It's Annuity Awareness Month

It seems like every industry and many products have now established “Awareness Months,” which are nothing more than opportunities to publish content like this to advocate for products they want to sell. Well, I just learned that National Annuity Awareness Month is here, and I can’t think of a product that could benefit more than Annuities.

Most of us are familiar with the word “annuity,” but only one in four Americans can tell you what it is, and only 1 in 10 own one.? I'm convinced that both of these statistics need to change.? Why?? Because when consumers have the chance to be educated on the benefits of annuity, more than 1 in 2 say, “That’s what I want!” [See my PS section below for more information about these statistics].

What is an annuity?

As I mentioned in my last article, I just finished several months of fundraising, which is nothing more than telling your story to as many wealthy Americans as you can schedule meetings with and asking them to invest in your companies.? I was not surprised at how many saw the opportunity when we told them our plans for Annuity.com, Inc., but I was shocked at how many wealthy and very smart people asked me, “What’s an annuity?”

Annuity Defined.

An annuity is a financial product issued by an insurance company that offers tax-deferred growth potential and the option for a guaranteed lifetime income. While designed for retirement income, annuities can also be used as long-term investment vehicles with the flexibility for lump-sum withdrawals upon maturity.

Annuities do have restrictions.

Annuities are not right for everyone and every circumstance and should definitely not be a product you put ALL of your retirement savings into.? Annuities are contracts for a specific period of time, and therefore, most have penalties or fees if you decide to take your money out early. If you keep your contract and don't withdraw your money early you don't have to worry about these penalties, but if you think you may need the money before the contract date, make sure you understand the contract and penalties associated with early withdrawal.? Nevertheless, in a world with so much volatility and news that major investors are selling equities and converting to cash, perhaps having some money under contract with the backing of a life insurance company is a good idea.

Why you should consider an annuity!

Why should you and every future retiree include Fixed Indexed Annuities (FIA) in their retirement strategy?

1. The Pension replacement - In the day, many Americans didn’t worry if they would live longer than their savings, because they had pensions.? With fewer and fewer companies offering pensions, the right annuity can be a great choice.? For example, in a Fixed Indexed Annuity with a Guaranteed Lifetime Income Rider, an insurance company will guarantee you a stream of income during retirement for a fixed number of years or until the day you die.
2. Indexed Annuities offer growth potential -? With a FIA, you won’t be subject to the volatility of the market and won’t be participating in any stock or equity investments directly. Instead, you’ll earn interest based in part on the change of a market index, such as the S&P 500. The best news is that these contracts allow you to grow your annuity value as the market increases in value, but you’ll never lose value in a down market due to market declines except for the fees charged for additional riders you may elect at the time you purchase the annuity. [Assuming you don’t withdraw funds during the withdrawal charge period].
3. It provides downside protection - With increased market volatility, it’s critical to ensure the money you are counting on in your post-earning years is protected when the market is down. That is why many Fixed Indexed Annuities are structured so that if the index is down, you may not earn any interest, but the account value won’t decline due to market conditions. This means they will never earn less than 0%. [Note: your principle may decline in value if you have chosen to purchase additional riders with a fee associated with the annual principal balance].

Annuities are growing in popularity.

The good news is that more and more financial advisors are taking the time to educate their clients on the value of these products. Thus, the growth in annuity sales should be close to 100% in just five years by the end of 2024.??

Now you know!

There—I’ve done my part to help you celebrate Annuity Awareness Month. Of course, you may have specific questions about whether or not an annuity is right for you. The good news is that we can help, and with dozens of carriers and annuity options available to us, we have only one desire -- to recommend the right product for you.

If we can do more to help you, please reach out. We’ll help you decide if an annuity is right for you now and how you should include it in your retirement plan.

In the meantime,

Be Happy!

B2

P.S.? In case you’re wondering where I got my industry statistics, In a study published by the Center for Retirement Research at Boston College in November 2023, researchers learned that half of those surveyed want to annuitize at prevailing market annuity prices,” but “12 percent of this group ..actually do buy annuities.”? Their study suggests that among individuals with investable assets over $100,000 the number that should own an annuity should be even higher than 50 percent.? In other words, the record number of annuities purchased in 2023 of $385 Billion (according to LIMRA) should be more like $1.6 Trillion.? ?[see the abstract here: ?https://crr.bc.edu/how-much-do-people-value-annuities-and-their-added-features/ ].