When it comes to buying annuities, too many people take an all or nothing approach. Annuities need not be an either/or decision. In the Life Health Pro article, “Annuities or investments? Ask yourself this question,” Adam Cufr explains why you should look at your annuity and investment product decisions in a different way. It isn’t always a black and white decision. Some people have cats and dogs, others agree with liberals and conservatives on different issues. Financing your retirement is the same way. By looking at multiple types of products and investments, you don’t put all of your retirement eggs in the same basket. The tricky part can sometimes be finding an advisor that is on the same page. It’s important to look for an advisor that has your best interest in mind. You want someone willing to look at the “and” and not just the “or”.
There are three reasons why it can be hard to see past the either/or mindset when making financial choices. But all of those reasons have a flip side that is not often addressed. There are consumers and advisors who just want to follow the money and look and one specific number when making a broader decision. Some annuities are known for paying a high commission to those selling them. Annuity commissions are usually a one-time fee, so while they may be higher at the onset, they are not continuous. Those people with fee-based investment portfolios will pay a smaller commission when you look at the first year, but their commission is paid out annually. This just shows that simply looking at a specific number is not beneficial when choosing your type of investment. You must make a more in depth comparison before making annuity or investment decisions.
Investments are continuously monitored by your advisor, whereas annuities are purchased for their guarantees and then left alone. As advisors or clients, you have to determine how much control you want to retain over your investments or how much work you want to continue for your clients. This so-called service model can make or break one’s decision to purchase or sell an annuity or an investment portfolio. Having both of these products in your financial plan offers you some consistent monitoring and control in your plan and another product that you don’t have to worry about changing.
Some firms only offer up the benefits of the product or products that they want to sell and highlight the downsides of products that they do not sell. This type of approach is not in the best interest of the consumer. The best way to ensure a secure financial future is by combining products so that you can optimize the benefits of multiple investments. Guaranteed income from annuities ensures that you will have reliable and consistent money coming in to meet your retirement expenses. Also having money invested in riskier products gives you more flexibility to pay for those extras in retirement. An either/or approach to retirement planning can be dangerous. Whether you are a consumer or an advisor, use an “and” approach to financial planning. You are able to take advantage of the benefits from multiple products when you don’t limit your sight lines to one or the other. Annuities offer tremendous benefits in retirement. Using annuities as a part of your financial plan often sets you up for a lifetime of financial ease.