You probably believe that Variable Annuities have some strengths. Well, I would be lying if I didn’t agree. BUT (yes, there is a “but”), any benefit that you can receive from a Variable Annuity can be received from another annuity, such as a Fixed Index Annuity. The difference?
With a Variable Annuity, you will have to pay higher fees to receive the same benefits that you can receive from a Fixed Index Annuity.
Of course the choice is yours, as it always is, but if you want to have most of the same features with a Variable Annuity that are already built into a Fixed Index Annuity, it is going to cost you. It is an expense that you can easily avoid, and you will end up with a more SECURE vehicle. Talk about killing two birds with one very smart stone!
Why would anyone want to pay fees for certain features on a less secure annuity when they can get the same features for much less with a more secure annuity?
The only benefit to Variable Annuities that Fixed Index Annuities, and other annuities, do not have is one that also comes with risk by open exposure to the stock market. Allow me to explain:
Back in the day, from 1980-1999, the market was up over 1000%. Well, wealthy earners needed a place to put their money after they maxed out their retirement accounts (401k’s, IRAs, etc.). During that time, VAs were a great product to place their money into. Rather than pay 50% in capital gains taxes, people at the time chose to put their money in a VA where the money would grow tax-deferred; the high fees of VAs seemed better to them than paying 50% in capital gains taxes
They saw a higher earning potential when the market did well, and the market was doing very well at that time. They had the money to take that risk. The reason it was a risk is because the investment portion of the VA has just as much of a potential to earn with the upside of the market, as it has to lose with the downside of the market.
Let’s quickly break this down:
The market had skyrocketing success from 1980-1999 (up over 1000%). Then, of course, there was the tech bubble that lasted from 2000-2002 before it burst, and then the market cruised to a peak in 2007.
Even with the tech bubble, though, the market was still up, despite the several years it took to recover. So, except for the setback the tech bubble caused, the market was mainly up from 1980-2007. Well, we all know what happened after that: the infamous market crash of 2008.
Well, before 2008, anyone who had a VA benefitted tremendously, because with a VA you benefitted from 100% of the market gains, and the market before 2008 was winning more than it was losing. With a Fixed Index Annuity, you can receive market gains without directly participating in the market. What does that mean? Well, that means that your principal is not impacted by the downside of the market. So, with a Fixed Index Annuity, you can receive some, not all, of market gains WITHOUT receiving market losses!
Okay, well what happened to VA owners in 2008?They probably lost. They probably lost big. How much of the market losses did they experience? All of it. Just like they got 100% of the market gains when the market was performing well, they also got 100% of the market losses when the market plummeted.
You may not get 100% of market gains with a Fixed Index Annuity, but another thing you won’t get with a Fixed Index Annuity is ANY of the market losses
A Fixed Index Annuity protects your principal from the downside of the market, while still allowing you to benefit from the upside.
While the gains that VA owners had prior to 2008 were tremendous, the losses that they had in and after 2008 were just as tremendous, basically making their former gains nonexistent. What ended up happening for many people is their portfolio just evened out after all was said and done. They ended up right back where they started, if they were lucky.
Gambling with the unpredictability of the market is NOT worth the possibility of losing your money, especially the money you depend to live on in retirement.
So, one benefit in a VA that you can’t get with a Fixed Index Annuity is having the opportunity to receive 100% of market gains when the market performs the way we want it to. Even if the market does start to look better, it doesn’t seem to ever stay that way. What goes up must come down, right?
To be honest, this “benefit” of VAs isn’t guaranteed, so it’s more like a ‘feature,’ because it comes with a constant risk of the market performing poorly.
So many of us are hopeful, with the mindset that the market is going to go way up, but it hasn’t for several years and people continue to lose money on this hope.
Do you see the erratic nature of the market? It’s up, and then down, and then up, and then even more down. There is no predicting what it will do tomorrow. There is no telling if you will receive large gains from it or large losses.
I never recommend any retiree or soon-to-be retiree to rely on “maybe” income, when you can rely on GUARANTEED* income.
This guaranteed* income comesfrom a financial vehicle that gives you a REASON to rely on it, unlike relying the instability of an unreliable market in the investment portion of the VA. Click here to fill out a short survey and find out how to attain that guarantee* that you deserve in retirement.
Sure, you don’t get all of the market gains from this product, but you can get something much more important than that: guaranteed* income for life that you can never outlive no matter what the market decides to do today, tomorrow, the next day, and every day after that. If you want the ability to know what will happen tomorrow and every day after that with your retirement income, a Fixed Index Annuity can do that for you. The guaranteed* income will always be the same, except when the market performs well. When the market performs well, it can be more!**
Yes, there are benefits to owning a Variable Annuity! For an extra fee, you can get a death benefit rider, a guaranteed minimum accumulation benefit, a guaranteed minimum withdrawal benefit, a guaranteed minimum income benefit, and more.” You can get all of that… by paying pretty high fees.
You can get ALL of that and more with a Fixed Index Annuity with MUCH LOWER RIDER FEES.
A Fixed Index Annuity, and other fixed annuities, are designed to best suit the clients who own them, and I don’t believe that a VA does this as well as fixed annuities. That is why we don’t even sell Variable Annuities at my firm, because, if I did, I would not be helping you do what is best for you in retirement, so there really isn’t much in it for me.
I do what I do because I want to help protect you and retirees like you in retirement. If I can’t do that, I won’t leave the office happy. That is why I spend a significant amount of time with each client educating them on everything they need to know about annuities before they come to any sort of decision.
Ultimately, the decision is yours and only yours. I am here to guide you and help you reach that decision by providing you the tools and education that you need. It’s not just a matter of me telling you what you need to do and what is right and wrong. adsense banned It’s a team effort, and when both parties are committed, the right thing for you will come naturally.
I can tell you that all day, but it isn’t until I show you that you will really see what I am talking about. So call us at 619-291-1233 or fill out a short survey here on our site and we’ll call you. My staff will put you in touch with me or one of my licensed agents who specialize in annuities and retirement planning, whom I hand-selected, and you will also receive the entire package of my educational eBooks at absolutely no charge to you!