Is your Annuity Good or Bad?

Annuities are probably the most maligned and misunderstood of all safe investment alternatives. They are often championed as the best thing since paper money by those who sell them and smeared by stockbrokers, business reporters and virtually everyone selling securities (Personally, I've never understood why investments that have risk are called "securities"). In fact, no financial product is universally good or bad for all people: annuities are no exception. But, annuities do fill a void for conservative Americans looking for a safe place to save money. If you're looking for excitement, wild price swings and something to talk about during happy hour, forget annuities and go for investments that rise and fall like a kite in a high wind. Just be sure you can handle the risks.

Possibly, you already own an annuity or are thinking about placing your hard earned money into one. If so, you should plan to keep your annuity for the longer term - five years or more. If your investment horizon is less than five years, think bank! Like many other alternatives, annuities typically need at least five years to deliver the most attractive results. The longer the growing season for your financial garden, the larger the harvest is likely to be.

Nonetheless, annuities are not for everyone, nor are all annuities created equal. Some really are better than others. Just because you are willing and able to make longer term investments doesn't make annuities the right choice for you. My purpose in telling you about annuities is to help you understand them better and to pick those that are appropriate for you or to get rid of the ones you shouldn't have bought in the first place. You'll learn which ones to keep and which ones to throw back, and you'll learn about one particularly rotten class of annuities: two-tiers.

Sadly, the press isn't much help in learning about annuities either because journalists haven't taken the time to learn about them, or worse, he or she may have an agenda other than full disclosure. In fact, some financial columnists make their living selling securities. To some extent, newspapers depend on advertising purchased by brokerage firms and banks, and use data supplied by them. They need these advertisers and don't want to alienate them. Bear in mind that brokerage firms and banks suffer wallet share loss every time one of their clients buys an annuity. In other words, it is not in their best interest to say complementary things about annuities. Why would a banker that sells FDIC insured CDs or a stockbroker that sells stocks and bonds have anything good to say about annuities? Would brokerage firms advertise in a newspaper, or treat a reporter to a power lunch, that praised annuities? Would you get objective information about the need to preserve the wolf population from sheep ranchers whose animals are being eaten by wolves? In both cases, I think not.

In that context, it's obvious why bankers and brokers are so anti-annuities. Don't hold your breath waiting for them to admit their biases. Frankly, their prejudices are so ingrained they actually buy their own stories. I'd like to set the record straight by giving you the real story about annuities. (Just for the record, I'm neither a banker nor stockbroker.)

My objective is to empower you with sufficient information to determine if the annuity you own, or are considering, is right for you. I will show you how to weigh your annuity on the "Good-Bad Annuity Scale" and draw your own conclusions. If you understand what an annuity can and cannot do, it will be hard to fool you into buying something you don't need or not buy something you really do need. It is just as bad to miss the bus as it is to take the wrong bus, because either way you won't get to your destination. I want you on the right bus to a happy retirement where you'll earn the most from the money you've saved for your golden years.

By the way, Americans purchase more than $200 billion in annuities each year and trillions of dollars are currently invested in annuities. That's a lot of money sheltered from current income taxes, out of the reach of most creditors, that can be used to buy a guaranteed lifetime income you can't outlive, and that will bypass probate when the final trumpet sounds. The majority of these annuities were not sold by banks and stockbrokers (they were busy selling CDs and securities), and they're understandably unhappy about their lost profits and commissions. I can see their point... but it's your money.

If your looking for more details - read this eReport and watch a short video seminar free:

http://www.theretirementpros.com/RP_annuities_primer.php