Retirement Investing: Biggest Misconceptions of Fixed Index Annuities Clarified by CFP® Professional

[@user-mm8jv3tn2l]

Thanks for another great video. We like the bucket approach for our retirement investments. Our number one bucket approximately 30% of total assets is placed in 2 fixed index annuities. If we have a down market, we can withdraw 10% a year penalty free which will cover our basic living expenses. Just got our yearly statement with significant gains. One is capped at 13% but I am happy that the gains are locked in and the main purpose is that if we ever have a repeat of 2008 , I have a safe bucket of money that we can draw for as long as a decade while we wait for the market to recover. Post retirement your security becomes more important than before retirement. I did not fully appreciate this while I was working. Thanks RSB

[@bigtoeknee11]

With 20 and 30 year treasury bonds yielding ~ 5% wouldn't that be the better option maybe alittle less monthly but you keep your initial principal wheater it be 100k or 1m+ Also if held in a Brockerage account will save on State taxs as well.

[@OakHarvestFinancialGroup]

Thank you for your comment! Putting money in U.S. Treasuries is another option since rates are higher now. Just be mindful that long dated bonds come with higher duration risk that could either help you or hurt you. This is why we recommend creating multiple streams of income. Please feel free to reach out to us for a free consultation. Set that up here: click2retire.com/fia-misconceptions

[@jessefletcher9116]

annuities are aggressively marketed and come with healthy commission for the salesforce, so you have to ask yourself if these things are such a hot piece of property why are they so aggressively marketed? If they were so great then you'd think it would be the other way around and people would be beating down the door to get at them. Unless it's the salesman it seems unlikely I'll ever meet someone who tells me "I got rich with annuities."

[@missouri6014]

Troy I am in the Missouri that gave that post at the beginning of your show. *Now 6years in was two years ago and both of those fixed index annuity‘s. I am afraid that both companies have dropped their participation rate to 22% and/or the To 4% Both are unacceptable to me And now I’m trapped for two more years with these companies. The companies are Midland national, and American equity. Not happy anymore, with the fixed index annuity other than the principal protection

[@OakHarvestFinancialGroup]

Hi Missouri, while we are not familiar with what you have, I imagine back when interest rates were 0 your participation rates weren’t too much higher than you stated. Maybe dropped from 30% to 22% or so? Either way, you should have other options inside the FIA to choose from or possible ways to get out. I would contact the representative that you initially worked with or give us a call and we’ll see if we can help. If I had to make an educated guess I’d say your contract anniversary is probably around February-May and your renewal rates were significantly impacted by the dramatic spike in volatility during the 35% or so Market drop during Covid. When volatility spikes so suddenly, option prices skyrocket, and the options budget the carrier uses to provide stable participation rates gets decimated. Volatility spikes like that are very rare events but I understand your frustration. Let us know if we can help and thanks for watching.

[@craigsowder4253]

How long would be the required deposit and what could you expect for income with the income rider. I am in a fund that may only be available as a spin. Could this still be a good investment. Otherwise to take it out takes 10 years with a 2% payout rate I am considering 20 year two life when n it is available.

[@OakHarvestFinancialGroup]

Thank you for your comment To answer your questions, we would need additional information. How much income you will receive would depend on how much you plan to invest and when you need to turn on the annuities income. For us, this would be based on your overall income goal once you decide to retire. Feel free to contact us so one of our advisors can get a better understanding of your desires / goals and create your plan accordingly.

[@Bill-vk7fh]

Can you address the effects of inflation on a deferred fixed index annuity ? Do you ladder annuities ? Or wait to buy until there is a need ?

[@OakHarvestFinancialGroup]

Hey Bill! Thanks for watching. This is a great question - and if we're not able to answer it via traditional YT video before then, you should tune into our livestream this month on Oct 26th where we'll be doing a live Q&A - Here's the link you can bookmark to return to that day - kzbin.infoyR4A1XTBO54?feature=share

[@M22Research]

Arm chair quarterbacking in the comments is fun sport. I do it. Many folks do it. But being an avid arm chair QB does not mean you’re always right and the content is wrong. Gotta be careful or your ego might get hurt.

[@OakHarvestFinancialGroup]

Hi @M22Research! We do many of these comment response videos and don't always disagree with what we find in the comment section. We try to only speak to the things that may add some color based on our experience with thousands of retirees. We believe annuities can be a great tool for many, and we want to make sure good info is available! Thanks for watching and commenting.

[@pware9643]

Income riders come with a fee or cost that rides with the contract. Why have a rider when most FIA allow you to take out up to 10% a year with no surrender charge and make your own income. In the illustration, the return on the $117k comes out to about a 10.4 % return over 5 years, not impressive when you can get 5% (per year!) tax free in a 5 year muni bond. Problem with FIA is the way they are sold as growth products that compete with the market, instead of bond or cd type of products which they are. One can invest in an annuity as a customer of an insurance company, OR as an investor in the Insurance company.. ie I just bought bonds of F&G life that pay 7% a year for 5 years.

[@missouri6014]

Please share with the bonds were that you bought I’d be most interested

[@pware9643]

The bond i mentioned : F& G (fidelity and guarantee) Life bond that matures 1-13-2028. The Cusip is 30190AAC8 , issued at 7.4% but trading above par at about 101 so yield to maturity is about 7.11% , available in most brokerage accounts . @@missouri6014

[@OakHarvestFinancialGroup]

We mostly agree. The forgotten point is that income riders were more valuable when interest rates were 0 and you couldn’t buy a quality Muni-fund, or any high quality, low risk bond fund paying 5% without significant risk to principal. In today’s interest rate environment, simple withdrawals like you state make sense. FIAs are an alternative for CDs and Bonds but unfortunately you’re right, some advisors position them as stock market alternatives. That isn’t the case. And be careful with high yielding bonds, the volatility of the bond can be extreme during a recession whereas the FIA you never have to worry about your principal losing money during a downturn or recession. Diversification is still important and each financial tool is just that, a tool that should be used in conjunction with other tools to accomplish your objectives. Thanks for watching and commenting!

[@josephcrane5301]

We are both retired I am 65 my wife is 67, our current income which is at zero tax In SC, and almost zero federal tax due to the Social Security work sheet, we take In $6K per month and at age 72 we will take in $8K per month, with our IRA'S added in ,we are not big spenders, and the IRA's will last until we are 92. Very happy with zero mortgage and a net worth of 1.3 million, no need for annuities, stock market or anything volatile.

[@OakHarvestFinancialGroup]

Hi Joseph! We're really happy you've found the best plan that works for you and that you're enjoying your retirement. Thanks for watching and sharing your experience.

[@angelarasmussen3884]

Don’t you pay to have higher returns?

[@OakHarvestFinancialGroup]

Great question. Not necessarily. As of this response, annuity rates (ie. cap and participation) are currently at some of highest levels we have seen in quite a while. Nevertheless, some insurance companies offer the opportunity to ‘buy up’ to an even higher rate for a fee. However, this is an option, not a requirement. Thanks for watching.

[@peter-hr1gl]

You must have brown eyes