The Three Biggest Reasons Americans Hate Annuities

Most Americans hate annuities and would tell you to avoid them… But what if the version you've been warned about isn't the only option for retirement planning?

David McKnight breaks down a strategy that's quietly helping retirees sleep better at night and safeguard themselves against the 3 biggest annuities-related problems. 

• In this episode, David McKnight looks at three perfectly legitimate reasons why Americans have been reluctant to embrace annuities, as well as a solution.

• The first problem is liquidity.

• David points out that one of the biggest fears in retirement is running out of money before you run out of life.

• He shares an example that shows you how, in the process of purging longevity risk from your retirement, you create an entirely different problem.

• The second reason why people dislike annuities has to do with what happens if you die early – what happens to what an insurance company promised to pay you for life?

• The third problem has everything to do with inflation.

• Sure, your income may be guaranteed for life but, with inflation, the lifestyle that income supports certainly isn't.

• David wonders whether there's a way to get guaranteed income you can never outlive without having to accept the three traditional drawbacks.

• "Over the years, life insurance companies recognized the shortfalls of the traditional guaranteed lifetime income annuity, so they designed a solution known as the Fixed Index Annuity", says David. 

• With many Fixed Index Annuities (FIAs) you can access up to 10% of your contract value annually during the surrender period without paying a surrender charge. 

• When you consider that most Americans with stock portfolios are relying on the 4% rule in retirement, 10% withdrawals are an absolute smorgasbord of liquidity.

• David explains how FIAs help with the second reason why Americans hate annuities, and what happens even if you end up living for a long time.

• He then illustrates how FIAs can come into play to help you deal with inflation – and why the so-called piecemeal internal Roth conversion feature is something you may want to explore. 

• Remember: not all annuities are created equal.

• If you're interested in the benefits of guaranteed lifetime income without all the pitfalls that go along with traditional single premium immediate annuities, fixed index annuities may be a viable alternative.

Mentioned in this episode:

David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track

The Power of Zero: How to Get to the 0% Tax Bracket and Transform Your Retirement by David McKnight

DavidMcKnight.com

DavidMcKnightBooks.com

PowerOfZero.com (free video series)

@mcknightandco on Twitter 

@davidcmcknight on Instagram

David McKnight on YouTube