A 2019 federal rule may be loosening requirements on annuities in retirement plans. With high fees, confusing guarantees, and questionable returns, annuities might imply certainty, but in reality, they may not be the best bedfellows for a retiree.
Consider those warranties you’ve been offered on all sorts of goods from A to Z. How many times have you paid for one and regretted it or, even worse, the warranty itself outlasted the purchase that it’s supposed to protect?
The sale of an annuity is compelling. In a contract between you and an insurance company, you are promised a lifetime stream of monthly income, which sounds great - especially if you have anxiety about the future (and who doesn’t?). But there is more than meets the eye, and we encourage you to do your homework. Annuities can be confusing and are commonly misunderstood. Annuities may be marketed as investments, but annuities are not the same as investments in index funds or ETF’s. They are contracts – contracts that lock you into an agreement. While annuities vary, all of them have commissions.
At One Day In July, we can offer you some other options as you plan for retirement, including a monthly income stream that does not come attached to high fees and confusing language. We do not take commissions, and we are transparent in all that we do.