10 Tips for Current Retirees – Tip 3- Be Aware of Annuities

Wealth Advisor

In this video, Jamison Smith, wealth advisor at EWA, advises caution when considering annuities for retirement planning. He distinguishes between variable and fixed annuities and highlights the potential drawbacks associated with both types. Variable annuities are criticized for high fees, commissions, and surrender charges, making them less favorable for asset accumulation. Fixed annuities are generally not recommended except in rare income stream circumstances. Jamison warns that annuities are often oversold, particularly to retirees, and urges viewers to be cautious about their use in retirement planning, as they may not always align with individual financial goals and can come with hidden costs.

Video Transcript

Hi, I’m Jamison Smith, a wealth advisor with EWA. And this is another video in our series of Ten Tips for Retirees or anybody close to Entering retirement. So this tip is going to be beware of annuities.

Annuities. There’s a lot of good and a lot of bad about them. They are, unfortunately oversold in the industry because of high commissions that are paid on them. Two different types of annuities. There is a variable annuity and a fixed annuity.

Variable annuities are invested into equities and they are sold as a vehicle to help accumulate assets. Our opinion is that annuities should never be used to accumulate assets. Number one, there’s high fees involved and commissions paid out, and a lot of times there’s surrender charges if you ever want to pull the money out.

So, all in all, not a good investment. And fixed annuities, on the other hand, most of the time, are not recommended. There are certain circumstances where a fixed annuity could be used for an income stream, which would be guaranteed for life, but very rare circumstances, for the most part, want to steer away from them.

Unfortunately, people entering retirement get solicited for annuities probably more than any other age group, because it’s sold almost on a fear tactic where the salesman will pitch it like it’s a guaranteed income stream no matter what the market.

Is doing if it’s up or down. And try to make it sound like it’s a staple for your retirement plan. And you won’t have to worry about the stock market, which is not the case. And most of the time. They are not worth it.

And the salesman is just looking to get paid a commission and not taking your entire financial picture in place. So if you have any questions on any annuity products or anything in this video, feel free to reach out.

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10 Tips for Current Retirees

10 Tips for Current Retirees - Tip 1- Have a Team of Trusted Advisors
10 Tips for Current Retirees - Tip 2- Recognize Your Investor Bias
10 Tips for Current Retirees - Tip 4- Have a Game Plan for Long Term Care
10 Tips for Current Retirees - Tip 5- Track Monthly Spending
10 Tips for Current Retirees - Tip 6- Don't Base Investment Allocation on Your Age
10 Tips for Current Retirees - Tip 7- Consider How You Will Spend Your Time
10 Tips for Current Retirees - Tip 8- Have a 7 Year Spending Back Up
10 Tips for Current Retirees - Tip 9- Have a Game Plan Around Social Security
10 Tips for Current Retirees - Tip 10- Plan Your Travel

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