Quick Preview:
There’s a lot of confusion out there about annuities, probably because there are different types of annuities that do different things. So we’ll give you each of these types of annuities, you explain how they work and how they might be used in someone’s financial plan…
On This Episode:
Generating income in retirement takes careful planning and an understanding of expenses, and one way that people try to accomplish this goal is through annuities.
The problem is that there are a number of different options out there and the products have changed quite a bit over the years. This creates confusion for investors and then hesitation on whether these products make sense for their financial plan.
To help you with the different types of annuities, how they work, and if they’re a good idea, we’ll go through everything you need to know on this episode of the Cornerstone Retirement Blueprint Podcast. And we’ll do it with the help of Anthony Napolitano.
These products are built for all types of people and personalities. They can also be beneficial depending on what kind of investment you’re looking for.
So here’s a rundown of the four types we’re talking about on the show.
Immediate Annuity – the goal is immediate lifetime income. The problem is you give up control of the lump sum you first put in so you aren’t able to make changes.
Fixed Annuity – this is a supercharged CD and gives certainty and safety in knowing what you’re going to earn every year. If rates go up though, you’ll have to pay a surrender fee to take advantage of those.
Variable Annuity – this is very similar to mutual funds wrapped into an insurance contract. These are infamous for being fee riddled.
Fixed Indexed Annuity – the main goal is to get the upside of the market without all the risk. These typically have no fees but there are some gotchas that we’ll go over.
If you’re looking for guaranteed income, a guaranteed legacy, or increasing income, annuities have come a long way and might fit your goals. The key, though, is having someone that can help you build a plan for this. That’s where Cornerstone comes in. Feel free to connect with us and we’ll see how annuities might help your income needs.
We do planning with annuities for a purpose. We don’t do them just to sell them. We do them because there’s a reason behind that.
Timestamps:
0:36 – We’re taking precautions in the office as things begin opening back up.
1:29 – Why annuities cause some confusion.
2:44 – We see people who are overloaded in annuities, which is a problem.
3:40 – Let’s start with the immediate annuity.
6:08 – What is a Fixed Annuity.
7:33 – Example of a client that really likes fixed annuities.
10:15 – Variable Annuity
13:26 – Are you better off just being in mutual funds?
15:34 – Fixed Indexed Annuity
18:35 – What annuities do we typically use during the planning process?
20:56 – Anthony shares a case where he’s used annuities to help a client achieve their goals.
