Debunking Common Annuities Misconceptions

Andrew McKinney |

Developing a sound retirement strategy requires periodic reviews and analyses of projected income levels in order to maintain the lifestyle you envision. Annuities can serve as useful vehicle for retirees looking to generate guaranteed income. According to one investor poll, having a guaranteed income is a top priority of 56% of respondents. Yet, most Americans don’t know how much monthly income they’ll have in retirement. 


Having predictable income is important, but to build adequate levels to cover your retirement expenses you will need to align your retirement goals with your financial strategies. For many, annuities may be a worthwhile investment. However, investors who aren’t retired have mixed emotions about annuities: 51% of Americans are unfamiliar with them.


To help you better understand annuities, here are a few myths debunked:

Myth No. 1: Annuities are too expensive.

Investors can choose to buy different types of annuities. Some annuities have very low fees while no-fee annuities are also available. The annuities market continues to change, and many providers are looking at ways to lower investor costs. While you should carefully consider how much you want to spend when investing, annuities are not necessarily pricey.


Myth No. 2: Annuities are wasteful investments if you die early.

Annuities are an insurance contract you buy. They can provide you with assurances of financial coverage for as long as you live, depending on how you structure the contract. Just as you protect your home or car with insurance by paying into a policy, you enter a similar relationship when purchasing annuities. For this reason, you can be confident in knowing you’ve protected yourself with the coverage you need to not outlive your money. If you anticipate having a shorter retirement lifespan, then annuities may not be right for you. Otherwise, annuities can be helpful investments for your retirement-income strategy.


Myth No. 3: Your invested money goes back to the insurance company once you pass away.

Fortunately, this isn’t true. While different annuities can have different payout policies and options, you can designate a beneficiary for your contract, similar to life insurance. Deferred annuities and income annuities have different beneficiary designations available to them, and some may incur an additional fee to add a beneficiary. But the option to name an heir to your contract is available, so you can pass on the money you’ve invested once you’re no longer here to receive the income.

Overall, your retirement goals and income needs determine what the appropriate investments for your life are. If you would like to discuss the annuities you own or the potential of purchasing them, we’re happy to help.



Securities and Investment Advisory Services offered through Securian Financial Services. Member FINRA/SIPC. Shoemaker Financial is independently owned and operated. Shoemaker Financial 2176 West Street, Suite 100, Germantown, TN 38138. Neither Securian Financial Services, Inc. nor Shoemaker Financial are affiliated with Platinum Advisor Marketing Strategies, LLC. No. 2132585 DOFU 6.1.18

An annuity is intended to be a long-term, tax-deferred retirement vehicle. Earnings are taxable as ordinary income when distributed, and if withdrawn before age 59 ½, may be subject to a 10% federal tax penalty. If the annuity will fund an IRA or other tax-qualified plan, the tax deferral feature offers no additional value. Qualified distributions from a Roth IRA are generally excluded from gross income, but tax and penalties may apply to non-qualified distributions. Please consult a tax advisor for specific information. There are charges and expenses associated with annuities, such as deferred sales charges for early withdrawals.​

These are the views of Platinum Advisor Strategies, LLC, and not necessarily those of the named representative, Broker dealer or Investment Advisor, and should not be construed as investment advice. Neither the named representative nor the named Broker dealer or Investment Advisor gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.

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