Ask Terry Questions Fixed Indexed Annuity

Fixed Indexed Annuity

By Terry Savage on October 25, 2017 | Financial Planning / Retirement

I am nearing retirement and was one of the first 5 callers to win a $3000 consultation for free on a radio show. After going they were promoting a fixed index annuity. It sound really good with no loss but limited up side.what's your opinion on these annuity's?

Terry Says

My opinion is that it's a great sales pitch -- and will help THEIR retirement plans, not your own!  There are always catches and expenses in these products.  You don't get the whole market upside, you are locked in for years, and you pay high internal fees.   You might want to read this article by "Stan the Annuity Man" -- the voice of reason and truth in the annuity business. I have nothing against annuities.  And perhaps a small part of your money should go into an IMMEDIATE annuity at retirement -- money you cannot outlive.  But that money might not buy much if we get another round of inflation.  That's why I don't advocate putting too much money into an immediate annuity (check a month for life, or for two lives if you include your spouse). As for those "indexed annuities" -- if you want tax-deferred exposure to the stock market via mutual funds, leave your money in your 40l(k) or roll it to a low cost IRA at Fidelity or Vanguard and you'll have two of the three promises of "fixed index annuities" -- you'll have tax-deferral and growth -- ALL the growth of your stock funds.  Then put some money in CDs for safety and you will have created your own retirement plan at far lower cost than those fixed income annuities! Why the "free lunch" or "free consultation"?  Because THEY MAKE SO MUCH MONEY OFF OF YOU!!

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