Top 10 Annuity Myths Exposed
New market report reveals annuity critics are often biased and incorrect in their perceptions of annuities within retirement planning.
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If the idea of a comfortable retirement with an abundance of money sounds appealing, then chances are you may be one of nearly 2 million people that utilize the Internet each and every month to search for financial advice to grow your life savings.
While annuities have played an integral role in retirement planning throughout most of the last century, a new report reveals that the average consumer is ten times more likely to read information designed to discourage annuities rather than endorse them.
A market study completed this week by Annuities Institute included the analysis of more than five hundred popular consumer articles on financial planning and annuities. From the review, an alarming 93% of the documents researched contained inaccurate and damaging assessments of how annuities work within retirement plans.
"Many of the articles attacking annuities are being written by private investment advisors that want to sell mutual funds, provide stock market trading systems, or broker other money market instruments," reports Robert Davis. "The Internet has become a very effective way to have your opinion heard. As a result, we are seeing the same ill-conceived perceptions being quoted time and time again as justification why annuities are not suitable for retirement planning."
Among some of the top negative press strategies and fallacies recorded were:
- Every Annuity is a Variable Annuity
- Your Insurance Agent Isn't Qualified to Offer Financial Planning
- Fixed Annuities Will Never Outperform Inflation
Very often, the risk properties of the variable annuity are intentionally or incorrectly referenced on behalf of all types of annuities, undermining consumer knowledge and confidence in non-security based annuities such as fixed, immediate and indexed investments. Nearly half of all annuities purchased are not based on stock market performance however, and offer guarantees through fixed minimum interest rates and future protection against loss of principal and earnings.
Some investment managers will diminish the value of annuities on the grounds that the insurance representative does not need a securities license to provide investment advice. However, a securities license is only utilized when selling speculative investments where the potential for loss exists. Many insurance providers focus on fixed and indexed annuities for retirement where loss to principal and earnings is not an option for their clients. They undergo continual training and professional courses year round to improve their knowledge and capabilities for senior planning.
The fixed annuity offers security in knowing you are guaranteed a set interest rate over a specific period of time, and is often utilized to give long term investments more growth return and tax advantages over CDs. Some investment advisors are against fixed annuities because of their perception of future inflation. They feel that some risk must be taken to grow savings to maximize personal wealth. For investors who cannot afford to lose any of their life savings however, risk should never be a substitute for long term planning and new income generation as needed.
We had heard about annuities and were investigating them for our IRAs. We also heard bad things about pushy brokers over the years. So when we went to the ImmediateAnnuities.com site we were skeptical about calling them. But whenever we called their staff was really friendly. They answered all our questions and one of their reps even told us that at our ages there was no advantage to buying the annuity with our IRAs. These guys are really honest!
About Annuities
Annuities provide many real advantages, ranging from competitive interest rates, to guaranteed income for life, to the often cited tax deferral advantages of compounding principal and interest over long periods of time in preparation for retirement distributions. They also offer many unique and beneficial ways to protect estates, avoid probate, and pass money to future heirs.
Many individuals looking for safety within their investments are being exposed to significant risk to their savings and are not even aware of it. To maximize the safety of your retirement plan, ensure you deal with a knowledgeable advisor who can provide independent and objective advice, buy only from reputable companies with a strong performance history in annuities, and never agree to anything that concerns your retirement and financial security that you don't fully understand.
Source: prweb.com - 08-22-2005
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