Can You Pass The Retirement Lie Detector?

What if the solution to your retirement income is the thing you don’t know about or WANT to know?

How many of these features would you like for your retirement?

•    A reasonable rate of return.

•    Participate in market gains without exposure to market losses.

•    Guarantees that you will never lose a penny.

•    Have a better than average chance of making a better than average return.

•    Little or no fees or expenses.

•    Access to your cash.

•    A guaranteed lifetime income

•    Control of your assets to be able to pass to your beneficiaries.

Sounds great, right?  What reasonable person would NOT want to have all these benefits available for their future needs, options, and flexibility? 

               Now, do you realize I am describing a  Fixed Indexed Annuity!

Maybe your retirement income planning has been victimized by misinformation and disinformation about Fixed Annuities – whether it’s been inaccurate stories in the media, half-truths from your broker/adviser, or well-meaning co-workers who just don’t have their facts straight, somewhere along the line you’ve gotten some wrong information and your retirement will suffer because of it.

I’ve talked with many of you who love those features described above, but when I mention a “Fixed Indexed Annuity,” the conversation comes to an abrupt halt.  In asking a few common questions, I have found that nearly everyone who is rejecting an FIA “out of hand,” has the wrong impression based on somebody else’s erroneous information and complete lies.

Let’s take a brief but closer look at the lies you have been told: 

1.)    “Commissions to agents.” It’s ironic that THIS lie is spread around by the adviser/broker who collects 5%-6% off the top of your investment, then gets 1%-3% annually from your account whether you have made money or not!  Think about that. The truth is that agents make 3%-7% when your money is transferred, and NONE of that cost comes from you.  Agents are paid ONCE and ONLY ONCE. Do YOU understand all the fees you are being charged in your retirement account? 

2.)    “Fixed Annuities have high fees.” This ironic “whopper” is similar to #1 (above).  The truth is that there are usually NO FEES at all associated with a FIA unless one elects to purchase the Guaranteed Lifetime Income Rider.  This is optional, fully-disclosed and typically costs <1% per year.  The agent doesn’t receive any of this money. Do YOU understand all the fees you are being charged in your retirement account? 

3.)    “If I die, the insurance company gets to keep my money.”    Gosh, is your broker-adviser that desperate?  Any cash in your account when you die goes to your beneficiaries – really, it does!  Now, can we move on from this stunning falsehood? 

4.)    “You never get 100% of the gain with a Fixed Annuity”.   This half-truth may have been accurate in the past, but not anymore, these days.  But while you may not have gotten all the gain, your chosen market index produced — you got NONE OF THE LOSS when there was a market crash or downturn.  That’s the part that was always omitted.     These days, there are lots of crediting options that offer MORE than 100% of the gain. 

5.)    “Annuities don’t keep pace with inflation.”    Many of the old-style fixed rate annuities offered by the likes of NY Life and Met Life etc. promised low, fixed rates in the 2%-3% range.  When inflation is higher than 3%, these fixed-rate products will undoubtedly lag behind inflation, and that is a problem.  The reality is this: most modern fixed indexed products far exceed inflation and have guaranteed returns in down market years. 

6.)    “There are high surrender fees with Fixed Annuities.”    My security dealer friends like to refer to surrender charges as “fees” to validate the claims made in #2 above.  Here’s the truth:  In most cases, if you withdraw more than 10% of your account value per year, there will be a charge on the amount over the 10% you take out.  After ten years there is no surrender charge.  Surrender charges do not apply to Lifetime Income Riders.  A Fixed Annuity can be a long-term retirement income planning tool.  It is designed to provide guaranteed income far into your future.  It is not a CD and should not be treated like “money in the bank.”  If one is not going to use the Fixed Annuity as it is designed, one should not be purchasing a Fixed Annuity.  There are other strategies available that should be discussed with an agent if cash withdrawals beyond the Income Rider are important.  This issue can be easily managed without surrender charges. 

7.)    “Fixed Annuities are complicated.”     Unlike a Mutual Funds Prospectus or a stock offering, everything in a Fixed Indexed Annuity is disclosed.  It’s important to meet with a knowledgeable agent,  skilled in retirement income planning, who can explain all the details to your satisfaction.  Ask questions.  Take notes.  Don’t be talked into, or out of, a Fixed Indexed Annuity based on lies and half-truths. 

If you have a negative opinion about Fixed Annuities, ask yourself where and how this impression was formed?  From whom did you hear this negative noise?  How did that person hear it?  Do they have a “vested interest” in your annuity opinion – like a financial adviser?      Or, were they just a misguided friend — trying to help, but unconsciously only furthering lousy information from questionable sources that they can’t remember?

Annuities have been around for over 2000 years.  They are PART – not all, of a balanced retirement plan.  Shouldn’t you get the facts for yourself about this retirement solution?