differences in results reported by the two firms are not significant, given that the firms have slightly different lists of participating companies as well as different research parameters and definitions.

But the double-digit growth that both firms identified is significant, especially when viewed against the performance of other annuity product lines. For example, total variable annuity# sales fell by 7 percent in first quarter 2012 compared to first quarter last year, according to LIMRA. That was on first quarter 2012 sales of $36.8 billion.

In addition, total fixed annuity sales fell by 10 percent on first quarter sales of $18 billion, LIMRA says. That was despite the two-digit jump in sales of indexed annuities, which are included in the fixed total.

The total fixed annuity plunge was a result of sales declines in most fixed annuity categories that LIMRA tracks other than indexed annuities. These other categories include fixed rate deferred annuities (down 28 percent on sales of $7.1 billion compared to first quarter last year), book value annuities (down 32 percent on sales of $5.8 billion), and fixed deferred annuities (down 11 percent on sales of $15.2 billion). Fixed immediate annuities were the only products to flatline, coming in at 0 percent gain on sales of $1.8 billion.

AnnuitySpecs points out that first quarter indexed annuity sales did lag the previous quarter by 3 percent.  But Sheryl J. Moore sees the product’s 13 percent increase over first quarter sales last year as the more compelling figure. Moore is president and CEO of Moore Market Intelligence, which owns AnnuitySpecs.com.

“No other lifetime income product is as strategically positioned to thrive in this low-interest rate environment. In fact, the indexed annuity is well-suited for any market environment,” Moore said in releasing her firm’s first quarter numbers.

LIMRA portrays indexed annuity sales as “the driving force in the fixed market” for the first quarter, and points out that for the third consecutive quarter, the products “outperformed traditional fixed annuities, capturing 45 percent of the fixed annuity market.” [Read More…]

Annuity Guys® Video Transcript:

Eric: We’re going to talk about annuity timing. Should you jump in or wait?

Dick: Well, that’s the big question. Do we jump in or do we wait and that’s a question we hear all the time.

Eric: We’re hearing it a lot.

Dick: Recently.

Eric: Especially even with people we’re working with in the last couple weeks, because things are changing. The market is changing, but why is the market changing?

Dick: Well, I think it has something to do with the government forcing these interest rates down.

Eric: Uncle Ben, are you doing it to us again?

Dick: These treasuries are setting new records on the downside, literally daily. So this is really making a difference and putting a lot of pressure on the annuity companies, and obviously banking instruments too, to lower rates dramatically.

Eric: Right. I mean we look at what has happened and I’m going to blame Europe, because they’re not here in the room with us, but the pressures of what’s happening with Greece and Spain and the euro and the flight to safety has been the flight to the United States. Bring us all your dollars, your euros, your yen. We’ll take them all and it’s pushing down the fed, the 10-year treasury is down 25%, from the beginning, just a couple of months ago.

Dick: So the big question gets down to do we jump in and do an annuity now for timing issues or do we wait for the rates to increase? Just recently, Bernanke has indicated that we’re likely to see this low rate environment, for three to five years. It wasn’t very long ago he was talking about the next year or two.

Eric: Yeah, it started it was going to be—when they started making these announcements telling us, giving us the information on how long they’re going to… it was 2013, then it became 2014, and then his latest statement is 2015. So now we’re in a—I don’t want to say **guaranteed low rate environment.

Dick: Yes, so how long do we wait for retirement? How long do we wait for these rates to change? Retirement isn’t always, say a choice. I mean there are a lot of reasons why we retire, and sometimes we just need to make that decision, because we need the income or we need the safety of the money. There are many reasons that we would move some money into an annuity.

Eric: Right and I think that’s the key. Why are you putting money into the annuity? If you need income and you don’t want to have to have that worry about outliving your money that’s where the strength of the annuity still lies. Now are we starting to see annuity companies start to pull benefits off the table?

Dick: Last week we had what three or four of them? Major companies start to pull back and just yesterday maybe, we were notified again?

Eric: I’ve seen two today of companies that have made announcements that within the next week to two weeks they are reducing their benefits.

Dick: And how many people have we met with over the past year or two that said that they were going to wait for things to go up?

Eric: Yes. I can remember two years ago when, oh my, gosh it was at 4.50% in the caps and they were like, “You know it’s going to go up to 5.0%. I’m going to wait till it’s a 5.0%.” Right now people would kill for 4.50%. So it’s trying to predict the market on that side, you just can’t do it, if you’ve got a crystal ball… What we’ve got though is we’ve got **guarantees of the fed. That’s probably not a **guarantee.

Dick: I was going to roll with you on the **guarantees. I was going a different way.

Eric: Prediction by the fed that basically, “Hey, we’re going to keep rates at a low level.” So timing-wise, do we wait? Well, if it’s income…

Dick: Then we should not wait, because the **guarantees that are offered right now on annuities for this income account, for the rollup to create a larger income in deferral is still excellent, and it’s about to take another step back.

Eric: It’s still better than what you’ll get in other areas sometimes, but the annuities excel right now with income. Guaranteeing a rollup and deferral, those are the pieces that really are superior. The lifetime income benefits versus some of the other pieces.

Dick: And if you need immediate income there is the possibility of using a hybrid, as some type of an inflation hedge or using an immediate annuity that has a **guaranteed cost of living adjustment. So there’s no reason not to consider going forward, if it’s that time to retire with immediate income or putting money aside for deferred income, because this is where the annuities really do shine.

Eric: Exactly. All right now so if I wanted to buy an annuity for growth, I’m trying to get the most bang for my buck in the sense of return, should I still buy an annuity now or should I consider other alternatives?

Dick: Yeah, we have a bridge to nowhere and we have an annuity in a package deal, right now. No, Eric. I say if you want growth we really have to think outside of the box. I think that we can still utilize safe money vehicles and use insurance companies for this, but I think that we need to be looking at more the secondary annuities, these would be like, pre-owned or pre-issued annuities, and you can find yields all over the internet.

Eric: Pre-owned, is that like buying a pre-owned car, a pre-owned annuity?

Dick: It’s certified. Actually, it is certified by the court. They’re court ordered. So they’re very, very safe. It’s backed by the insurance company, or the annuity company, the same as a standard annuity. Someone actually bought an annuity. Decided for whatever reason they did not need this annuity and they sold it on the secondary market.

And so by doing that, it can create a much higher yield. So we’ve been able to help different ones with yields in the neighborhood of between 5.0-6.0%. However right now, you see on the internet, you see advertised a lot, if you know where to look, somewhere in that 4.0-5.0% range. It just depends on the source that you have for these annuities. Another one would be that you could get growth. What would be another area?

Eric: Well, as you say, sticking with similar life insurance, in the sense of you’ve got life settlements, now. Life settlements are a little bit more unique in the sense of you’re buying life insurance that somebody decided that they didn’t need. Usually, it’s that someone purchased it and it was for a spouse and the spouse predeceased them. So they have a life policy they no longer need, so there’s more benefit to them by actually selling it on the secondary market, than cashing it out sometimes.

Dick: Right. So you know you’re going to get paid out on that and you know it’s **guaranteed by the insurance company that’s behind it, so it’s relatively safe, very safe actually.

Eric: You’re basically buying—you and usually a group of people are buying the premium. You’re paying the premium, in exchange for the death benefit, so you don’t necessarily always know when…

Dick: You never know when somebody is going to pass.

Eric: The people that underwrite these basically go in and they calculate, look at the life expectancy.

Dick: Of their life expectancy.

Eric: Usually they try to time it to 3-4-5 years, so you could expect it to happen, but you can’t **guarantee it. You’re putting this down, knowing you’re going to get this. You just don’t know how long it’s going to take.

Dick: So you always know that you’re going to have an increase in the money. You just don’t know what the percentage of the yield will be, based on the timing.

Eric: Right. You know you’re going to get the death benefit. You just don’t know when it is coming. You’ve also gotten another life insurance product. You’ve got your indexed life insurance. Now your caps there have not been impacted nearly to the extent that the annuities have. You’re still looking at caps that 12-14%.

Dick: Yes, and they’ve held up all through the whole financial crisis, so that’s again not for everyone, but it is an area where if you’ve got the right scenario, the right situation you get a pretty darn good growth on that. You do have to pass a medical audit.

Eric: Yeah, you have to be insurable or know somebody that’s insurable.

Dick: Know somebody who is insurable, right. So that’s thinking outside of the box.

Eric: There are alternatives out there, safe money alternatives.

Dick: If you want to earn somewhere in that 5.0% to maybe 7.0% range, and even in some cases it can go into the double digits, but we’re trying to be a little bit more conservative.

Eric: We’re by nature conservative.

Dick: Under, what do we call that, under promise?

Eric: Understate.

Dick: Over deliver.

Eric: That’s right.

Dick: Back to, did you have a point that you wanted to hit there, on something?

Eric: No. I was looking at the article that kind of stimulated the topic for today and talking about the changes, and what’s going on in the annuity market.

Dick: The annuity world out there.

Eric: You’re seeing a lot more of the purchases on the indexed annuity side, and I didn’t know if we were ready for the summary statement in this sense, but it’s basically looking at the changes and there are a lot more people purchasing indexed annuities.

Dick: Right, which are considered the hybrid annuity, so the fixed index annuity.

Eric: We like to personally think we’re responsible for the increases in the annuity market, but in all likelihood, probably not.

Dick: We’re rising a tide, across the nation with them.

Eric: And it’s because of one, the income riders. The ability for in retirement, and then you also have a safety of principal and a hope for gain.

Dick: Right. So you put all those factors together and compare the hybrid annuity or the indexed annuity to just a standard fixed annuity or the variable annuity#. What we’ve seen is a great increase in the overall rate of sale, of the indexed annuity and the hybrid annuity and a decrease in the fixed annuity, which is paying very low rates right now, and also in the variable annuity# which introduces the market risk factor.

Eric: People are agreeing with us more and more that they see the benefits of safety of principal and **guarantees, either whether it be, through just the **guarantee of not losing principal or increases in income.

Dick: Right. Well, I think we need to sum it up with—is this a good time to jump in?

Eric: Yes, and no.

Dick: He sounds like me, now.

Eric: If your timing is that you need income, if you want growth, there are vehicles out there that we would encourage you to look at.

Dick: If you want income it’s a definite, that a portion of your portfolio can go towards an annuity and the timing is probably better to move than to wait.

Eric: If you’re retiring now?

Dick: Or in the near future.

Eric: Yeah, as you say, you probably don’t have time to wait.

Dick: So that’s it for today, folks. Thank you for spending time with us.

Filed Under: Annuity Commentary, Annuity Guys Video, Annuity Rates, Fixed Annuity, Hybrid Annuities, Variable Annuities Tagged With: Annuity, Annuity Products, Deferred Annuities, Equity-indexed Annuity, Fixed Annuities, Fixed Annuity Sales, Fixed Deferred Annuities, Indexed Annuity, Variable Annuity, Variable Annuity Sales

Low Interest Rates Hurt Seniors

April 20, 2012 By Annuity Guys®

The Federal Reserve Board has not formally relaxed its intention to keep interest rates low through the end of 2014. And there is little new to say about the way non-existent interest rates on savings accounts, certificates of deposit, and U.S. Treasury securities have hurt all savers, particularly risk-averse investors.

Retirees are, of course, the poster children for risk-adverse investments, and their nest eggs have been hammered by the Fed’s policy. The Fed has said that low rates help the economic recovery. So it argues, in effect, that investors should enjoy the solid stock market returns and that savers should display a stiff upper lip. [Read More at US News…]

**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.

4 Ways New Annuity Rules Will Help Retirees

The White House last week strongly endorsed annuities as a needed but missing piece of Americans’ retirement plans. Insurance companies and annuity trade groups had something nice to say about Washington regulators for a change. And the new rules just might set in motion some interesting retirement-plan changes.

Among financial products, annuities have long been a very hard sell. It’s easy to understand the appeal of buying Apple stock or getting in on the ground floor of Facebook’s IPO. Understanding annuities and their benefits, however, is not on the minds of many investors.

The premise of an annuity is easy to state: Give some money to an insurance company and it will make **guaranteed payments to you for the rest of your life. The money can be paid now or in the future. The payments can begin at any time the investor chooses. And the lifetime stream of income promised by an annuity can augment Social Security and help put to rest a person’s fear that he or she will run out of money before they die.

[Read More at US News…]

Annuity Guys® Video Transcript:

Dick: One thing that really gets our blood boiling, and I would have to say a lot of the folks that we speak with, is this low interest rate environment that is really being penalizing to retirees.

Eric: The unfortunate thing is you’ve got a government who is forcing low interest rates down our throat.

Dick: Why would that be to our government’s benefit, Eric?

Eric: Let’s see here. If I print cheap money, and if I don’t have to pay it back at high interest rates . . .

Dick: If I owe $16 trillion, and there’s a way I can actually manipulate and hold interest rates low, that might be a good thing for me?

Eric: Just borrowing free money. We’ve been propping up the banks and propping up and, supposedly, economy by keeping these rates low, but the return effect is we’ve taken our retirees and our savers, and we’ve thrown them under the bus.

Dick: We’ve penalized them in a major way. When you look at the financial institutions that these interest rates were put into effect, supposedly, to help and to shore-up, these financial institutions are all passing their stress tests.

Eric: They’re making money.

Dick: They’re making money; they’re coming back. There’s a few that are having a challenge, but overall, our financial system at least gives the appearance that it’s been restored to some degree.

Eric: What they did is they designed this to basically push money into the economy to make it better to borrow. Borrowing helps the economy; that’s what the theory is here.

Dick: Stimulating the economy.

Eric: If you want to borrow money right now, it’s a great time, but if you’re getting close to retirement and you’ve already saved up everything, you’re now earning next to nothing on most of your major options or your safe money options: Your CDs, your money markets, the FDIC-insured options. You’re being forced to look at other alternatives.

Dick: Our corporations are cash-rich. The banks have a lot of cash that they don’t know what to do with. The demand isn’t there to borrow the money, even though the rates are extremely low. What I believe that this is leading up to, and I think, Eric, we’ve discussed this, is that there is no short-term fix.

Eric: No. In fact, Uncle Ben Bernanke has promised us that we’re going to keep interest rates at this level at least until the beginning of 2015. We’re sitting here, years away now, and people are saying, “Are rates ever going to increase?” The crystal ball in front of us says no, because we’ve got a **guarantee, or a pledge, to keep rates at a hyper-low level.

Dick: Our government’s motivation isn’t there to stimulate and raise the rates for savings, which encourages savings and that type of thing. The more that consumers spend, the more that they borrow, the more that drives the economy, and it has that other side effect of holding the government’s borrowing costs down. When we look at Japan, we go back to 20 years of very, very low interest rate environment, and the savers over there have had . . . who knows if we’re really following that model or not, but there are some similarities there.

Eric: I’ll be honest, and Dick’s heard me say, I don’t care about Japan. I’m worried about what happens here at home.

Dick: What happens to our clients right here in Central Illinois, United States.

Eric: That’s right. We’ve got people that are constantly walking in the door. I’ve had umpteen people that are typical CD borrowers, who walk in with their hands in the air, and they go, “What can I do? What are the alternatives?”

Dick: We’ve been pretty fortunate. We’ve been able to establish at least the foundational portion of many of our clients’ portfolios in annuities, and we’ve been able to ladder those annuities and get 8% **guaranteed growth on the income base anyway. Maybe the cash accumulation isn’t growing at 8%, but their income base is growing, that they can draw their income off of. It will have a tendency to outpace or stay ahead of inflation.

Eric: Just real quickly, when we talk about laddering annuities, what we’re talking about is basically having different start-points for annuities. You may turn on Year-1 and you may wait 5 years before you turn on another, and another 10 years before you would turn on a third.

Dick: You’ve got this 8% or 7% compounding year-after-year. The longer you can stretch it out, the better. You may need some income immediately or income in 5 years, and then income in 10, in 15.

Eric: To turn those on after those have been in deferral so they have a greater compounding effect.

Dick: The other choice that we have if somebody needs income right away, is to setup some type of an immediate annuity or a hybrid annuity that will actually have some cost of living adjustment built into it.

Eric: The one thing with [inaudible: 05:11] the immediate annuities, if you start them with a cost of living adjustment, they usually start a little bit lower than those that just have a normal life expectancy.

Dick: Similarly on some of the hybrids, but there are some hybrids that will actually start about the same point and still have a cost of living adjustment built into them.

Eric: That’s what we always talk about with the client: What’s the longevity expectation? If you have a longer than normal life expectancy in your family, that’s especially the time to look at those things, because that’s [inaudible: 05:39].

Dick: You can really come out ahead. Our goal is never to do out and beat up on the insurance company, but when it comes down to . . . Eric says, “Yes we do.” When it comes down to the client or the insurance company, we’re for the client.

Eric: That’s exactly right. We want you to make the most money possible back.

Dick: If you can win against the insurance company, then obviously, longevity is one of those variables, those wildcards.

Eric: Our goal is for everybody to win. I say that facetiously. I don’t want to take the insurance company down, but that being said, I want all my clients to benefit.

Dick: To benefit in the best way possible. We really come down to, Eric, a low-rate interest environment. It’s affecting retirees all over the country, and their choices aren’t that many.

Eric: No, very limited. I don’t want to say ‘in closing,’ necessarily, but in summary . . .

Dick: It’s okay. We can close.

Eric: Look at your full range of options because of the interest rate environment. It’s not the time to be sitting on the fence, unfortunately. People keep on saying, “If I wait.’ I’ve had somebody out there waiting for 3 years now, waiting for rates to increase, and the opposite has happened.

Dick: It lost ground, and they don’t have the same options they had a few years ago.

Eric: How long can you sit in a 0.5% CD?

Dick: With 3% inflation.

Eric: Exactly. You’re losing money by putting yourself in a . . .

Dick: You’re going backwards at 2½% to 4% a year, probably.

Eric: In summary, yes. Low interest rates hurt retirees, they’re very painful, but it shouldn’t stop you from taking action and making a progressive retirement plan.

Dick: Yeah, making a good decision. Use a good financial advisor and just weigh all the options. Thank you.

Filed Under: Annuity Commentary, Annuity Guys Video, Annuity Income, Annuity Rates, Annuity Returns, Retirement Tagged With: annuities, Annuity, Interest Rate, Interest Rates Low, Life Annuity, Low Interest Rates, Low Rate, Pension, Rates Low, retirement, Risk Adverse

« Previous Page
Next Page »

 

Empowering Annuity Reference Book

 
DOWN-LOAD NOW - FREE!
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 

  • Five Top Annuity Safety Risks to Avoid

    Five Top Annuity Safety Risks to Avoid

    Annuities are safe, secure, and without risk…. hmm, well not exactly. As Annuity Guys® we expound quite a bit on the safety …Read More »
  • Can MarketFree® Annuities Balance Your Portfolio?

    Can MarketFree® Annuities Balance Your Portfolio?

    It has been more than four years since the pandemic started and the stock market has reached some new historic …Read More »
  • Why are Markets and Annuity Sales at All Time Highs?

    Why are Markets and Annuity Sales at All Time Highs?

    Equity markets increasing and annuity sales increasing at the same time is a little like cats and dogs playing together. …Read More »

Revealing Fun Video: Fiduciary Advisors Vs. Annuity Salesmen
MUST KNOW FACTS 90% of
ANNUITY ADVISORS AVOID TELLING!
  • *FIDUCIARY RETIREMENT REVIEWS
    Second Opinions Improve Retirements
     
    "For Your Retirement's Success"
     Choose a *Fiduciary Advisor who gives you Full Disclosure of Cost & Selection.
     
    Material Fact 1:
      About 90% of advisors ARE NOT REQUIRED by law to do what is best for their clients!
     
    Material Fact 2:
     Fiduciary Advisors ARE REQUIRED by law to do what's best for their clients! 
     
      Hence, clients of a fiduciary can know that their advisor chose the highest legal standard required by law to work strictly for their highest good.
     
     We estimate Fiduciaries are less than 10% of total U.S. financial service providers. Fiduciaries are held to the highest client legal standard of financial planning and investment advice.
     
     The other 90% are sales oriented advisors, brokers, bank reps, registered reps. & insurance agents, selling products on a much lower suitability legal standard, not necessarily what's best for their client!
     
       Fiduciaries also must disclose conflicts of interest that could potentially bias their advice, such as; selling products that pay them higher commissions having higher fees or costs, and their lack of investment product access limiting their client's opportunities, to name a few.
     
    Choosing your advisor can have
    "The Largest Single Impact on
    Your Retirement's Success or Failure"


  • Why do Wives Prefer Annuities?

    Why do Wives Prefer Annuities?

    Before everyone starts yelling gender discrimination, we know that husbands can prefer annuities too.However, it is not uncommon for us …Read More »
  • Annuity Undo Buttons – Using Your Free Look!

    Annuity Undo Buttons – Using Your Free Look!

    Most big ticket purchase come with a warranty or a **guarantee – including annuities. Did you know that all annuities …Read More »
  • Fixed Index Annuity Returns Reviewed

    Fixed Index Annuity Returns Reviewed

    Dick and Eric take a look at the Wharton study and what it means for anyone considering a fixed index …Read More »
  • Market Volatility is Back! Are MarketFree™ Annuities an Answer?

    Market Volatility is Back! Are MarketFree™ Annuities an Answer?

    Timing is everything. Unfortunately, 99 percent people who say they are only in the stock market when it is going up …Read More »
  • Optimizing Annuity Income for Retirement

    Optimizing Annuity Income for Retirement

    If we only had a nickel for every phone call that came into the office which started out like this…“Hello, This is …Read More »
  • Top Five Annuity Lies!

    Top Five Annuity Lies!

    There are annuity white lies, damnable annuity lies, and some liar-liar, sales agent/advisors who hope you won’t notice that their pants are on fire! …Read More »
  • China Tariffs – Market Corrections – Effects on Index Annuities

    China Tariffs – Market Corrections – Effects on Index Annuities

    Market’s are so unpredictable that “the experts” are frequently – DEAD WRONG! Unfortunately, you rarely here about their failed predictions, …Read More »
  • Can Annuities Reduce the Cost of Retirement?

    Can Annuities Reduce the Cost of Retirement?

    Would you rather get something on sale or pay the full retail price? Silly question, right? Nobody wants to pay more …Read More »

View Our Newest Videos! Subscribe Now
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Annuity Diversification – What Amount Per Company?

    Annuity Diversification – What Amount Per Company?

    You may have invested, scrimped, and saved most of your life for just this moment. Yes, you are ready to …Read More »
  • Never Place an IRA in an Annuity? Wrong!

    Never Place an IRA in an Annuity? Wrong!

    One question that seems to come up on a regular basis is “should I use my IRA/401k dollars to purchase …Read More »
  • Sell in May and Go Away or Buy Annuities?

    Sell in May and Go Away or Buy Annuities?

    Life is full of profound statements and sayings that stick in our minds. For investors and brokers, the saying “sell …Read More »
  • Why do 84 percent of Retirees want Annuities but only 14 percent buy them?

    Why do 84 percent of Retirees want Annuities but only 14 percent buy them?

    “You can’t always get what you want; but if you try, sometimes, well you just might find you get what …Read More »
  • Lifetime Annuity Income: Annuitize or Control Your Money with Income Riders

    Lifetime Annuity Income: Annuitize or Control Your Money with Income Riders

    Do you have to annuitize an annuity to get **guaranteed lifetime income? No, not if the annuity has an income rider.If …Read More »
  • Are 8 Percent Annuity Returns in 2025 Too Good to be True?

    Are 8 Percent Annuity Returns in 2025 Too Good to be True?

    Annuity Salesman asks:  “How would you like an eight percent compounded return? -Guaranteed!” Misled customer replies, “Where do I sign-up?”Is …Read More »
  • Choosing an Immediate Annuity

    Choosing an Immediate Annuity

    In the golden era of career based retirements, everyone could count on a company paycheck for life in retirement. Unfortunately, in …Read More »
  • Choosing a Fixed Index Annuity

    Choosing a Fixed Index Annuity

    All fixed index annuities are hybrid annuities – fact or fiction?  Fiction!Don’t let the sizzle fool you. You can get …Read More »
Get Newly Released Annuity Guys® Videos on Saturday Mornings
  • Annuity Guys Videos - Annuity Answers
  • New Annuity Guys Videos
    Our Entertaining & Informative
     Saturday Morning Video Blog
  • Timely Retirement & Annuity Issues - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.


  • Low Interest Rates Hurt Seniors

    Low Interest Rates Hurt Seniors

    The Federal Reserve Board has not formally relaxed its intention to keep interest rates low through the end of 2014. …Read More »
  • Smooth Market Volatility with Fixed Index Annuities

    Smooth Market Volatility with Fixed Index Annuities

    We all have heard the saying “what goes up, must come down” However, when it comes to your retirement portfolio …Read More »
  • What are Hybrid Annuities?

    What are Hybrid Annuities?

    Hybrid annuities, also referred to as hybrid income annuities, are essentially a type of annuity contract that allows the account …Read More »
  • Are Hybrid Annuities too Complicated?

    Are Hybrid Annuities too Complicated?

    In our conversations with people considering annuities we often hear them repeat a phrase they have read or heard from …Read More »
  • Can Annuities Save Your Assets?

    Can Annuities Save Your Assets?

    There is an old saying that goes – “there is nothing **guaranteed in this life other than death, annuities and …Read More »
  • Reduce Your Concern of Outliving Retirement Dollars!

    Reduce Your Concern of Outliving Retirement Dollars!

    Have you ever made a trip to the grocery store where you picked up a few items, walked up to …Read More »
  • Annuity Income Riders

    Annuity Income Riders

    What makes a newer hybrid style income annuity different from the industry standard, immediate income annuity? It’s the income rider!Everyone …Read More »
  • 100% Money Back Annuity **Guarantees!

    100% Money Back Annuity **Guarantees!

    Most big ticket purchase come with a warranty or a **guarantee – including annuities. Did you know that all annuities …Read More »
  • Do Not Waste Time Considering Annuities, If You…

    Do Not Waste Time Considering Annuities, If You…

    Do not waste your time considering annuities if you cannot find one of the following Annuity Profiles that matches your …Read More »
  • Are Annuity Commissions Too High?

    Are Annuity Commissions Too High?

    Most of the mainstream media decries annuities as bad investment choices sold by unscrupulous agents solely to earn high commission.CNN/Money even …Read More »

 

Empowering Annuity Reference Book

 
Start Reading Now - Instant Download
  • Annuity Guys Reference Book - 250 pages of Annuity Facts

  • "The New Retirement"
    Annuity Reference Book 
    Free Instant Download
  • Confidential - Easy Opt Out
  • This field is for validation purposes and should be left unchanged.

 
Comprehensive Site Terms and Disclosure | Privacy Policy | Copyright © 2025 Annuity Guys®


  ** 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.
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 Annuity Guys website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this educational Annuity Guys Website. He still maintains his insurance license in good standing and assists his current clients.
Annuity Guys' 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.)



  # Investors should consider the investment objectives, risks, charges and expenses of a variable annuity and its underlying investment options. The current prospectus and underlying prospectuses, which are contained in the same document, provide this and other important information. Please contact an Investment Professional or the issuing Company to obtain the prospectuses. Please read the prospectuses carefully before investing or sending money.


  ^ Investors should consider investment objectives, risk, charges, and expenses carefully before investing. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.


  ^ Eric Judy offers advisory services through Client One Securities, LLC an Investment Advisor. Annuity Guys Ltd. and Client One Securities, LLC are not affiliated.