Ep 9: What to Know About Annuities

July 29, 2021

Annuities are a tool that come with their own pros and cons and specific uses. On today’s episode of the podcast, we talk through the different types of annuities to broaden your understanding of what annuities do and why they may (or may not) be right for you.

An immediate annuity means you put money into it and 30 days later you start getting a check back for a set amount of time. It’s like buying a pension account that brings in a solid income each month that you can count on, regardless of what the market does.

A fixed annuity is almost like a CD on steroids. It’s a guaranteed rate for a certain amount of time. Fixed annuities can produce a decent rate and might be a worthwhile strategy in your overall plan.

Variable annuities are a bit of a hybrid product and what many people think of when it comes to high fees. They sometimes give annuities a bad name, but in the past few years have cut back on the fees. It’s important to understand what you have and how it serves you and your financial plan best.

Finally, with index annuities you can’t lose money but you’re limited on the upside. Troy and Alan give an example of what this might look like. What happens when the market goes down? There are certain strategies to choose each year. Make sure you understand the fees. With any annuity, it comes down to figuring out whether or not it is the right fit for you.

Listen to the entire episode or skip ahead using the timestamps below.

Listen to the entire episode or use on the timestamps below to skip ahead to a particular question.

0:43 – A lot of people have strong opinions about annuities.

1:29 – What is an immediate annuity?

4:13 – What is a fixed annuity?

6:41 – How does a variable annuity work?

10:06 – What is an index annuity?

14:51 – How have annuities been used in a retirement plan?

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