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.

(Click the featured times below to jump forward in the episode)

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:

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

Presidential Quotes And The Financial World

June 20, 2019

There are a lot of great quotes from past presidents that also apply in the financial industry. Have you heard all of these? How would you apply them to your financial portfolio?

Read More

Mailbag: Retention Bonus or Retirement?

June 13, 2019

As you near the final months or years before taking the plunge into retirement, there are always a few details to work out and questions to ask. Eric answers a few questions from the mailbag about pensions, paying taxes in retirement, and deciding when to walk away from a retention bonus and just retire already.

Read More

Handling What You Can’t Control in Retirement

June 6, 2019

Some things are just out of your hands. In retirement planning there are a lot of things completely out of your control, but if you re-frame your thinking, there is actually something you can do about them. Eric talks through these four areas where you have an opportunity to prepare for the unpredictable.

Read More

Wishful Thinking In Retirement Planning

May 30, 2019

Is your head in the clouds when it comes to retirement? Here are three common phrases people say when it comes to retirement planning. Eric shares whether these mentalities are wishful thinking. 

Read More

Underrated Or Overrated?

May 23, 2019

We’re playing a game to determine what’s underrated and overrated when it comes to a few topics in the financial world (and even a few outside of financial planning). Let us know what you think. 

Read More

Lazy Money

May 16, 2019

Do you have money sitting around without a purpose? We’ll explain the dangers of lazy money, why people have it, and how you can put it to work! Make your money work for you as you plan for retirement.

Read More

Delayed Gratification In Retirement Planning

May 9, 2019

Sometimes, it’s hard to make financial sacrifices when the reward seems so far away. However, delayed gratification can be extremely beneficial when it comes to your finances. Eric talks about four situations when people may be tempted to choose instant gratification over a better long-term pay out.

Read More

If Retirement Were Like A Game Show

May 2, 2019

Everyone loves a good game show, whether it’s The Price Is Right, Jeopardy, or Who Wants To Be A Millionaire? It’s fun to play along, but remember, they’re just a game. Today we’ll talk about game shows and how they relate to your retirement planning process. Ready to play? 

Read More

Financial “Jerseys” and What They Say About Your Plan

April 25, 2019

On game day, it’s fun to wear your jersey and show some team spirit. What you might not realize are the three ways your financial planning process is similar to a jersey. Consider the names, numbers, and symbols on a jersey. How might they be similar to the names, numbers, and symbols on your financial statements?

Read More

Unlikely Wisdom From Unlikely Voices

April 18, 2019

You might not expect to gain wisdom from these popular celebrities. To be honest, these quotes weren’t intended to be about finances either. However, there’s plenty of retirement planning wisdom we can learn from these personalities.

Read More

Leave a Comment