by Paul Hubbard III

Since pensions have all but vanished in the 21st Century, the responsibility of designing their own retirement blueprints rests solely on the shoulders of older Americans. The challenge is that most of us do not possess the specialized training and skill sets necessary to create successful retirement plans. Modern money products can be overwhelming and confusing, even for seasoned financial advisors. It’s unrealistic to expect people without that training to understand the many nuances.

When retirees and pre-retirees come to me seeking assistance with their retirement planning, some of them tell me they HATE annuities. They are adamant that they will never consider owning this proven safe money product.

Maybe their cousin’s wife’s brother said annuities were horrible investments. Or they saw an ad on Google warning them that annuities are not right for seniors and should be avoided at all costs.  Perhaps their spouse worries about “tying up” cash in an annuity contract.

My typical response was that annuities are essential to a solid retirement blueprint for people within 7-10 years of leaving the workforce. Now, though, before I mention annuities as one of several products I use to protect seniors’ wealth in retirement, I  would like to ask the annuity naysayers a few relevant questions:

  1. Do you feel you have enough to retire without needing to cut back on everything that makes retirement enjoyable? Seniors who are honest with themselves almost always say, “No!”
  2. Would it make sense to have at least one reliable, predictable income stream to supplement your Social Security and Savings? “Well, yes, THAT sounds like a great idea.”
  3. Is protecting your principal investment vital to you? “Uh, yeah, that’s why I’m talking with you.”
  4. Do you like the concept of a product where you could potentially participate in market gains without needing to risk all your savings? “There’s such a thing? Really? Tell me more.”
  5. Have you thought you may need nursing home care someday but can’t afford or qualify for long-term care insurance? “I don’t like thinking about it, but yes, I might need it.”
  6. Is leaving something to your heirs of importance to you? “I suppose I like my kids and grand kids enough to do this.”

After hearing their responses, I drop my bombshell, informing them that annuities can do all these things and more. I also remind these clients and prospective clients that if they have a Social Security number, they either already own an annuity or will own one in the future.

Upon reflection, most seniors admit to believing at least a few annuity myths.  Some also say that they had forgotten that Social Security, the cornerstone of most Americans’ retirement plans, is itself an annuity. While there are some apparent differences between Social Security and privately-issued annuities, both share the goal of giving you a lifetime stream of guaranteed, predictable income that you can’t outlive. In the case of a private annuity, guarantees derive from the issuing company’s claims-paying ability.

I’ll be the first to agree that, although a lot of slick marketing may have you thinking otherwise, purchasing an annuity is not the right decision for everyone. However, since this financial vehicle is endlessly flexible, it deserves a second or third look.

Are you ready to discover more about annuity contracts, life insurance, or other products that can help buffer your wealth against inflation, market volatility, increasing taxes, or other threats?  Would have an additional guaranteed income stream make sense in these tumultuous, unpredictable times?   If so…


Better Call Paul!