Fixed index annuities are often presented as a way to participate in market gains while avoiding market losses. That combination can sound especially attractive near retirement, but what happens when the promises made during a sales presentation are compared with the results of an actual contract?
In this episode of Coasting in Retirement, Josh Null and Michelle Lee Melton-Null place fixed index annuities and advisory investment accounts in opposite corners of the ring. Using real annuity contracts with identifying information removed, they examine how features such as caps, income riders, fees, bonuses, and surrender periods can influence the return an owner ultimately receives.
They also discuss the important difference between using an annuity for capital preservation or future income and purchasing one with the expectation that it will deliver stock-market-like growth. On the advisory side, Josh explains how market participation, liquidity, professional management, fees, and comprehensive financial planning contribute to a very different investment experience.
Are you comparing these options based on realistic outcomes, or an illustration of what might happen? And do you know what you may be giving up in exchange for protection from market losses?
Listen to the full episode to hear how the numbers compare and why understanding a financial product’s purpose may be just as important as reviewing its performance.
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