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Do You Think You Are Locked Into an Annuity?
So many people tell me they don’t want to be
“Locked In”. But you’re not!
OK, if you have what I call your “Grandparents Annuity” then yes you are locked in. But those are antiquated Annuities not the type of Annuities we would recommend.
Before I go into explaining the liquidity of an annuity, keep in mind, there is no such thing as the perfect financial product. Not a Stock, Bond, ETF, Mutual Fund, Life Insurance policy, or an Annuity. All have their pluses and minuses.
Like any wise planning you want to have different asset classes to provide you the overall benefits and give you the
best opportunity to enjoy your life with financial peace of mind regardless of economic events.
After all, isn’t that what you have worked so hard for to achieve?
So many people seem to think they are “locked in” when they deposit money into an Annuity.
With most annuities, that is a fallacy. It is incorrect and greatly misunderstood in my humble opinion.
"But Joshua, there is a surrender charge if I take ALL my money out prior to the Term of the policy."
Ok, that is true, but now let’s take a deeper look into this. Let's compare the liquidity of a Fixed Index Annuity to a Brokerage account in the Market, and see if you agree with me
Fees:
With a Fixed Index Annuity for Safe Secure Growth, there are no annual fees. In your brokerage account you have about a 1% fee every year, whether you make money or lose money.
Liquidity:
With a Fixed Index Annuity, you have a 10% Free withdrawal without any surrender fee each anniversary year. When have you ever needed to take out more than 10% in a year from any one of your accounts?
Volatility (This is a big one!):
In your brokerage account your money will go up and go down. No security or guarantees of any kind, correct? So many people say to me they want to get off the Markets Roller Coaster, but when?
No Money Manager at the Brokerage is ever going to tell you to get out of the Market. They will tell you, “Well, the Market is up, you can’t get out now”. Or they will say, “The Market is Down, you can’t get out now, you’ll loose money”.
If I had a nickel for every time a client told me that…
When I first came into this business 24 years ago, I was managing money with a big Financial Institution, and that is exactly what they taught us to say. Tell your client to never get out of the market!!
Recapturing Losses:
So, when the Market is down, would you want to take money out, or would you say, I can’t take money out now, I need to wait to recover my losses. The #1 thing people tell me when they want to get an Annuity is they want to protect their money because they don’t have the time to recapture losses like they did when they were young!! I’m 65, I know I don’t have the time to recapture losses. Do you?
Here is an Illustration of a Fixed Index Annuity that I will explain below
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