Ten years ago on a cold dark night

Published: Thursday, March 21, 2013 at 04:18 PM.


Ten years ago, my first byline appeared in The Walton Sun.

That initial journalistic foray consisted of a rather lengthy annuity diatribe. In those days, annuities were abominations from the pits of hell, but I was wrong. In some instances, annuities, especially immediate annuities are perfect fits, and everyone in retirement should consider — not purchase but evaluate — if an annuity is appropriate. Many fee-only, fiduciary financial planners abhor immediate annuities simply because an annuity purchase means fewer assets to charge asset management fees.

I know what they say when the camera’s turned off. 

Since the first of the year, we’ve had several clients show up with variable or equity index annuity statements in hand and a vague understanding of what they own.

The guaranteed income option (rider) confuses many clients. Yes, the guaranteed income rider is wonderful but, far from free, very expensive. We had a case where the benefit increased $5,000 annually but cost over $3,500. Sounds like a good deal but here’s the catch. The guaranteed income rider was for the wife and if she predeceased her husband then he would inherit the greater of the death benefit or account value but not the guaranteed income piece.

Yes, it’s confusing. Bottom line: The income rider often applies to one life not two.  You can reduce your costs, for many, it’s an option worth exploring. Don’t expect your agent to be unbiased; lower costs for you mean lower fees for them.

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