Watch out for the Fake News and those who spread it
I know that many investors are not big annuity fans, but I also know that most annuity “haters” have been exposed to “fake news,” mostly via false advertising from stock guys who’ve lost business to modern annuities. I never recommend an annuity for ALL an investor’s assets, and I never recommend stocks for ALL an investor’s assets. A wise asset allocation plan usually calls for both. Because I have an advisor license AND an insurance/annuity license, I don’t have a dog in the silly fight between pure stock guys and pure annuity guys. I like BOTH dogs so that I can be objective.
Objectively speaking, here are five common falsehoods that “joker brokers” disseminate about annuities:
Falsehood 1: “Annuities have high commissions that eat account value.” This is a total lie. The only type annuity I recommend takes NOTHING in commissions from client accounts. Zero, nada, not a cent. So, client funds go to work for the client, WITHOUT a commission deduction.
Falsehood 2: “Annuities have huge annual fees that also eat account value.” This is yet another fabrication. Several excellent annuities I recommend charge NO FEE whatsoever. Again, zero, nada, not a cent. Ingenious annuities that do have a fee charge only .95-1.25%, AND you get something extra for this fee. Examples of what yuh get: (1) a turbocharged return potential, (2) a higher guaranteed lifetime cash flow, or (3) double cash flow should you wind up in assisted living or a nursing home.
Falsehood 3: “An annuity will leave nothing to your heirs.” This is blatant deception. The annuities I recommend not only assign and pay account balances to listed beneficiaries, but they also do so quickly, OUTSIDE PROBATE.
Falsehood 4: “Annuities have no return potential.” This may be the biggest lie stock guys tell about annuities! The annuities I recommend have a potential return of 5-10%. Given that the S&P 500’s average return over the last 20 years or so is less than 5%, a 5-10% potential return ain’t too shabby! Plus, when the stock market is crashing, a smart annuity has an awesome return potential of 0%!. . NOT minus 30%
Falsehood 5: “You can’t get your money out of an annuity.” to 50% like the S&P and DOW, and NOT minus 60-75% like the NASDAQ. Oh brother. This is another doozy. First, no matter the investment plan, it should include an adequate cash emergency fund. That way, you shouldn’t have to remove money from ANY asset in the plan. Second, modern annuities allow at least one 10% withdrawal EVERY YEAR.
Third, one allows an additional 10% withdrawal at any time. Fourth, another allows a FULL, FREE ORIGINAL DEPOSIT WITHDRAWAL AFTER FOUR YEARS and withdrawal of up to 20% if you took no withdrawal the year before! Fifth, in terms of five to fifteen years, are available. Five-year CD terms are common. Why not a five-year annuity? Also, why not ladder one’s annuity terms? Sixth, many allow a FULL, FREE WITHDRAWAL should one wind up in a nursing home or be unable to perform 2 out of 6 activities of daily living.
Finally, the goal of a retirement plan is NOT to spend it all at once, but to withdraw funds over your entire retired life; yet never run out of money–GUARANTEED. Today’s ingenious annuities fulfill that goal. STOCKS AND BONDS DON’T. If you can get your money out for big emergencies like a nursing home stay or a new roof, the fact an annuity pays steady guaranteed cash flow for life is a PLUS—NOT A MINUS.
Instead of spreading lies about what’s allegedly “bad” about an annuity, a good advisor sets out its actual terms AND includes what’s good about an annuity, along with a list of problems only it can solve.
SD, LC
