Is My Annuity As Safe As They Say?

When you decided to purchase your annuity, it was likely because you thought it was safe, could give you payments if needed, and would limit losses from the stock market. 

Although your intentions were pure, the broker who sold you the product may have had other interests in mind. Depending on the type of annuity you purchased, it may be causing more harm than good.

Not all annuities are bad. 

Some annuities can be an important component of a financial plan. Certain fixed annuities, where the insurance company guarantees you a specific interest rate for a period of time, are beneficial. In this case, you could benefit by spreading out a large tax bill over several years.

It’s important to note that once you “annuitize” and begin receiving payments, you are turning over all of your money to the insurance company, in exchange for payments over a defined number of years. 

Before deciding on this, it is important to consult with a Financial Planner, who understands your holistic financial situation. 

Take a pass on annuities as an investment vehicle.

Variable and Indexed annuities may be sold to investors with the promise of investment returns, and less risk than the stock market. They may offer a guaranteed return of 4%-6%, however, the cost of owning the product directly deters from your investment return. 

Other restrictions such as limited investment options and inflexibility of withdrawals, make it difficult for investors to reach their goals. 

Many annuities can be extremely complex, even to those selling them. This leads to higher fees and investors paying for “benefits” they are unaware of, or didn't need in the first place. 

Need help evaluating your annuity? You can contact us here. Or schedule a call with Evan today.

"Fisher Investments." Fisher Investments, Personal Wealth Management, Your Financial Goals, Grow Your Wealth, Asset Types, Annuities. Accessed May 25, 2023. https://www.fisherinvestments.com/en-us/personal-wealth-management/your-financial-goals/grow-your-wealth/asset-types/annuities.