OK, let’s have some fun. Cue the car dealership ad: “Have I got a deal for you. Come lease this brand-new car for a fraction of what you’d expect to pay. Just come on down and see me.” You get the point. When dealers need the business, you can’t stop hearing from them.
Which brings me to annuities. They remind me of a car lease. Because the more options you want, the more you pay, and at the end of the term, they get your money (or the car), not you. If you were in kindergarten and were told about the terms, you’d run. But that’s not what happens with annuities. They’re sold by salesmen who prey on investor emotions and collect handsome fees along the way.
And the sales pitch is good. It’s something like this: Let me tell you about a product that almost guarantees you can’t lose more than the market and can participate in the gains. Or how about this, a lifetime of income that pays you much more than you can get in a bank CD? Or taking care of your spouse if you happen to croak out before she does.
But here’s the catch. The added options, just like with a new car, will cost you, and if you’re going to beat the house, you better get good at wheeling and dealing. Sound like fun? Quick question: What if I want inflation protection? That will cost you.
Most annuity owners are frugal ‘til it hurts, and that’s why they have some money to invest. They believe what they’re told and don’t want to think about investing. But like a car lease, it’s not the best way to make your money last, especially when actuaries rely on investors dying—literally—to pay you.
Action Line: The next time you read about an annuity, ask for the prospectus, not some silly brochure. The prospectus tells you the real story, like Atlas Shrugged. Don’t rely on the greater fool theory with your hard-earned money. Be self-reliant, and you’ll see the truth for yourself. If you want to learn more, let’s talk.
- Will Insurers Make Good on Annuity/Life Insurance Promises?
- Is the World’s Largest Money Manager Pushing You into an Annuity?
- Get Ready! The Annuity Onslaught is On
- Grave Concerns about Annuity Survival
- Beware the Coming 401(k) Annuity Storm
- Annuity Salesmen Rise from the Dead
- New Wave of Annuities Likely to Fall Short of Investor Expectations
- BREAKING: Game Changer for ANNUITIES and Life Insurance
- Annuities Hammered by Conflict of Interest Rules (Finally)
E.J. Smith - Your Survival Guy
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