David McKnight discusses the Woman's World article Suze Orman Reveals When to Buy an Annuity - and the One Question You Must Answer First.

For years, Orman has warned investors away from annuities, often lumping them into the category of expensive financial products that enrich salespeople at the expense of consumers.

David has been surprised by what the current views of Orman appear to be, completely in line with what David has been preaching for years.

Orman's analysis begins with a key consideration: annuities can be a helpful tool in retirement, but whether they make sense for you depends on one key factor: your income needs.

In the Woman's World article, Orman writes that the first step is to figure out how much money you need each month to cover your essential expenses.

Next, you should look at your guaranteed income sources like Social Security, a pension, rental properties, interest, or dividends.

David paints out the scenario in which you get permission to take more risk in the stock market portion of your portfolio.

A recent BlackRock study showed that people whose living expenses are guaranteed spend 22% more than those who rely on their stock market portfolio alone in retirement.

David talks about what he refers to as a "piecemeal internal Roth conversion feature" and why it may be a beneficial asset.

David sees Orman's approach as short-sided for the fact that guaranteed lifetime income isn't the only mathematically appropriate use of annuities.

True, most retirees own bonds because they want stability, but bonds do come with reinvestment risks, interest rate risks, inflation risks, and often low long-term returns.

David explains what would happen if you reached into your portfolio, removed bonds, and replaced them with an annuity.

According to David, the conversation needs more nuance because "not all annuities are created equal".

Remember: retirement planning isn't about one-size-fits-all financial advice; it's about creating a customized approach that will help you wring the most efficiency out of your retirement savings.

Mentioned in this episode:

David's new book: The Secret Order of Millionaires

David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track

Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement by David McKnight

DavidMcKnight.com

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Suze Orman

Woman's World article - Suze Orman Reveals When to Buy an Annuity - and the One Question You Must Answer First

BlackRock

Ken Fisher