Misconceptions With Annuities

Today’s Prep:

Sometimes annuities are misused or misunderstood, but annuities can be powerful tools if you know how to use them properly.

Equipping Points:

1:47 – Know What You Can Risk

In a discovery meeting, Eric asks what you are comfortable risking and what percentage of your money you want to protect from market risk. Most of his clients put 50 to 70 percent of their money into protection when they are near retirement.

2:38 –  Client Spotlight

Eric tells a story about a client needing about a four percent rate of return to make their plan work.

3:54 – Misconceptions With Annuities

A lot of people think when they have an annuity that they are giving money to an insurance company and not getting it back. That is one type of an annuity, That’s called an immediate annuity. You pay a large sum, and they promise to pay you every month for the rest of your life. It’s similar to what a pension does, but then if you die you don’t get any money back.

4:52 – Deferred Annuities

A deferred annuity is another type of annuity. There are two stages to an annuity. There’s an accumulation stage when it grows tax-deferred. Then there’s a second stage when you can access the payout.

8:23 – Education Helps Make The Right Choice

Understanding the pros and cons will help you make the best decision regarding your money. Eric recommends reading Jack Marrion’s article about using an index annuity during the Great Depression.

11:48 – What Insurance Does

Everyone thinks they lose control of their money with annuity, but that is not true. You have a contract, but this will do things that your other accounts cannot. With properly structured insurance products, you might have different income guarantees, death benefit guarantees, disabilities backstop guarantees. This is a transference of risk.

Today’s Takeaway:

“Once you understand how long you have to keep it for and what you have access to, annuities can be wonderful tools. – Retirement Ready

Additional Resources:

More From Eric:

The host: Eric Peterson - Contact - Call: (515) 226-1500

Subscribe To The Podcast:

Apple Podcasts  -  Google Podcasts  -  Spotify  -  Stitcher  -  iHeartRadio  -  TuneIn

Check out some other recent episodes

Bracket Busters and Stock Flops: The Risky Game of Picking Winners

March 27, 2025

March Madness is here, and just like filling out a bracket, picking individual stocks can feel like a thrilling gamble. But the odds of winning big are slim. In fact, history shows that most stock picks, like most brackets, end up busted.

Read More

Are Hidden Fees Draining Your Retirement Savings?

March 20, 2025

In this episode, Eric reveals the true cost of investing and how to protect yourself from unnecessary financial drains.

Read More

What Game Night Can Teach Us About Financial Planning

March 13, 2025

In this episode, Eric breaks down the surprising financial lessons hidden in classic board games, offering valuable insights to help you navigate your retirement strategy.

Read More

Mailbag – Upsizing, Financial Advisors & Business Owner Planning

March 6, 2025

Join us as we answer questions about the challenges of downsizing, the emotional aspects of planning for family gatherings, and the realities of transitioning into a financial advisory career.

Read More

Planning for Unique Situations in Retirement

February 27, 2025

While many face the same general retirement concerns, each individual’s situation is unique, requiring tailored solutions.

Read More

Planning for Kids, Grandkids, & Your Future

February 20, 2025

As many nearing retirement age are discovering, adult children and grandchildren can significantly influence financial strategies, making it crucial to understand how to navigate these relationships effectively.

Read More

Financial Planning Conversations for Couples

February 13, 2025

This episode is focused specifically on that planning we do with couples with insights on how we help them navigate tricky conversations about money and retirement.

Read More

Is Your Retirement Based on Wishful Thinking?

February 6, 2025

Many people fall into the trap of wishful thinking when it comes to what they expect will happen in retirement, but a successful retirement isn’t built on hope and assumptions.

Read More

Spending With Confidence in Retirement

January 30, 2025

Eric shares strategies to help retirees enjoy their savings while ensuring financial security.

Read More

Watch Out For These Financial Half Truths

January 23, 2025

Eric pulls back the curtain on some of the most common financial half-truths that many retirees and investors encounter. As someone gearing up for retirement,

Read More

Leave a Comment