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 ó not purchase but evaluate ó 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 cameraís turned off. 

Since the first of the year, weíve 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 hereís 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, itís confusing. Bottom line: The income rider often applies to one life not two.  You can reduce your costs, for many, itís an option worth exploring. Donít expect your agent to be unbiased; lower costs for you mean lower fees for them.

We had a case where the owner was paying for an income rider but with no named beneficiary. Until we fixed it, the owner was paying for a benefit he would never use. Working with the new agent of record (Iím not insurance licensed), we increased the stock allocation in the annuity. If the market continues higher the guaranteed locks in at the higher level, if the market goes down we have the guarantee. We offset the additional risk by making the rest of the portfolio less aggressive. If you have a lemon, you make lemonade.  Some annuities are like the baby ó so ugly itís cute. 

Donít run out and dump your annuity like many a fiduciary planner recommends. Some older annuities have a 3 percent or 4 percent guaranteed investment option. Years ago, interest rates were higher and 3 or 4 percent looked cheap, not today. For the fixed income slice of their overall portfolio, clients utilizing these fixed options are at the top of the mountain. Absent surrender charges, they have the equivalent of a 3 percent or 4 percent investment grade bond with money market liquidity.

Older variable annuities use the now out-of-date life expectancy table so if annuitization is on the horizon an older annuity provides more income. You have an ironclad contract with the insurance company based on shorter life expectancy.  Invest less aggressively as you get closer to annuitzation.

No one should put an entire 401(k) or IRA in an annuity; only a portion of your assets should go into one. At our shop no one has bought an annuity in over four years but we have the discussion with everyone over age 60. We put clients first. Some talk the talk; others walk the walk.

Let me thank Gwen Break for giving me a break (little b) and Lefty Frizzell for the ďLong Black Veil."

Buz Livingston, CFP offers hourly financial planning and fee-only investment management to clients along Floridaís Emerald Coast.  Contact him at 267-1068, Buz@LivingstonFinancial.net or www.LivingstonFinancial.net.