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 Dollar

Will a Collapsed Dollar Harm Annuities?

February 2, 2013 By Annuity Guys®

Jack in CA asks; If the dollar goes into a nose-dive,  how safe will it be to own an immediate, fixed or hybrid annuity?

In figuring out how to best answer Jack, we have to speculate on the level or severity of the collapse – if we have total anarchy or a Zimbabwean type of inflation, the paper dollar would be worthless and so would most investments. Do we feel that is likely to happen in the near future? No. Now, that being said, common sense says that if you spend more than you make, eventually you will go broke and our government has to figure out a way to meet its obligations and payoff its debt.

Annuities; just like equities, bonds, and commodities; to name a few, can have a place in a well structured portfolio. Dick and Eric examine the potential effects that the collapse of the dollar would have on the annuity industry and address annuity strategies that are best suited for this particular situation.

[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.

Considering an inflation adjusted annuity? Check out this recent USA Today article from John Waggoner

Should you get an inflation-adjusted annuity?

An inflation-adjusted annuity aims to solve the problem by giving you an automatic cost-of-living increase every year. But the cost is steep.

Most people still have nightmares about math word problems: “If Nate has 37 red gumdrops and Hope has 43 blue feathers, what time will their train reach Altoona?”

If you have a 401(k) plan, you’re being asked to solve a similarly impossible problem: “Assume that R is the amount of money you’ll need to retire, X is the number of years you’ll live, Y is your rate of return, and Z is the rate of inflation. You have no idea what X,Y, or Z is. Solve for R.”

One solution is an inflation-adjusted annuity, which promises to pay you a sum that will rise with the cost of living every year until you die, much as Social Security does. Should you try one? Only if you expect to live long — and even then, you’d be better off waiting until interest rates rise.

The rule of thumb with 401(k) withdrawals is to start by taking out 4% of your portfolio the first year, and adjusting that amount upward for inflation each year. Most times, it’s too conservative: You’d need a $1.25 million portfolio to get an initial $50,000 annual withdrawal. But when the first few years are down years in the stock market, your withdrawals can simply aggravate your losses and increase the chance you’ll run out of money.

Because the stock market is unpredictable, to say the least, some people use an immediate annuity to smooth out some of the bumps in a portfolio. An immediate annuity is a contract between you and an insurance company. You pay the company a lump sum, and they agree to pay you a set amount per month for the rest of your life. If you live to 120, you win. If you join the Choir Invisible the year after signing the contract, you lose, and the annuity company pockets your investment.

The payout is based primarily on an interest rate — what the company expects to earn on your lump sum. As a simple example, suppose you want to invest $100,000. According to Immediateannuity.com, a 65-year-old man could get $548 a month for life — a 6.58% payout rate.

The 30-year Treasury bond yields about 3%, and insurance companies are not magic yield-making wizards. Some of the extra yield comes from the money left on the table by annuitants who have gone to the great field office in the sky.

The rest comes from the insurance company’s own investments, which is why it’s good to choose a financially strong annuity company. You want a company that can still pay, even during economically stressful times. States do have **guaranty associations backing annuity policies, typically to at least $100,000, but it’s best to avoid shaky companies entirely.

While the annuity’s payout is decent, it’s fixed. Let’s assume that inflation averages 3% — the average inflation rate since 1926, according to Morningstar. The effects of inflation are cumulative: After 30 years of 3% inflation, your $548 will have the buying power of $220. Unless you plan to live on toasted plaster, you’ll have to find a way to offset inflation, and a fixed annuity won’t provide that.  [Read More…]

Annuity Guys® Video Transcript:

Dick: Today, we want to give a shout out to Jack in California.

Eric: You don’t know Jack.

Dick: I do know Jack. In fact, this is for and Jack and Sharon. Jack, hey, we appreciate the question. The concern today is what happens if the dollar collapses, what does that do to annuities?

Eric: Right. What’s it going to do to fixed index annuities and hybrid annuities? Excellent question. Now, we first have to define the collapse of the dollar I guess. If we look at it in a Zimbabwean sense . . .

Dick: Or Germany.

Eric: . . . where they’ve had, basically, a decimation of their currency . . .

Dick: Anarchy in the street.

Eric: . . . then the honest answer is nothing can save it.

Dick: Nothing’s going to save it.

Eric: In all honesty, it wouldn’t save the country. Social Security would be messed up. Your pension would be gone.

Dick: Right. Even having gold, you’d need to hire the A-Team to protect your gold.

Eric: Your interests.

Dick: I think that we’re all looking for that answer that is somewhere in the middle. We’re facing a lot of headwinds in our economy. Our government does not look very reliable, at this point, to make the right decisions.

Eric: Right. Peter Schiff is one of those guys that’s been calling for the collapse of the economy because of, basically, the overspending. I don’t think anybody would deny that, as a country, we’ve maxed out the credit cards. Until we start paying them down, we’re kicking the can down the road. We haven’t had a budget in, what, three years on a federal level.

Dick: The debt just keeps rising and rising, and it’s going to have to be paid back. The alternatives aren’t very good. You can raise taxes, which is political suicide, or you can devalue the dollar, which looks like everybody just raising their price. But really the value of the dollar is dropping.

Eric: Right. So your buying power is going kaput. Now, if I own an annuity, am I better off than if I don’t own an annuity?

Dick: Well, I’m going to answer that, but before I do, let me just say this, folks, the topic that we’re on today is complex. It is a very big concern that we talk about regularly with our clients. It’s very important that you do work with a good local advisor, somebody that actually gets it, works from a point of safety and diversification. That’s what we’re really going to talk about today. Your question, Eric, in terms of, if I have an annuity and the dollar starts to devalue, my question would be, same as yours: How far is the dollar devaluing, and did I set my annuity up to offset inflation?

Eric: Right. There are annuities that exist right now, hybrid style annuities, where the income rider is tied to something called the CPI or the Consumer Price Index.

Dick: Right. And immediates will . . .

Eric: They have the ability to, basically, be indexed to that. So those products exist right now if that’s one of the things you’re concerned with. You can set it up. Now, you’re going to start a little bit lower, typically, than you would if you took a level payout.

Dick: When you turn your income on, it’s going to start at a lower level. Yes.

Eric: Right. Now, depending on inflation or that index, you’ll get bumps in your income as those things increase. There are ways to dial in from that, but you’re making a choice to trade, perhaps a higher level now for future safety and security if those things do happen.

Dick: The other aspect of that for those of you that have means, that have the assets to work with, annuities may be one small portion or one moderate portion of your portfolio. It is not the end all and the be all.

Eric: No. We you always talk about asset allocation or diversification. You don’t want to put all your eggs in one basket. It’s really that simple. So having some hard currency. We’ve talked about if you’re worried about the economy as a whole and our domestic crisis, and you think companies here are going to be impacted, you may make the decision to make some investments in companies that are either multinational or overseas.

Dick: Right.

Eric: There are lots of options in securities, bonds, hard currency, gold, silver, platinum.

Dick: Take care of all of it. I don’t want to say in summation, but should we avoid buying annuities with the current economic situation and if the dollar is going to start to see this impact?

Dick: Well, Eric, I think that as we look at this whole situation, I think we want to always be cognizant of how long annuities have actually been around. Annuities go way back to the Roman Empire. That’s where the word comes from, “annua,’ annuity.

Eric: I “annua” that.

Dick: You “annua” that. Then, as we move forward into our modern times, we have annuity companies that have existed for 300 years. Do you think they have seen some devaluing of currencies?

Eric: Oh, yes.

Dick: Do you think they have seen some revolutions? The answer to that is yes, and even those that are quite plentiful in the United States, that are in excess of 100 years old. Insurance companies have a proven record of being able to withstand deflation, inflation, world wars. Not that in a total collapse, an anarchy type collapse that they’re going to be unharmed, but are they worth a diversification in your portfolio to have an allocation towards annuities? I think that any reasonable prudence would say yes.

Eric: Yes. It’s worth considering for a portion of your portfolio.

Dick: Yes. Hey, Jack, thank you for the question. The rest of you out there that maybe now have more questions, send them in, and we’ll get to them as soon as possible.

Filed Under: Annuity Commentary, Annuity Guys Video, Annuity Income, Annuity Returns, Annuity Safety, Retirement Tagged With: annuities, Annuity, Annuity Companies, Annuity Strategies, Dollar, Fixed Annuities, Hybrid Annuity, Inflation, Insurance, retirement, The Dollar

 

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.

 

  • Tax Free Annuities – Limited Supply!

    Tax Free Annuities – Limited Supply!

    Tax Free annuities are entirely possible with some planning and knowledge about Roth conversions.One of the biggest negatives continually re-hashed …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 »
  • Why Hybrid Annuities Are Game Changers

    Why Hybrid Annuities Are Game Changers

    Two recent studies discuss the overwhelming growth of annuities as a sought after financial product. LIMRA cited the significant growth in …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"


  • Annuities: What Percentage Should Be in Your Retirement Portfolio?

    Annuities: What Percentage Should Be in Your Retirement Portfolio?

    The answer is… 50 percent (NOT!!!) — want to know why many insurance sales agents might say that?It’s nice when …Read More »
  • Are Annuity **Guarantees on Their Way Down?

    Are Annuity **Guarantees on Their Way Down?

    “It was the best of times, it was the worst of times.” Dickens often quoted opening to the Tale of …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 »
  • Understanding Immediate Annuities

    Understanding Immediate Annuities

    Today, people are living longer than ever before. While the idea of living a longer (and hopefully healthier) life is …Read More »
  • Annuities, Investing and Retirement – What’s Your Strategy?

    Annuities, Investing and Retirement – What’s Your Strategy?

    A goal without a plan is mostly just a hope and a wish. So, do you have a well thought …Read More »
  • Avoid Tax Moving IRAs and 401Ks to Annuities

    Avoid Tax Moving IRAs and 401Ks to Annuities

    Death and taxes may be certainties of life… but it doesn’t mean we should not do all we can to …Read More »
  • 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 »
  • Annuity Ratings, are they Believable?

    Annuity Ratings, are they Believable?

    U.S. to sue S&P over Ratings – that was this years’ February 5th headline in the Wall Street Journal. If the federal government …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.


  • Is the Fiscal Cliff a Threat or an Opportunity for Annuities?

    Is the Fiscal Cliff a Threat or an Opportunity for Annuities?

    The “Fiscal Cliff” could have profound implications on the economy. Dick and Eric examine the potential impact on retirees and …Read More »
  • How are Annuities Affected by the New 2015 Rollover Rules?

    How are Annuities Affected by the New 2015 Rollover Rules?

    The Internal Revenue Service is changing the IRA rollover rules this year – if you don’t know about this change …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 »
  • Avoiding Annuity Income Rider Abuse!

    Avoiding Annuity Income Rider Abuse!

    If they tell you that your annuity has a "6%" guarantee most annuity purchasers believe that the 6% guarantee is …Read More »
  • Who Should Not Buy Annuities?

    Who Should Not Buy Annuities?

    Are You One of These Five Profiles who probably should NOT buy an annuity?Are you an Aggressive Investor with an Appetite …Read More »
  • Are Annuities Good or Bad?

    In and of themselves, annuities just like any other investment are not technically good or bad. An annuity can, however, …Read More »
  • OutCome Based Planning™ for Retirement

    OutCome Based Planning™ for Retirement

    We practice and recommend a “Holistic – OutCome Based Planning™ process when considering annuities.” This approach has the effect of …Read More »
  • Fed Up with Exaggerated Annuity Claims?

    Fed Up with Exaggerated Annuity Claims?

    There is a saying in the annuity world that annuities are sold, not bought! Yes, at times this may be …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.


  • Enjoy Annuity Income While Maintaining Your Principal!

    Enjoy Annuity Income While Maintaining Your Principal!

    You can’t have your cake and eat it too… or can you?When it comes to choosing annuities, most folks want steady growth and …Read More »
  • Annuities – Liquid or Not?

    Annuities – Liquid or Not?

    As advisors who specialize in retirement planning one of the first questions we discuss with clients surrounds the subject of  liquidity. …Read More »
  • Can Annuities Solve the Retirement Challenge?

    Can Annuities Solve the Retirement Challenge?

    Why does it feel like everyone is talking about annuities these days? Could it be due to the approximately 10,000 …Read More »
  • How to Get Rid of a Bad Annuity

    How to Get Rid of a Bad Annuity

    Do you think you made a bad decision on an annuity purchase in the past? Do you think you’re stuck due …Read More »
  • Annuity Fees – The Nasty Truth

    Annuity Fees – The Nasty Truth

    The conventional press has maligned annuities for years due to high fees and surrender charges, as well they should… when …Read More »
  • Are Annuity Fees, Surrender Costs, & Commissions too High?

    Are Annuity Fees, Surrender Costs, & Commissions too High?

    I would wager that everyone has used the phrase “You get what you pay for” in describing a less than desirable …Read More »
  • Choosing a Great Retirement Advisor for Financial Planning

    Choosing a Great Retirement Advisor for Financial Planning

    Remember the yellow page ads from years ago – “Let your fingers do the walking, it’s a snap!”The yellow pages …Read More »
  • The Love Hate Annuity Relationship

    The Love Hate Annuity Relationship

    Every financial product has negatives and positives, how these products are presented or utilized by companies and advisors can lead …Read More »
  • Long Term Care – Annuity and Life Insurance Solutions

    Long Term Care – Annuity and Life Insurance Solutions

    Long-term care, growth, and wealth transfer are built into many of today’s annuities and life insurance products, this is sometimes achieved …Read More »
  • Is Strong Growth from Annuities Likely in The Looming Bear Market?

    Is Strong Growth from Annuities Likely in The Looming Bear Market?

    Strong growth is a matter of perspective, and when your basis of comparison is a decrease of 20 to 30 …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.