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
You are here: Home / Archives for Hybrid Annuity

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

By

Strong growth is a matter of perspective, and when your basis of comparison is a decrease of 20 to 30 percent, even zero growth is strong by a matter of comparison.

Many economist and market watchers have been proclaiming an end to the bull market for months and the recent drops have sent many investors scrambling for safety. Now that we have seen many indexes drop into “correction level” (a polite way of saying they have lost 10%) the big question is … [continued below video]

Video: Watch as Annuity Guys, Dick and Eric, discuss the growth potential of annuities in a declining stock market…

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

[continued below]…are we poised for a new bull run or are we in for a more serious drop of another 10 to 20 percent or even far more?

Can you get strong growth from an annuity during a bear market? Certainly! You can even utilize a fixed annuity and typically **guarantee a fixed return of 2 to 3 percent at present rates. However, a fixed index annuity (hybrid style) can benefit from resetting during a bear market, which typically creates more growth potential because fixed index annuities can reset to a new lower indexing point during a bear market – they do not have to grow back to their high point to begin accumulating gains. According to various studies of past performance, index annuities have the realistic potential to earn from 4 to 6% interest annually while protecting principal!

Trying to time the market can be extremely difficult for professionals, especially for individual investors. Riding out a bear market for some is “un-bearable” – they cannot handle the emotional roller coaster. Annuities can be an answer for those people hoping to move a portion of their portfolio into a safer financial growth alternative – safer option that offers a far greater upside potential than just sitting in cash or riding a market down.


 

Read more on this subject in this article:

 Shiller: Average CAPE Ratio Puts S&P at 1,300, Dow at 11,000

Nobel laureate economist Robert Shiller of Yale University says his indicator shows that the current stock market values are overinflated and will only crash even lower.

Shiller invented the cyclically adjusted price to earnings ratio (CAPE), a key indicator for stock market crashes.

“It is entirely plausible that the shaking of investor complacency in recent days will, despite intermittent rebounds, take the market down significantly,” Shiller wrote in the New York Times.

According to Shiller’s CAPE ratio, the stock market is significantly overvalued. The metric modifies historical price-earnings ratios to account for business cycles. Between 1881 and 2015, CAPE averaged a ratio of 17, well below today’s reading of 27.

“Levels higher than that have occurred very few times, including the years surrounding the stock market peaks of 1929, 2000 and 2007. In all three of these instances, the stock market eventually collapsed,” he said.

Shiller said his indicator would put the S&P closer to 1,300 from around 1,988 on Friday, and the Dow at 11,000 from around 16,643.

“We are in a rare and anxious “just don’t know” situation, where the stock market is inherently risky because of unstable investor psychology,” he said.

“There are reasons to question whether this was a quick, effective slap on the wrist, or if the market is still too overactive, and thus asking for a more extended punishment,” he said.

“Ten percent drops in the S&P 500 in just five trading days — such as what we just experienced — have not been common. Out of the 29 corrections since 1950, only nine happened in five days or less,” he said.

“Most of those happened since 2000, possibly because of the Internet and faster communications. Such rare sharp drops are psychologically significant; an extreme one-day collapse seems to create anxiety that imprints on people’s memories and could contribute to a downward momentum.”

The CAPE is a valuation measure usually applied to the US S&P 500 equity market. It is defined as price divided by the average of ten years of earnings (Moving average), adjusted for inflation. As such, it is principally used to assess likely future returns from equities over timescales of 10 to 20 years, with higher than average CAPE values implying lower than average long-term annual average returns.

All of the recent market volatility could help drive investors away from stocks for years, says ace hedge fund manager Doug Kass, president of Seabreeze Partners Management. [Read More at NewsMax]

 

When is Zero Good News for Hybrid Annuities?

By

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

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

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

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

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

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

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

Here is a similar article by Anton Hendler at Annuity123.

Pros and Cons of Fixed Index Annuities

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

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

Pros of Fixed Index Annuities

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


 

 

Can Hybrid Annuities Beat Market Returns?

By

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

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

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

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


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

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

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

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

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

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


Using OutCome Based Planning™ for Your Retirement

We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.

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

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

When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.

Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.


Fiduciary Retirement Review
Priority Mail - Free Shipping!Our Gift to You

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


Selecting the Best Annuity & Retirement Income Advisor

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

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

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

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

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

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

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

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

Video: "Avoiding Gimmicks, Scams & Charlatans"

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

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


Site Terms & Disclosure

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

Can a Hybrid Annuity Uncapped Index Pay Higher Interest?

By

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

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

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

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

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

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

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

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

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

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

 


 

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

By

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

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

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

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

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

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

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

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

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

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

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

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

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

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

 


 

Are Hybrid Annuity Income Riders Stacked in Your Favor?

By

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

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

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

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

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

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

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

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

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

 


 

The New – Immediate Hybrid Annuity™

By

What could be better than a Hybrid Annuity? How about a New – Immediate Hybrid Annuity™!

For a typical retiree with about $250,000 the income differences were just under $2,000 per year; and while $2,000 may not set the world on fire – just take that times 30 years in retirement.

Are you willing to gift $60,000 to an insurance company? Learn how to make the insurers pay you more of their money and get less of yours!

Watch as Dick and Eric discuss this New – Immediate Hybrid Annuity™ and why most advisors are trying to ignore it!

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

 

**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.

What makes an Immediate Hybrid Annuity™ better? How about larger income streams and no fees while providing access to your principal. That’s right. You don’t have to give up access to the principal unlike the immediate annuities of old where you gave up all your principal, never to be seen again. These new Immediate Hybrid Annuities™ still allow access to your principal, if needed. Are they as flexible as most of today’s hybrid annuities? No! However, for many retirees who are looking to start income in the next 12 months or defer for less than five years, this Immediate Hybrid Option can offer a significantly higher payout percentage – for **life.

[embedit snippet=”hybrid-annuity-live-demo-invite”]

More information on some of the changes to Immediate Annuities from OnWallStreet.

Insurers Add Appeal to Income Annuities

by: Donald Jay Korn – May 14, 2013

Immediate annuities, also known as income annuities and payout annuities, can replace disappearing corporate pensions, but sales have been tepid.

LIMRA, a research, consulting and professional development organization, reported that income annuity sales reached $8.7 billion in 2012, a small percentage of total annuity sales, which reached $219.4 billion. Insurers have responded by offering features such as liquidity, death benefits, and flexible income options for income annuities.

Amid these changes, advisors who are engaged in retirement income planning are beginning to take a second look at income annuities, according to Mark Paracer, research project director at LIMRA. Paracer pointed to a 2012 LIMRA study that brought responses from more than 1,000 advisors.

“Our findings showed that more advisors are interested in products in general (32% in 2011 vs. 31% in 2009),” he said. “That was especially true for RIAs (33% in 2011 vs. 24% in 2009).” That study also indicated that solutions are often well received by clients: 63% of advisors agreed while only 7% disagreed.

“Most importantly,” Paracer said, “the attitudes of advisors are shifting to more recognition of the benefits of solutions versus the benefits of non- solutions: 56% in 2011 vs. 40% in 2009. There is also a shift in advisor attitudes toward the idea that a solution should be used to cover non-discretionary expenses in retirement: 48% in 2011 vs. 38% in 2009.”

Paracer noted that including an income annuity — either deferred or immediate — can help retirees ensure that at least their essential expenses in retirement are covered, thus allowing advisors to invest the remaining portion of their portfolio with a goal of higher returns.

According to Lowell Aronoff, CEO at CANNEX Financial Exchanges Ltd., which compiles data on financial products, there is a disconnect between the need for income annuities and the amount of sales. “Retirement income research universally suggests that income annuities should be a core product for nearly all retirees,” he stated, “yet sales of these products are still fairly modest.”

One objection to income annuities has been the “hit by a truck” fear. A consumer might buy an annuity that would pay a lifetime income and die soon afterwards, thereby relinquishing capital for little return. A recent joint study by CANNEX and LIMRA found that annuity issuers now address this concern. [Read More from OnWallStreet…]

Video Transcription:

Dick: Hello, I’m Dick.

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

Dick. Yes! And Eric, there’s a new kid on the block.

Eric: A new innovation to the industry.

Dick: The most exciting thing that’s come along in the several years actually.

Eric: It’s funny how you make some old things new again. And people think annuities are boring.

Dick: Well, it is boring Eric.

Eric: This is exciting for us… we’re getting a lot of fun with this.

Dick: And for years, the variable annuity# was called a hybrid annuity. Then along comes the fixed index annuity; and what we saw really change that was those new income rider as they came out on them.

Eric: Opportunities for growth and income and **guarantees…

Dick: And hence, the hybrid annuity is born. And now we have the immediate hybrid annuity which has earned a little bit better from their cousin…

Eric: It’s taking some of the hybrid and fixed pieces, and some of the variable pieces and slide it on the immediate annuity which is like… “why the heck would you want to do that?”

Dick: Well, and that brings up another point agents are talking about this too much.

Eric: Don’t tell anybody. And there’s a reason why…

Dick: There’s a reason why. Well, the truth on these immediate hybrid annuity folks, there really more than likely to catch on in a big way because there’s so many good features to them that we want to explain and help you understand, but they’re also the very low commission. They don’t pay the agents very high commission.

Eric: That’s probably a lot of people really didn’t talk about even a standard immediate annuity before; and now all of a sudden we’re certainly get a little bit more innovation and I think people are going to have to start talking about it because the features are there and we’ll see what we can get – higher payouts perhaps…

Dick: A greatly increased income…

Eric: Increased income. Fees… oh -oh.. No fees…

Dick: That’s a big negative. Now that was one of the things on the variable annuity# that really became, I don’t want to say the death of the variable annuity#, but a lot of folks moved away from the variable annuity# because of the high fees; and they still do. The hybrid annuity which we’ve explained many times is the fixed indexed annuity chassis typically, the standard hybrid annuity, and it lowered the fees a lot but it still has fees Eric.

Eric: Some of them do but not all of them. The most commonly you’re looking at 1/2 and 1 percent on an income rider which is what **guarantees your income for life on that kind of fixed indexed or hybrid chassis.

Dick: So now we’ve move over to the immediate hybrid annuity and we’re talking about zero fees.

Eric: Ohh my…

Dick: No fees folks, no annual fees.

Eric: No fees, higher payouts..

Dick: For lifetime income and it last ’till your retirement and the most innovative aspect to this which is what really takes it into this hybrid annuity realm is access to your principal.

Eric: Right. Access to your liquidity… it gives you some liquidity options that didn’t used to be there. Now, we’re not going to pretend that you’re going to go out there withdraw everything without penalties or such but it does give you access to emergency cash and we’re seeing more and more carriers try to offer this.

Dick: And many folks would have opted for an immediate annuity if they had some all those options in the past; they just weren’t available. One of the things, Eric, that I want to talk about and we kinda get this… You and I were never really against the insurance company; we’re always for the client. So, if there’s a way that the client can actually win and I mean let’s face it, most clients feel that the deck is stacked against them when dealing with an insurance company. So if there’s a way to win what you really want to do is get your money out of the insurance company early, faster,… the sooner you can get your money out and have them paying you their money the better off you are.

Eric: And if you haven’t figured out what an annuity is really, it’s a return of your money to you…

Dick: Plus a small return…

Eric: Plus a **guarantee that you’ll get that return as long as you’re alive.

Dick: Yes.

Eric: Those are the key aspects of an annuity and so lifetime income… well, you want to get your portion that you paid in

back quickly and then you’re starting to work on their money.

Dick: What’s so exciting about this Eric is that we’ve been able to run the numbers and we’ve seen now the breaking point where it really works for folks, and those payouts where they can have a considerably larger amount of money at certain ages and even in that early stages make a lot more income

Eric: Well, looking at a typical portfolio size we see and 401K for a 65-year-old male, single… that difference between a popular hybrid payout paying about five and a half percent and then these immediate hybrid annuities are now also paying about almost 6.7 percent; so you’re talking about…

Dick: Compared to five-and-a-half percent…

Eric: Right. So for somewhat two hundred fifty thousand and looking as their foundational income, talk about two thousand dollars a month difference.

Dick: That equates out to somewhere between forty and fifty thousand dollars over twenty years which is a typical retirement. I mean some of which are much longer than that but a typical retirement pushes twenty years nowadays…

Eric: And I’m sorry, i said per month, it should have been year.

Dick: Right, I took it as annual… right. right…

Eric: So, The lifetime number is just the amount of money you would leave on the table is just astronomical.

Dick: It’s just large, yes!

Eric: As we’re looking at it. We’re always excited to talk to people about it…

Dick: Well, we get excited because they get excited. It’s like everyone’s kinda look at the standard fixed indexed hybrid annuity and they’ve compare them one against the other, and finally there something out that kinda breaks the mold and answers a lot of questions that folks are looking for.

Eric: Exactly, especially for those folks that are retiring, they’re getting buyout options. We’re hearing all these people and they’re gonna retire and they’re going to start needing money now and that’s where this works extremely well. It’s exciting.. I am excited!

Dick: So, we’re talking… it works better for those folks that need money in what time period? Obviously there’s a next 30 days but then how much further out might might this strategy work?

Eric: Well, with this specific strategy really because you’re using an immediate income chassis, your looking at income the next 12 months.

Dick: Yes.

Eric: But obviously then we start looking at when does a hybrid best-perform, usually on that stage you’re looking at having to deffer for at least five years.

Dick: Rights. So if you’re wanting to be able to balance this and say well “if my income, I need in about three years” maybe you should hold off a little bit or use a different type of an annuity to get you to that level where you’re ready to turn the income on and then use this type of an immediate hybrid annuity.

Eric: Right and that’s where we say run the numbers, look at the options. It might be worth taking a two percent **guarantee for a couple years knowing you’re going to get a better payment in two years with an immediate hybrid than you would with a standard hybrid annuity.

Dick: Eric, let’s put together some of those numbers for folks and do a webinar on that that they can watch and maybe even have a button on the website where they can just go and look at those numbers and do some real comparisons, and then they can get back with us if they have questions.

Eric: We’re always welcome to help share those numbers for people on an individual level that are looking at what those options would be as well.

Dick: Okay folks, thank you very much. Eric: Have a great day.

Annuity Income Riders

By

What makes a newer hybrid style income annuity different from the industry standard, immediate income annuity? It’s the income rider!

Everyone who hears about a new hybrid style annuity is pitched on the the “sizzle”. I’m sure you have seen the advertisements – 5%, 6% or even 8% **guaranteed. Call today! Unfortunately, the limitations are not explained in most advertisements. So, there are many misconceptions about income riders and how they work.

Income riders are great options for creating a predictable retirement income in the future by using their roll-up **guarantees for lifetime income provisions.  They allow annuity owners the flexibility of creating lifetime income without having to lose cash value access by handing their savings over to the insurance company for income.

Annuity income riders are truly beneficial options when used in suitable ways, but they are not without certain trade-offs.

Video: Annuity Guys® Dick& Eric, discuss annuity income riders and how they can work to improve 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.


 

When Are Living Benefits Riders Right?

To truly determine if a living benefit rider is best for a retirement plan, it is important to understand exactly what one’s objectives are. For example, certain questions should be answered, such as:

  • Does the annuity income stream need to start soon or at some future date?
  • How much income will be needed?
  • Is it important to leave money to heirs?
  • Is long-term care spend-down a concern?
  • How much control should be maintained over the money?
  • Is outliving income a concern?

Once the answers to these questions about a retiree’s specific situation are determined, there is more information that must be gathered about the income rider being considered.

Some of the important rider questions are:

What is the roll-up rate? Many annuity income benefit riders offer a **guaranteed rate of growth, or roll-up, or minimum floor of between 5 to 10 percent. This roll-up rate is the **guaranteed annual rate at which the income base will grow. Therefore, if an annuity with a contribution amount of $100,000 plus a bonus offers a ten-year income rider with an 8 percent annual compounding roll-up, then the income base could be $215,892 at the end of ten years. Then, at the end of the ten years, the income stream from the annuity would be based on an annual percentage income payout of the income base determined by the annuitant’s or joint payee’s age (using the youngest age for joint to determine the payout percentage) at the time that the payout phase began.

Is the interest being credited compound or simple? When comparing different types of annuity income riders, it is important to truly understand the type of interest being credited. For example, a 10 percent roll-up rate is typically going to be based on simple interest, and 10 percent simple interest is the same as 7.2 percent compounded for ten years.  After ten years the compounded rate grows much faster and larger.

How many years can the income base accumulate? There are many income riders that will not allow the income base to accumulate beyond ten years before the annuity owner must start taking the income payout. However, there are some that allow much longer accumulation periods.

What are the fees now, and can those fees increase over time? Many annuity income riders have current fees of between .40 percent and .95 percent. Some annuities may increase their income rider fees after a specified number of years, up to 1.5 percent or more

View some of our newest featured videos below from the country’s leading experts on successful retirement strategies and the pitfalls you will want to avoid!

Retirement should be an exciting new phase in one’s life. And just like any other aspect of life, how we embrace and prepare for this new phase will help determine just how secure and fulfilling this extended time period of our life will be.


Using OutCome Based Planning™ for Your Retirement

We practice and recommend a "Holistic - OutCome Based Planning™ process when considering annuities." This approach has the effect of balancing your overall portfolio so you can meet your retirement objectives by "first identifying the least amount of your investments or savings (if any) that should be considered for annuities." OutCome Based Planning™ analyzes and models multiple outcomes so you can clearly identify your best income and growth opportunities.

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

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

When requesting help you can be assured of working with an experienced Annuity Guys' Retirement Planner who is independently insurance licensed and securities licensed as a fiduciary financial planner having access to the vast majority of annuity companies in helping you choose the best annuities using a holistic-outcome based planning approach. We consider the high quality advisor recommendations we make to our website visitors as a direct reflection back on our commitment to serve all client's with a high standard of excellence in financial planning for retirement.

Based on survey feedback on advisors from our website visitors, we eliminated about two-hundred local advisors and now only recommend a few that we consider experienced vetted Annuity Guys' Fiduciary Advisors. Many local advisors continue requesting us to recommend them as a vetted advisor. However, our reputation and future business is driven only by satisfied website visitors. So, unfortunately we've had to tell the vast majority of local advisors no, since we changed our business model four years ago. At that time we stopped trying to satisfy everyone with local advisors, we now primarily work with individuals who are comfortable using today's internet technology to their fullest advantage by working with a select group of vetted, experienced and knowledgeable Annuity Guys' Fiduciary Planners.


Fiduciary Retirement Review
Priority Mail - Free Shipping!Our Gift to You

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


Selecting the Best Annuity & Retirement Income Advisor

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

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

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

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

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

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

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

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

Video: "Avoiding Gimmicks, Scams & Charlatans"

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

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


Site Terms & Disclosure

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

Hybrid Annuities as an Inflation Hedge

By

Inflation – this one word strikes terror in the hearts of many retirees on a fixed income.

Never to fear, we have a cost of living adjustment (COLA) in Social Security to help save us — maybe not the more generous COLA that we have come to expect if the President and Congress decide they should balance a portion of the budget by restructuring the consumer price index (CPI) formula used to calculate increases in social security income.

Can annuities be used to hedge against depleted spending power in retirement? Certainly! Today’s hybrid annuities are bringing forth solutions for just that concern. Annuities developed by multiple insurance companies are now offering options to tie annuity income to inflation tracking indexes such as the CPI-U. This creates an additional option to other strategies used by advisors in the past such as laddering annuities.

Watch as Dick and Eric discuss the potential change in the CPI and what annuity strategies you might consider if inflation is a concern for you in retirement.

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

 

**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.

Check out this article from Walter Hickey on what the change in the CPI  might mean for Social Security.

How Obama’s Plan For Chained CPI Is Both A Stealth Tax On The Middle Class And A Cut In Benefits For Grandma

Last week it was revealed that the President’s budget proposal will include a revision to the way the government calculates the impact of the rate of inflation as a concession to House Republicans.

Still, a switch to chained CPI from the current rate demonstrably cuts benefits to seniors and could be a stealth tax on primarily the middle class.

The Consumer Price Index (CPI) is used as a proxy for the annual cost of living adjustment used to keep federal benefits in line with inflation.

There are several different ways that economists calculate the Consumer Price Index, according to the AARP Public Policy Institute.

  • CPI-W is the current cost of living adjustment index for Social Security. It reflects the spending habits of households where the income comes from a wage earner.
  • CPI-U expands CPI-W to reflect the spending habits of the retired, professionals, the unemployed and self-employed as well as wage earners.
  • A new, experimental CPI-E looks exclusively at how the elderly spend their money.

“Chained CPI” refers to another adjustment, particularly to CPI-U.

As an example, CPI-U and CPI-W already incorporate people switching from Starbucks coffee to homemade when prices increase.

Chained CPI-U takes that a step further — the idea that when coffee gets more expensive, people switch to orange juice. It incorporates more switching.

When it comes down to it, Chained CPI-U spits out a lower rate of inflation than regular CPI-U, which already spits out a lower rate of inflation than the current CPI-W. As a result, were the government to switch the way they index cost of living adjustments to chained CPI-U from CPI-W, payouts to seniors would increase at a much slower rate.

This means that over time, seniors receiving Social Security see their benefits cut. [Read More at BusinessInsider.com]

 

Will a Collapsed Dollar Harm Annuities?

By

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.