Sometimes it can be difficult for annuity advocates to spread the truth about annuities. There are biased opinions both for and against annuities floating out there, so it’s important to look for advice that simply states the facts about these financial products. In The Florida Sun Sentinel, Roy Daniel Rosner tells you “How to get the truth about annuities.” He is a financial expert who neither sells annuities nor profits from the sale of annuities, so he has an unbiased perspective about the products. The author often recommends using annuities as one part of an investment plan that protects your income in case you have a long retirement. After hearing countless arguments against annuity products, he wants to set the record straight so that Americans can be financially secure in their retirement.
The negative articles and comments about annuities almost always come from people who make money selling investment products like stocks, bonds and mutual funds. If you invest money in an annuity instead of one of their investment products, they will earn less income. So unfortunately a lot of bias is involved in the anti-annuity community. What Mr. Rosner is trying to do is make sure that people are financially secure for a long retirement. Some of the products in their retirement plan might not earn him commission, but that doesn’t mean that they aren’t important to consumers. I applaud his ethical values and his desire to spread truthful information for the common good of society. People who speak against annuities typically talk about their complexity. There are a lot of moving parts with annuity products and some are much more complex than others. Cars are complex and computers are complex, yet we still manage to use them successfully without understanding every little moving part.
Life insurance companies are required by the state and federal government to disclose every single part of an annuity. You can see every detail involved in your product because of these transparency requirements. While this is certainly a good thing for consumers, it can add confusion and be overwhelming. The article compares this information to the long printout you receive with a new credit card. Do you actually read and understand all of that fine print? You buy your house without understanding all of the blueprints and specifications required to build it. Complexity associated with annuities does not make them bad. It often makes it necessary to have a financial expert to help explain the information that you need to understand.
No one has anything negative to say about the important insurance aspect of annuities. Single premium immediate annuities (SPIAs) are the most common type and are basically insurance against the possibility of running out of money during your lifetime. There are a lot of other annuity products with features that include principal protection, guaranteed growth and/or income, and death benefits that can be left to your heirs. It’s possible that you can find products to offer you more growth or profit than annuities do. That would be in the case that the stock market performs well and there is not a crash close to the time that you need to receive income. History has proven that it is easier than you think to lose money in the markets if you happen to retire during a recession. That is why guaranteed annuity income is important insurance to have in your financial plan. Annuities are better used as a replacement of some of your bonds rather than a replacement of your equities.
The bottom line is that you should look further into the negative rants you see about annuity products. When annuities are used as insurance that you will not run out of money in retirement, they are almost invaluable. You insure your house against catastrophes and your car against accidents. You insure your income during working years with disability insurance. Annuities insure your retirement income in the case that you live a very long life. They offer many other benefits as well that can be tailored to your individual situation and needs. It’s important to speak with an unbiased financial expert and do your research to get the best information about annuity products.