Index Annuities and Your Retirement
Hey everyone, happy summer. Our pool just opened this week so now it really does feel like summer. The kids were so excited to go swimming, and truthfully, I was too. It’s great exercise to get into the pool and tread water. But, I’ll tell you this, the first time you get into the pool, especially our pool here in Mineral Point, unheated, it’s a little bit chilly…or refreshing as I like to say.
I had to laugh yesterday, all the kids just jumped in, but the adults are a little more cautious with getting in. My sister was quite funny. When she was going to get into the pool she asked both me and one of my friends swimming, “Hey, how is it?” and I replied “It’s great! Just jump right in and you’ll be fine!.” My friend, on the other hand, was like, “Well, I think I might get frostbite.” So my sister says, “I’m not sure who to believe. One of you says frostbite and the other one says it feels great.”
That got me thinking about something. How often, when you’re looking for something financially, or anything to do, do we go and ask other people’s opinions? Then we get conflicting information. Some people say, “Hey, it’s great!” and other ones are like, “No, I would never do that” or “You’re going to get hurt.” It’s negative, right?
It made me really think of one particular investment that I want to talk about and that’s indexed annuities. A lot of times people have a bias towards annuities, just like my sister had a bias that the pool was going to be freezing. Then, because of that bias, they’ll go and maybe it could be the best thing for them. We use indexed annuities a lot because they limit the downside potential of the market so you don’t experience market loss, but still have the opportunity for market gains. Plus, you can guarantee income from them, there’s features that go to your beneficiaries, just a lot of features that can be really great in an indexed annuity for someone in retirement, especially when we’re looking for limited downside risk and guaranteed income.
But, people often have a bias. Like my sister who was biased that the water was going to be cold. So what do they do? They ask everyone. Today that means going to Google and putting it in. I will tell you you’re going to find a lot of negative information and some positive information on anything you Google. The question is, who do you believe? You have to figure out where it’s coming from. So, going back to the story with my sister, she thought, well, you can’t be getting frostbite, or you still wouldn’t be swimming, so she weighed the benefits. Swimming with her kids, spending time in the pool, and she jumped in. One of the things she said when she popped out of the water is, “You know, it is not as bad as I thought it was going to be.” That is so true with investments as well.
Index Annuities can be a great tool. It can be scary because maybe it’s not something that you’ve used before or maybe you’ve heard bad things, but the fact is it could be exactly what you need and it could give you all the benefits that you’re looking for.
So, another side note, something you might want to know. Sometimes the people saying all the negative like my friends saying that she is going to get frostbit, well those people might actually be thinking something totally different. For example, Ken Fisher is a great investment guru. He has lots of things out there saying that he hates annuities, he hates Index Annuities, and yet his company has honed billions of dollars in stock in annuity companies. So, does he hate annuities? Maybe, maybe not. Or, is he trying to tell you something for his own bias to get you to do what he would like?
The truth remains that sometimes you just gotta jump in and outweigh the benefits from the pain, and enjoy it, just like my sister did.
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