The growing demand for more predictability and security planning for retirement income has led an increasing number of retirees and pre-retirees to look to annuities as way to provide more stability in their investment portfolios.
As Halloween approaches we are all reminded of the scary spooks and ghouls that haunt our lives. Few things are scarier than the sequence of returns risk I wrote about in my lastpost. Like the weather, we cannot control sequence of returns risk, but we can protect ourselves from experiencing its full wrath.
“It’s a great investment!” replied Ed when I asked him why he had purchased his variable annuity. “I get 5% guaranteed—and if the markets do better I get all the upside too!” The promise sounds too good to be true. And, in this case, it is too good to be true. I’ve seen this annuity many times over the past few years. The sales pitch is very convincing—who wouldn’t want no downside risk and full upside benefits. Has anyone tried to sell you this annuity?