Annuities – Buyer Beware

Although many financial advisors consider annuities suitable in certain circumstances, annuities are rarely the most optimal investment. Typically, the goal of an annuity is to provide a steady income stream, helping insure against the risk of outliving one’s retirement resources. However, the complexity and fees of these insurance products almost always outweigh the positive aspects, often being sold by insurance companies through over-hyped and oft-misleading claims.

  1. “Annuities guarantee principal income, and withdrawals.”
  2. “Annuities are tax-deferred and therefore, tax-efficient.”

These claims can make annuities seem too good to be true.  However, they typically come with high costs as tremendous fees are hidden behind terms such as Mortality & Risk Expense, Surrender Charge, Administration Charge, Riders, Investment Management Fees, and much more. These excessive fees can eat potential returns, to the possible detriment of reaching your retirement goals.

To protect yourself against purchasing an annuity, research and understand all of your options. If you have a current annuity, we would be more than happy to discuss the details of your insurance contract in an objective, free, and informative consultation.

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