Purchasing an annuity for retirement can be a difficult and stressful decision. For many people this means re-positioning a portion of their retirement assets as they transition from investing and saving to spending and securing assets; and while this sounds like an easy process, there are more than a handful of obstacles that must be overcome before… [continued below video]
Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. During this segment, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
[continued] …most can reach this decision with a level of confidence.
The first obstacle many people encounter is the lack of knowledge they have about annuities and in the Internet era that typically means one of their first introductions to these products come courtesy of Google Search. Unfortunately, some popular publications and websites in the investing world decry annuities as awful products that no one should want to own. Not surprisingly, many of these publications and websites make most of their income from advertisers that benefit if you purchase securities and mutual fund^s – so their opinions often come with a highly biased pre-disposition. On the contrary, you have annuity promoters who overstate annuity benefits and promote 7 to 8 percent income roll-up numbers like they are return on investment, growth guarantees**, thus, creating unrealistic expectations for anyone researching annuities. People who are trying to do genuine research often have a challenge sorting between fact and fiction when determining how annuities may help their retirement portfolio.
Five Obstacles to Overcome – In Short:
- Lack of Knowledge;
- Acceptance of Surrender Fees;
- Limited Control;
- Wrong Financial Advisor;
- Paralysis of Analysis.
The most common negative cited in the the popular media is the issue of surrender fees that are associated with annuities. Thus, prior to deciding whether an annuity purchase is suitable, one must effectively project how much liquidity will be needed during the time the surrender period exists. While annuities would be an even more desirable consumer product if they did not have surrender fees, we must realize that these fees exist for the purpose of protecting the benefits desired when the annuity was purchased in the first place. Insurance companies have to protect client assets by covering their potential liabilities, if too many clients removed their money early. And, one of the ways they do that is through the use of surrender fees. These fees work as a limiting factor on the outflows to protect the benefits of the insurance companies existing clients. Like many bank interest bearing retail offers, the insurance companies want a dis-incentive that makes clients think twice before withdrawing dollars from them – too many early withdrawals on an insurance company’s annuity holdings could produce unfavorable effects for remaining clients, hence surrender fees become a safeguard to protect clients.
Another obstacle and or perception exists related to the surrender charge that needs to be overcome prior to purchasing an annuity is the perceived loss of control. Oftentimes, this is a perception based upon a single type of annuity – the lifetime income annuity where you do, in fact, give up control of your asset in exchange for a lifetime income. The vast majority of annuities today have liquidity provisions that allow access to a percentage of the annuity penalty free each year (typically 5-10%). Also, while no one should purchase an annuity with the intent of early surrender, it is an option that must be considered. The ability to retain control over 90% of the cash portion (which is generally the lowest percentage of control one has with annuities) should provide a base level or minimum return of premium as a worst case perspective to help those who are considering annuities for their portfolio.
So you have determined an annuity might be a good fit for your portfolio or one you would like to discuss; who do you talk too? Typically, most people have their initial annuity conversation with their existing financial advisor. This is where it gets interesting for many, after all, most advisors are very good at accumulating assets and growing them which rewards the client and the advisor. But, now you need those assets to live on. You have saved your entire life for this time and now you need to spend some of these dollars. Accumulation advisors may not know what is really best so they typically fall back on some form of market strategy that simply changes the mix of stocks and bonds or adds a variable annuity#. If they don’t know how to create an effective income plan that insures a comfortable and secure retirement by reducing market risk, what should you do? Stay with the advisor who brought you this far and pray everything works out for the best? – after all they said you’d be fine. 2008 – 2009 changed the mentality of many clients who realized accumulation advisors don’t understand what it feels like to lose 30% to 40% of your savings when your time to make it back is limited. Ultimately, the key is to know your advisor is knowledgeable, competent, independent, and takes a balanced approach to income planning and the use of annuities so you can comfortably reach your retirement goals. In addition, the advisor must also have access to all of the retirement products available that can help you achieve those goals. Unfortunately, many accumulation advisors do not have full access to products you should be considering!
Moving beyond all the prior obstacles still leaves the greatest challenge to annuity utilization and that is the fear of change. Most people are accustomed to saving and accumulating dollars so, the move to a time of life that requires spending down savings and investments can be scary. Depleting savings to generate a comfortable retirement can be very emotionally challenging and moving into that stage can be uncomfortable. It requires a combination of thoughtful analysis and planning to assess which financial products can best meet your retirement goals and objectives while insuring you don’t outlive your money. As difficult as change is, the status quo can be more difficult if it leads you in the direction of falling short in retirement.
Using OutCome Based Planning™ for Your Retirement
We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.
"The Annuity Guys will only call if you request help". Hence, when you are ready for specialized help we will be available."Working with an Experienced Fiduciary Financial Planner can help you Avoid a Trial & Error or Risk Based Retirement"
This type of approach does take considerably more time, effort and analysis which will show you mathematically the successful possibilities by comparing various outcomes rather than trying to sell or convince you of that "so-called one best solution." Clients frequently tell us that this process removes some of the confusion and emotion to help them objectively identify a better retirement plan; rather than just ending up with the most convincing salesperson or advisor.
When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.
Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.
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.
"There is no room for trial and error when it comes to choosing MarketFree® Annuities or a Successful Retirement Planner."
"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.
"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."
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"...
** Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values. Annuities are not FDIC insured and it is possible to lose money.
They are insurance products that require a premium to be paid for purchase.
Annuities do not accept or receive deposits and are not to be confused with bank issued financial instruments.
During all video segments, Dick and Eric are referring to Fixed Annuities unless otherwise specified.
*Retirement Planning and annuity purchase assistance may be provided by Eric Judy or by referral to a recommended, experienced, Fiduciary Investment Advisor in helping our website visitors. Dick Van Dyke semi-retired from his Investment Advisory Practice in 2012 and now focuses on this website. He still maintains his insurance license in good standing and assists his current clients.
Our vetted and recommended Fiduciary Financial Planners are required to be properly licensed in assisting clients with their annuity and retirement planning needs. (Due diligence as a client is still always necessary when working with any advisor to check their current standing.)
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- MarketFree™ Annuity Definition: Any fixed annuity or portfolio of fixed annuities that protects principal / premium and growth by remaining market risk free.
- 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.
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