The ‘Three-Legged Stool’ of Retirement Is Missing a Leg
August 7, 2024 by John Rekenthaler
Personal annuities can only get the system so far. Once, the tale goes, American workers relied upon a three-legged stool for their retirement income: 1) Social Security, 2) pensions, and 3) personal savings.
Click HERE to read the full story via Morningstar.
Wink’s Moore on the Market: Here we go with Morningstar hating on annuities again.
“To start, fixed annuities aren’t typically used to prepare for retirement.”
*honk*
WRONG.
This is precisely what fixed annuities are used for.
While it is true that “relatively few buyers choose fixed-rate contracts, opting instead for riskier options that operate differently,” couldn’t that be because investment advisors (who think annuities are about accumulating gains, rather than guaranteeing lifetime income) suggest alternatives such as stocks and bond funds?
When M* says “almost nobody can explain the difference between deferred fixed, deferred variable, immediate fixed, variable, and fixed-index annuities,” are they excluding the 100,000+ insurance agents that sell these products?
Asking for a friend.
And as far as suggesting one to “Go ahead: Read this 112-page prospectus. Somebody should, at least once.”- that only applies to structured and variable annuities. Fixed deferred, indexed deferred, and fixed income annuities do not have prospectuses.
Sheesh.
As for “…while personal annuities are often costly, workplace annuities will be relatively cheap thanks to competitive pressures,” not only is this generalization incorrect when it comes to these products being “costly,” but the in plan deferred annuities that I have reviewed are comparable to individual retail products.
LOL about “second, because 401(k) plans by law must offer gender-neutral terms,” because nearly every annuity offers “gender-neutral terms.”
Hilarious to me that this company offers a product called “Morningstar Annuity Intelligence,” but they can’t seem to get it right when it comes to annuities. -sjm
