The lingering question about the success of variable annuities as a sales vehicle is on the surface difficult to understand. By examining it closely and using the “new car” concept of selling, the focus is on the allure, the new paint, the transformation of us as drivers being behind the wheel and on it goes.
The record stock market gains of 2013 and the market’s ability to ignore everything from poor earnings reports to last April’s announcement of a QE3 decline in Treasury buying should be seen as a new wave of “irrational exuberance.”
We are now facing an economic situation similar to about 20 years ago, and I know from experience that you’re not going to like what’s about to happen to you and your important money.
Having weathered the economic crisis in 2008 with most of their value intact, fixed rate annuities have become the standard for retirement savings. Variable annuities, on the other hand, try to accomplish more than that. Higher Risk investments may generate more income for the annuity holder, but this income can be reduced by the fees charged for maintenance of these accounts. In addition, if the market loses money, your account value decreases with it and fees still are charged on your variable annuity.
There are a number of different choices you can make when setting up your income annuity. These choices will determine how much money you receive each month, how much you leave to your heirs, and other important choices.
Fixed Indexed Annuities are valuable tools for many who are planning their retirement. Along with a company pension and social security, a Fixed Indexed Annuity can provide the basis for guarantees in a retirement plan. Fixed indexed annuities are excellent investments that allow you to enjoy the benefits of interest linked to the market without being affected by market risks.
Baby boomers are afraid of more than not being able to retire comfortably. They’re also afraid they won’t be able to afford necessary health care or even making ends meet. And as if that’s not enough, they’re also worried that their kids (or grandkids) will be moving back home.
Is an annuity right for you? Several factors unique to your personal situation should be considered before investing in an annuity.
Once the financial marketplace began its shift in 2008, promises and contractual guarantees offered by variables annuities became a huge and monstrous potential liability for the industry. The liability was really a derivative, meaning a future promise paid for by consumers but expensive for the insurance companies to keep.
Think of your money like a safe, when the stock market drops, your funds jump into the same, when the stock market increases, your funds are in play. Your crystal ball would always know what was happening before it happened.