Should You Buy an Annuity? Retirement Planning

Taking away money from the public is good for society....isn't it?

Great video!

Would have loved to hear comments on the agent’s commission on the $1 million annuity!

That’s why they’re pushing the sale! 😂😂😂

When you get to say, 50, you might consider easing yourself out of the stock market. If you keep your money in the stock market and take some percentage, say 3% out every year, your income will vary as the market rises and falls. Another reason is that perhaps you don't know anything about investing, like MOST people, you can set up a pension for the rest of your life. Your attitude is silly.

This is an excellent, objective, informative video. In a nutshell, he who loses control of his money loses - and that's what happens if you invest in an annuity.

Thank you for your recommendation

Some. Stocks experts say stocks that will skyrocket in 2024 are MRNS. UPST. BBY.TGT. PARA. TDOC. SQQQ,

: )

Jake investing in VTI is a great investment. However while the 4% rule is great guideline it falls apart during implementation mainly due to sequence of return risk and behavioral factors. If you can hang tough through thick and thin and rebalance aggressively during market downturns it works but what happens is people get shaken out and it fails. People are not robots

You can’t make such a broad statement. These days there are RILAs you can buy with no fees no surrender fees and you can earn 130% of the index and get 10% downside protection. This allows a lot of people to stay invested. Not all annuities are for income and not all have high fees. You really don’t sound like you have much experience with this.

Annuities are the only product that guarantees future income., either by annuitization or giving a pension base that will be guaranteed to increase every year when you don't draw. This living benefit is crucial. As for "investing your money " beside studies showing that self-directed investors way over time significantly underperform the market, if you buy mutual funds and the market tanks at the time you retire you can be easily out of money. There are no guarantees with any variable product but with a variable annuity with a living benefit rider. If you have a guaranteed payout in a variable annuity you are much more likely to be in the market even when you are a codger like me. The 'costs" of a variable annuity which he refers to me can be way less that what most investors do by going in and out of the market. He pretty much ignores living benefits in annuities giving an analysis that would be more relevant for 1990. Even if your stocks or mutual funds have a good ten year average run when you retire, if the bad years are at the beginning, you could be out of money due to how sequence of returns work. Put up Moshe Milevsky for this analysis. The return of many annuity variable accounts are net of charges, beside the rider charges, so they are easily comparable to stocks or mutual funds in terms of costs. I would gladly trade marginal higher costs for a minimum yearly ten year pension base increase and a guaranteed payout.

Fixed annuities have no fee and not impacted by the market!😂

Fixed annuities only ❤

What about a MYGA - at 6% a year interest for 8 years with full return of principal?

YOU ARE A GEM : so intelligent and logical ! just love your logic ; i have learnt so much from you . THANKS !

Multi Year Guaranteed Annuities are very good values. The behave like CD's but have tax and distribution benefits. Pay upt o 6% for fixed terms.

YES! Thanks for speaking TRUTH. It never made common sense to me to turn your money over to a company or ANYONE and have them pass it back out to you.

If I invest the way you are telling me and I lose money in the market, will you reimburse me?

I have a client that put in 350k into an annuity with an income rider (1% fee). In 10 years his income account will have a GUARANTEED 860k. There are pros and cons, if you want it for income, nothing beats it. There are 0 fees after 9 years. There was a record of 310 billion invested into annuities 2023 for a reason.

Great advice!

Wow incorrect information here annuities are a great form of steady return without the risk and you have to make some commitments but the market averages 7% return annuities are now paying five with no risk to your principal not bad

My dad instilled in me to "never trust an insurance company".

My father-in-law took the annuity at 65 is now 76 sleeps like a baby. My mother-in-law kept hers in stocks and bonds, lost $30,000. She is 76. She panicked and took it out, never to make it back.

Good grief! This kid has no idea why an annuity is good for a large segment of society, I’m talking boomers, senior citizens. After social security and if your lucky some pension money, annuities can fill the income gap to insure the basic living costs are covered. Annuities are an important PIECE OF A BALANCED low risk portfolio for senior and also can have confinement care rider added. Annuities help insure income for the mostly unavoidable cognitive decline! This kid is so young he cannot see beyond age 50. In an 76, husband is 76. Rates are good and this guy just convinced me to buy a $100,000 annuity! Social security, pension and an an additional annuity is the answer. The balance of portfolio in Vanguard because low fees is the only saving grace for people without year and years to wait for market growth. I-bonds are our only outside investment. The kid is not talking to seniors. Wake up people, you also will be old and need contractual guarantees in exchange for $ someday!

Wrong an annuity is not an investment it is a contract.

A STABLE INCOME IS MORE IMPORTANT THAN ANNUITY FOR RETIREMENT PLANNING. Big ups to everyone working effortlessly trying to earn a living while building wealth. I'm 40 and my wife 34. We are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. Saving and investing lifestyle made it possible for us this early even till now we earn monthly through passive income.

My financial adviser put my money in an Lincoln annuity 4 years ago and now it's showing a whopping 2% gain😡.

Thanks Jake this was were useful 🙏

Thank you as this was a very educational video.

What about a high net worth individual who is diversifying? Would an annuity be a good choice then?

TY for pointing out the following: High fees, not your money anymore, no real tax benefits.

so this video was a bad advice if you look at it in March 20, 2023

This stuff is so dang confusing!

Right off the bat you assume the advisor is recommending an annuity to earn a commission. Never mind the growing number of fee-based annuities with substantially lower costs than commissioned annuities. I had a hard time taking the rest of your information seriously when your very first assumption, while accurate for a majority of the annuities sold, could be shown to be false.

I have 2 annuities valued currently at $278,000 and plan on retiring in 3.3 years. The annuities will be valued at $350,000 when I begin taking monthly payments. The annuity payments coupled with social security will give me a comfortable monthly/yearly paycheck for the next 25 years of my life. An annuity is basically a self funded pension. There is absolutely nothing wrong with annuities and I highly recommend them.

How will your 4% withdrawal strategy fare if you started retirement in 2022 or 2008 when markets were down -19% and 38% respectively? Doesn’t your math breakdown if I retire in a negative market year?

Also wondering if your assumption that stocks return 10% per year is fair if Vanguard and Fidelity believe the stock market will average 3.2% per year for the foreseeable future.

I’d prefer the guarantees of an annuity so I don’t have to worry about stock performance in retirement.

Thank you.

The fundamental premise of this message it: the market is sound and reliable, has been, therefore always will be-time is your friend, always....
No chance you can be 70-75 yrs old and say, hypothetically, the fed prints money for 10 yrs, Joe B is pres, Russia invades a neighbor and cuts off gas to Europe....all out war....and so on.
If you are approaching retirement age and are looking for a later stage guarantee money stream, as part of your retirement income (social security 2.0) then a deferred annuity could be an answer for you. Yes it has fees, but you are buying the reduced risk, that's the game. Unless going back to work sounds good at age 75 or perhaps going hungry.
I'm not in sales or a retirement expert, but I do see the WHOLE picture.

I always knew investing in the index was better but not specifically why, thanks Jake

Bravo!

pheww..after watching 10+ vids finally this one gave the most informative down to tax etc. TY 🙏 I was debating to add annuity to my future income but I know now. Will stick to my IRA & 401K then.

I'd rather keep the money under my mattress than use an annuity. Crazy and foolish but that is how much I hate annuities.

I purchased a FIA 8 years ago for around $500k. It continues to be the best decision I have ever made. Why? Because I bought it to be my "bond" part of my portfolio. It is my "40%". Today. July 16, 2022 with the market down over 20% my so called 60% stocks are now worth less than my "40%".
This video simply makes no sense. I am about to retire in a few months because of my FIA's..........not because my stock portfolio is down 30%........but rather I can retire despite my stock portfolio being down 30%.
Jake, I love your videos on things such as which platforms to use........but when it comes to something like this you just do not know what you are talking about.

Also single premium immediate annuity the commission is included.....

Lol so tell me what other investment Guarantees payment every month for the rest of your life..... your ignorant to annuities

President Obama, his administration put a rule on annuities that the sales people must follow a fiduciary standard. They could only sell the best annuity if it truly fit the clients purposes. The sale of annuity went down 30% per year for several years. The Trump administration reverses rule, and annuities went up their sales went up dramatically. I am a retired estate planning attorney. I had lots of experience looking at the portfolios of elders. I thought that most of the annuities that were sold to these elders were junk! Something that really gets to my craw, is that these financial planners, they called them selves financial planners but all they sell is annuities and life insurance! They infiltrate churches, and then pray on some of the naïve older members and talked him into buying these annuities. And I totally agree with your analysis. Why not just put the money in long-term bonds with VanguardAnd probably aA better return on your capital

Jake, I just found your channel and I really like the honest way you have to explain very complex information. Thank you for it 😊 I have a question for you: I used to have an account with sharebuilder and they closed the company or sold it I don’t remember exactly but I ended up selling my stocks because I didn’t know what to do. If I open an account with fidelity do you think one day will happen the same thing?

Annuities are designed to protect against two major risks retirees face: 1. Longevity Risk: When someone retires they have to design their retirement plan to last until they die. But when will they die? 80, 90, 100? You probably decide to plan for roughly the worst case. In order to increase the probability a portfolio will last, a higher stock allocation may be needed which increases #2 Sequence of Returns Risk: If the market performs very poorly the first couple years of your retirement, your odds of running out of money increase dramatically. If self-insuring, you have to plan for the worst case (and spend much less) or risk running out of money if you live longer than expected or sequence of returns are bad. An annuity lets you pool these risks, so you can plan for the average case and have a possibly higher guaranteed monthly income for life. This means you can spend more like you will only live until age 82, instead of possibly 100. Maybe ~85-95% (speculating here) percent of cases it would be better to self-insure, but some people aren’t comfortable with say a 5% chance of running out of money. I don’t think basic SPIAs or DIAs are that bad, if you want to insure against these risks. Depending on risk tolerance, it may make sense to have annuities to cover necessary living expenses.

Nice and simple — No. don’t do it.

I was talked into a variable annuity 5 years ago. Put in 50000. 3.25 % guaranteed. When I learnt about stock market, I pulled out everything and invested during the covid crash. I had to pay the penalty, but I more than made up in gains in the last 1.5 years.