When it comes to retirement planning, annuities offer a lot of unique advantages that are often overlooked by both consumers and financial professionals. In general, confusion and a lack of understanding about the product have caused many people to avoid annuities altogether. 

As concern over today’s volatile market environment continues to grow, taking the initiative to address any confusion around annuities with your clients can help them make more informed decisions about their retirement plans.

Here are five common misconceptions that you might encounter when discussing the benefits of annuities with your clients:

“Annuities Are Only For Retirees.”

While annuities tend to be popular with retirees who are looking for immediate income, they can also be a great part of your client’s long-term financial strategy during their working years. Your clients might want to consider an annuity before retirement if: 1) They’re looking for a tax-deferred growth solution; 2) They need/want a safe place to roll over a workplace retirement account when they change jobs; and/or 3) They’ve maxed out their 401(k) and/or IRA annual contribution limits and have additional money they want to set aside for retirement.

“Annuities Lock My Money Away With Surrender Charges.”

Annuities are designed to meet long-term retirement goals, but that doesn’t mean your client’s funds are completely locked away. In fact, annuities can give your clients far more flexibility than they may realize.

Typically, annuities offer a penalty-free withdrawal amount that is generally a stated percentage of their contract value. Additionally, surrender charges are generally waived if you are withdrawing the funds for nursing home expenses, are diagnosed with a terminal illness, or need to satisfy IRS-imposed required minimum distributions. Surrender charges for many contracts also typically decrease over the years until they no longer apply at all.

Of note, if your client plans to annuitize their contract and create a guaranteed income stream, this will limit your client’s ability to access their funds and transfer them into other investments.

“I Don’t Need An Annuity. I Can Easily Create Lifetime Income From My Retirement Accounts.”

Retirement comes with a lot of risks, including outliving your assets, unexpected market performance, and concerns over principal preservation, just to name a few. All these challenges can severely impact your client’s retirement and force them to adjust their investment mix and decrease their income, or risk sacrificing their ideal retirement lifestyle. Meanwhile, an annuity with an optional living benefit can ensure your clients receive a guaranteed income stream for the remainder of their life.

Our Virtual Client Seminars can help you further educate your clients on the retirement challenges they’re currently facing. Sign up to host an event today with your dedicated WealthVest wholesaler.

“When I Die, The Insurance Company will keep all My Money.”

Today, most annuities are designed specifically to provide a payout to your beneficiaries upon death, ensuring your client’s spouse or beneficiary will be taken care of after they pass. Even if your client chooses to annuitize their contract and create a guaranteed income stream, many annuities offer options that allow them to transfer their lifetime income payments to their spouse or create a guaranteed payment period in which any remaining payments will be paid to their designated beneficiary.

“Annuities are expensive with high fees.”

It’s important to note that annuities are not a one-size-fits-all product. While some annuities can be more expensive than others, there are a plethora of annuity options out there to fit every client’s retirement income needs and current budget goals. From variable annuities to fixed annuities, every type of annuity comes with its own unique benefits, fees, optional riders, and level of risk, which gives your clients the ability to choose and customize a product to their unique financial situation.

In general, higher fees equate to more value and options for your clients. For example, fixed annuities with no riders tend to have no maintenance or annual fees at all - a great option for those looking to protect and grow their safe money, without sacrificing additional funds. Give us a call to learn more about the industry-leading annuity solutions we can provide you and your clients.

Planning for retirement can be a daunting task for your clients, especially when you consider all the risks and challenges they could face in their golden years. While a well-diversified retirement portfolio can help fund your client’s retirement lifestyle, there’s no guarantee that they won’t end up strapped for cash in their old age.

Annuities exist to help provide the guaranteed income, tax-deferred growth, and additional protections your clients want as part of their retirement portfolio. Knowing the facts can help you and your clients better evaluate whether, and how, an annuity might fit into their financial plan. Find even more great educational materials about annuities in WealthVest’s Professional’s Toolbox.

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 • Not FDIC insured • May lose value • No bank or credit union guarantee • Not a deposit • Not insured by any federal government

These statements are not tax advice. This brochure is designed to provide general information and education on the subjects covered. Pursuant to IRS Circular 230, it is not however intended to provide specific legal or tax advice and cannot be used to avoid tax penalties or to promote, market, or recommend any tax plan or management. Please note that WealthVest and its representatives and employees do not give legal or tax advice. You are encouraged to consult with your tax advisor or attorney.

Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are designed to meet the long-term needs of retirement income. Annuity contracts typically require money being left in the annuity for a specified period of time, usually referred to as the surrender charge period. If you fully surrender your annuity contract at any time, guaranteed payments provided for in the contract and/or any rider will typically no longer be in force, and you will receive your contract’s cash surrender value. Early withdrawal charges will apply if money is withdrawn during the early withdrawal charge period.

Purchasing an annuity inside a qualified plan (retirement plan) that provides a tax deferral under the Internal Revenue Code provides no additional tax benefits. An annuity used to fund a tax-qualified retirement plan should be selected based on features other than tax deferral. All of the annuity’s features risks, limitations, and costs should be considered prior to purchasing an annuity inside a qualified retirement plan. This is not a comprehensive overview of all the relevant features and benefits of annuities. Before making a decision to purchase a particular product, be sure to review all of the material details about the product and discuss the suitability of the product for your financial planning purposes with a qualified financial professional.