The Best, Most Secure Financial Product Ever Conceived

I'm writing today in defense of one of the greatest financial tools available to retirees. I'm talking about annuities. Yes, annuities. I said it. You can quote me. I for one am sick and tired about hearing how annuities are a "bad deal". Annuities are exactly what they purport to be. They are financial savings vehicles that allow the saver to have earnings grow tax deferred until they distributed from the account. They are financial vehicles that, when properly structured, have no risk of loss due to fluctuations in the stock market. They are financial vehicles that, when properly structured, will guarantee that the account holder will never outlive his money. They are financial vehicles that, when properly structured, allow you to participate in market gains when the markets are positive, but allow you to avoid any and all market losses. In essence, it is the best, most secure financial product ever conceived (except for permanent life insurance). Let's take a look at the biggest downsides and upsides of annuities.

Surrender Charges - most annuities are subject to a surrender charge. These charges are usually based on a declining percentage of the account value. The longer you keep your money in the account, the smaller the surrender charge becomes. Most annuities, work like bank CDs as far as surrender charges are concerned. You place money in a CD for a certain period of time. The bank promises a certain interest payment on your deposit. You promise to leave the money in for the specified period. If you must withdraw the money before the end of the period, you will be subject to an early withdrawal penalty. Annuities work much the same way. The time periods can be between 3 and 14 years, depending on the company and the annuity product selected.

Liquidity - most annuities allow for a 10% withdrawal provision annually with no surrender charge. This feature allows access to a portion of the money without incurring a financial penalty. This is a great feature in case an unforeseen circumstance arises. Also, if you become disabled, terminally ill or die, most annuities can be liquidated with no surrender charges at all.

Bonuses - many annuity companies pay deposit bonuses when you open the account, some as much as 12%! They do this as an incentive to consumers to attract long-term deposits. So, on a $100,000 account, you would be credited up to $12,000 in bonuses in your account. Most annuities with large bonuses require longer contracts, usually between 10 to 14 years. These bonuses are very generous and help people recuperate some of their stock market losses.

Guarantees - annuities are insurance contracts, and are guaranteed by the insurance companies issuing the contracts. Many annuity products sold today are of the Fixed Indexed variety. These contracts promise that the account values can never decrease. They also pay competitive fixed rates of interest. Some allow you to participate in market gains without the risk of market losses. Others allow you to add a rider to the contract where the insurance company will guarantee a rate of return as high as 8% per year, based on certain conditions. In this day and age, that is an attractive offer.

Call us today to schedule an appointment to see if an annuity is right for you.