Kitchen Table Finance

S3E12 – Annuities and Insuring Your Retirement

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In today’s episode, we dissect the often-debated topic of whether you need an annuity for retirement. With a straightforward approach, we explore annuities with both a small “a” and a capital “A”, debunking common misconceptions and laying bare the good, the bad, and the frequently misunderstood facets of these financial products.

Watch on YouTube HERE

Main Topics Discussed
  • Annuities and Retirement: Discussing the need and implications of annuities as part of a retirement plan.
  • The Good and Bad of Annuities: The conversation brings to light our biases against the abusive sales and usage of annuities rather than the product class itself.
  • Understanding Annuity Functions: A detailed explanation of what an annuity is intended to provide – guaranteed lifetime income.
  • Cost vs Benefit Analysis: Every decision, especially in finance, comes with its own set of pros and cons; annuities are no different and we discuss what people give up in exchange for guaranteed income.
  • The Concept of Annuity: We discuss the foundational ideas behind annuities and their original purpose of mitigating longevity risks within a group.
  • The Reverse Life Insurance Policy: An interesting analogy that compares annuities to life insurance, but in reverse.
  • Lump Sum Investments for Guaranteed Payouts: How paying a lump sum to an insurance company can translate into lifelong monthly checks.
  • Deferred Annuities and Guarantees: Delving into where annuities can get complicated—understanding the lead-up to the payout phase and how companies offer certain guarantees.
    • Episode Highlights
    • Lifetime Income Guarantees: The importance of understanding what you’re trading in exchange for the certainty of income.
    • Insurance Chassis: How annuities operate on the insurance principle of diffusing risk across a large group of people.
    • Payout and Deferred Phases: An explanation of the two critical phases of annuities and the issues that often arise.
    • Market Guarantees and Real Returns: A critical look at what insurance companies promise versus what they deliver, particularly when it comes to market investments and returns.

      • Remember to subscribe to our podcast for more insightful discussions on finance and retirement planning. If you have any questions or personal experiences with annuities, reach out to us. We’d love to hear your thoughts on this complex but vital topic.

      About Shotwell Rutter Baer

      Shotwell Rutter Baer is proud to be an independent, fee-only registered investment advisory firm. This means that we are only compensated by our clients for our knowledge and guidance — not from commissions by selling financial products. Our only motivation is to help you achieve financial freedom and peace of mind. By structuring our business this way we believe that many of the conflicts of interest that plague the financial services industry are eliminated. We work for our clients, period.

      Click here to learn about the Strategic Reliable Blueprint, our financial plan process for your future.

      Call us at 517-321-4832 for financial and retirement investing advice.

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      Kitchen Table FinanceBy David Shotwell CFP(r) and Nick Nauta CFP(r)
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