Considering Annuities? How to Find the Right One for You
March 1, 2023 by Bradley Rosen
An annuity can help protect your retirement savings from threats such as sequence of returns risk from market volatility, longevity risks from outliving your money and inflation risks through the use of a guaranteed growth feature. Annuities come with dozens of customizable features, but careful planning and reflection on your personal goals for retirement can help you find the right one for you.
Click HERE to read the full story via Kiplinger
Wink’s Note: I started this one, thinking that I typically like the author’s articles. I was nodding my head again and again, then…
WHAP!
Check-out the third paragraph, under “What Are Annuities?”
“For a fee (typically 1%), you can add a living rider benefit to a FIA that provides guaranteed growth and guaranteed lifetime income regardless of market performance. Alternatively, you can choose a FIA without guaranteed growth with only upside index earnings (no fee).”
If you want to get technical, all indexed annuities have “guaranteed growth” of no less than 1% interest on 87.5% of the premiums paid.
This statement also positions indexed annuities as if they inherently have a fee, and you have to opt-out of “guaranteed growth” to have “no fee.”
AND- you truthfully don’t need a living benefit rider (GLWB) to get “guaranteed lifetime income.”
Matter-of-fact, while we’re talking about it, there are SEVERAL references in the article- leading the reader to believe that they need an “income rider,” a.k.a. living benefit rider, Guaranteed Lifetime Withdrawal Benefit (GLWB), in order to get guaranteed income. Many insurance companies suggest same in their literature. This frustrates me to NO END. While agents may not talk about annuitization, it not only guarantees a lifetime of income, but it IS free! No one understands the merits of a GLWB more than I, but I am tired of people pretending that one must PAY for the ability to have guaranteed lifetime income. This is a materially false statement!
A statement further down in the article suggests that “all annuities have surrender charges.” Not true. In actuality, 9.36% of all deferred annuities have no surrender charge.
Conversely, I don’t know how I feel about the suggestion that, “If you add a living benefit rider with guaranteed growth and lifetime income to your annuity, there is no surrender penalty, even if you start your guaranteed lifetime income before the surrender period ends!” A GLWB technically does not negate the annuity’s surrender charge?!?
Ugh. I give.
If “insiders” can’t get it right, how can we expect consumers to understand these products? -sjm
