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Weekend Reading: Working with Your Clients to Solve the Annuity Puzzle

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|Annuities |"Financial Advisor Magazine" Articles
This article appears as part of Casey Weade's Weekend Reading for Retirees series. Every Friday, Casey highlights four hand-picked articles on trending retirement topics and delivers them straight to your email inbox. Get on the list here.
Weekend reading understanding annuities Weekend reading understanding annuities

Weekend Reading

June is National Annuity Awareness Month, and it couldn’t have come at a more opportune time. Annuities are having a moment right now

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Fact versus fiction: Amidst rising interest rates, market volatility and high inflation, annuity sales are experiencing record highs. Their ability to simultaneously offer principal protection and growth makes them a noteworthy investment vehicle for retirees, but common misconceptions have also caused their sometimes “bad rep” in the financial industry. The top myths (and what you should really know about them) include:

📌 #1 - Annuities are too costly: Since they are able to function as an insurance product, annuities can offer a higher level of protection during market volatility, versus a 401(k), which is tied to markets. With the help of a professional, you can better understand an annuity’s fee structure and whether or not its extra protection is worth the cost.

📌 #2 - Annuities are only for older, high and ultra-high-net-worth individuals: While many annuity owners are closer to retirement age, there is no set net worth or age for obtaining one. As stated here, “A lengthier annuity accumulation phase means more time for investments to grow, leading to the potential of greater principal growth and higher payouts in retirement.”

📌 #3 - There is a right (or wrong) time to purchase an annuity: Throughout any economic climate, annuities offer protection and guaranteed income.

📌 #4 - As they say, nothing is certain except death and taxes — there is no way retirement income can truly be guaranteed: As a contract with an insurance company, an annuity’s income is in fact guaranteed, and “future payments [are] based on the financial strength of the insurer.”

Ask yourself: If you are averse to an annuity solution, is it because you’ve embraced common myths or misconceptions that might not be serving you?
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