Annuity - from Variable to Fixed

[phylt]

We both have owned Variable Annuities for over 10 years. Have been receiving $$$ from them monthly which is...nice. But, knew that fees were very high.

We met with Amerity Financial, Ross Beattie this week. He is located near the Brownwood hotel on Rt 44. 352 633 3777. Our experience with Ross was exceptional. He reviewed our finances, and the Variable Annuities we had in detail with us. Called each of the Annuity companies to obtain all info re status, past fees, transfer info, etc. Very professional and very knowledgeable.

In the end we transferred funds OUT of these Variable Annuities into Fixed Indexed. They have FAR lower fees, more income, better rates of return. All around a better financial move. We are extremely pleased.

Ross was a wonderful expert in this field, zero pressure, and provided unbiased information of possible moves. We highly recommend him for anyone with a Variable Annuity, or considering Annuities in general. Annuities may have a bad reputation, BUT if invested properly in the best instrument they can be a great source of income with solid security.

[manaboutown]

Oh my!

[Stu from NYC]

Oh my!

Well if the OP is happy who are to burst his bubble.

[dewilson58]

Very Nice Restraint Boys.

:mornincoffee:

[Caymus]

Did he take you to dinner first?:laugh::laugh:

[CoachKandSportsguy]

We both have owned Variable Annuities for over 10 years. Have been receiving $$$ from them monthly which is...nice. But, knew that fees were very high.


hmmm, monthly income taxed at income rate levels versus lower dividend rates?

is your taxable income > 89K?
if your taxable income is not over 89K, never mind. .

monthly income taxed at 22% over 89K
versus ETF dividends taxed at 15% over 89K?

JUST CURIOUS, with high fees and higher taxable income bracket than monthly ETF bond and stock distributions, what was the rational from your financial planner for annuities?

former finance guy

[CoachKandSportsguy]

Very Nice Restraint Boys.

:mornincoffee:

sorry, you posted while I was typing.

always interested in financial planners rational with tax implications, especially after age 71+ when IRA RMDs start to get added into taxable income levels. . which people don't always take into account when in their 60s

[RedChariot]

Very Nice Restraint Boys.

:mornincoffee:

Ok you guys. Please share with us all what the issues are here, so we could all learn. Consider it a teaching moment.

[dewilson58]

Ok you guys. Please share with us all what the issues are here, so we could all learn. Consider it a teaching moment.

Or, you could search the last 23 annuity threads and save a lot of keystrokes.

:highfive:

[dougjb]

Anyone who "invests" in annuities is simply handing a lot of money over to the salesperson. These "investment" vehicles are some of the worst places to put money. They are highly complex instruments that even the salesperson does not understand. Imagine the regular man on the street. They stand no chance with these very expensive, impossible to unload "investments".

[Stu from NYC]

Annuities are sold and never purchased. Sales rep does very well selling them.

[Rwirish]

Totally a false narrative.

[Rwirish]

Variable annuities are much better IMO. Why cap your potential return with a fixed annuity? Your new financial advisor made a nice commission.

[dewilson58]

Totally a false narrative.

expand

[RoseyRed]

great questions!

[rsmurano]

Never never buy any kind of annuity for many many reasons. You already know about the high fees, which now you have paid 2x. You get pennie’s on the dollar in returns compared to investing your money in a index fund receiving an index and an average of 8% gains a year (unless you invest in the funds I do that make > 30% and stocks this past year that have performed > 100%) with little fees, just pay taxes on your dividends or long term capital gains.
Or if you have > $1M to invest, you could have been in a money market that has been paying over 5.25% with no fees and no risk.
Now if you get out of your annuities again, you will have to pay the high fees again, plus the cost of getting into them in the 1st place.
I hope the salesman gave you more than dinner!

[retiredguy123]

Never never buy any kind of annuity for many many reasons. You already know about the high fees, which now you have paid 2x. You get pennie’s on the dollar in returns compared to investing your money in a index fund receiving an index and an average of 8% gains a year (unless you invest in the funds I do that make > 30% and stocks this past year that have performed > 100%) with little fees, just pay taxes on your dividends or long term capital gains.
Or if you have > $1M to invest, you could have been in a money market that has been paying over 5.25% with no fees and no risk.
Now if you get out of your annuities again, you will have to pay the high fees again, plus the cost of getting into them in the 1st place.
I hope the salesman gave you more than dinner!
I would just add that any money you make in an annuity will be taxed at ordinary income tax rates, with none of the advantages of capital gains discounted tax rates. Surprisingly, some annuity salespeople forget to mention that.

[Stu from NYC]

I would just add that any money you make in an annuity will be taxed at ordinary income tax rates, with none of the advantages of capital gains discounted tax rates. Surprisingly, some annuity salespeople forget to mention that.

The long lost cousin Brucie would also push annuities relentlessly.

[crash]

We both have owned Variable Annuities for over 10 years. Have been receiving $$$ from them monthly which is...nice. But, knew that fees were very high.

We met with Amerity Financial, Ross Beattie this week. He is located near the Brownwood hotel on Rt 44. 352 633 3777. Our experience with Ross was exceptional. He reviewed our finances, and the Variable Annuities we had in detail with us. Called each of the Annuity companies to obtain all info re status, past fees, transfer info, etc. Very professional and very knowledgeable.

In the end we transferred funds OUT of these Variable Annuities into Fixed Indexed. They have FAR lower fees, more income, better rates of return. All around a better financial move. We are extremely pleased.

Ross was a wonderful expert in this field, zero pressure, and provided unbiased information of possible moves. We highly recommend him for anyone with a Variable Annuity, or considering Annuities in general. Annuities may have a bad reputation, BUT if invested properly in the best instrument they can be a great source of income with solid security.
Did he tell you that he was going to get a fat fee for swapping you out. Any advisor that recommends annuities is not one I want.

[Papa_lecki]

We both have owned Variable Annuities for over 10 years. Have been receiving $$$ from them monthly which is...nice. But, knew that fees were very high.

We met with Amerity Financial, Ross Beattie this week. He is located near the Brownwood hotel on Rt 44. 352 633 3777. Our experience with Ross was exceptional. He reviewed our finances, and the Variable Annuities we had in detail with us. Called each of the Annuity companies to obtain all info re status, past fees, transfer info, etc. Very professional and very knowledgeable.

In the end we transferred funds OUT of these Variable Annuities into Fixed Indexed. They have FAR lower fees, more income, better rates of return. All around a better financial move. We are extremely pleased.

Ross was a wonderful expert in this field, zero pressure, and provided unbiased information of possible moves. We highly recommend him for anyone with a Variable Annuity, or considering Annuities in general. Annuities may have a bad reputation, BUT if invested properly in the best instrument they can be a great source of income with solid security.
You don’t realize this is a “reverse advertisement” for Mr Beattie.
Any financial advisor who is pushing annuities isn’t a financial advisor, he’s an annuity salesman - and won’t be getting calls from most on TOTV.
My dad was talked into 2 annuities, before he let me get involved in his financials. I was upset when I saw that.

[wayneman]

I would just add that any money you make in an annuity will be taxed at ordinary income tax rates, with none of the advantages of capital gains discounted tax rates. Surprisingly, some annuity salespeople forget to mention that.
Not necessarily true. If the money was invested from an ira, the taxes would be the same at withdrawal time from the ira. Only money put into a annuity from a regular brokerage acct could have lower taxes.

[retiredguy123]

Not necessarily true. If the money was invested from an ira, the taxes would be the same at withdrawal time from the ira. Only money put into a annuity from a regular brokerage acct could have lower taxes.
I don't understand what you are saying. Money that you "earn" in either an IRA or an annuity is taxed as ordinary income. It is not considered a capital gain. I am currently withdrawing RMD funds from my IRA, and it is taxed as ordinary income. If you buy an annuity, you are buying a life insurance policy, so you don't actually own any stocks or bonds in your name, and you cannot accumulate any capital gains, only ordinary income.

[Priebehouse]

With all due respect, if you think of this forum as a teaching platform you need to go back to first grade. At least you will find a wide variety of opinions.

[guitarguy]

No one buys an annuity; they are sold an annuity.

[CybrSage]

No one buys an annuity; they are sold an annuity.

Please explain how there something can be sold if there is no buyer? How can selling happen without buying?
If no one buys the item, how can the item be sold?

[CybrSage]

I am curious, will the view on annuities change if a certain candidate gets in office and is able to enact a tax on money not yet earned, aka unrealized capital gains?

No politics please, just asking how such a thing may or may not alter views on annuities.

Also, if one is seeking safety, but not stupid levels like a savings account whose interest is far below inflation, what is recommended? For a risk adverse person. Asking for a friend (and in this case, I really am. :) )

[ElDiabloJoe]

Please explain how there something can be sold if there is no buyer? How can selling happen without buying?
If no one buys the item, how can the item be sold?

guitarguy is not saying there isn't a transaction that occurs. He is saying that no one goes looking to buy into an annuity because most people know they are bad moves. He is saying that people are sold annuities by a salesperson, someone persuasive.

Kinda like extended auto warranties. No one goes looking to buy one, but instead is solicited and persuaded by a salesperson.

No one buys annuities, people are sold annuities. It's the perspective of the transaction he is talking about.

[Marine1974]

We both have owned Variable Annuities for over 10 years. Have been receiving $$$ from them monthly which is...nice. But, knew that fees were very high.

We met with Amerity Financial, Ross Beattie this week. He is located near the Brownwood hotel on Rt 44. 352 633 3777. Our experience with Ross was exceptional. He reviewed our finances, and the Variable Annuities we had in detail with us. Called each of the Annuity companies to obtain all info re status, past fees, transfer info, etc. Very professional and very knowledgeable.

In the end we transferred funds OUT of these Variable Annuities into Fixed Indexed. They have FAR lower fees, more income, better rates of return. All around a better financial move. We are extremely pleased.

Ross was a wonderful expert in this field, zero pressure, and provided unbiased information of possible moves. We highly recommend him for anyone with a Variable Annuity, or considering Annuities in general. Annuities may have a bad reputation, BUT if invested properly in the best instrument they can be a great source of income with solid security.
I would not take any advise from any one on this thread .
There are many types of annuities where the insurance company pays the fee not the owner .
Only a portion of the monthly withdrawals are subject to taxes .
You never lose money if the stock market goes down . Your investment constantly grows .
It’s a great source of income with less taxes and your principal is protected from any downside.

[retiredguy123]

Please explain how there something can be sold if there is no buyer? How can selling happen without buying?
If no one buys the item, how can the item be sold?
Most annuities are a bad deal. So, it requires a slick and deceptive salesperson to convince an uninformed buyer to buy the product. In fact, the salesperson will not even allow the customer to read the annuity contract before buying it. So, you buy it first, pay the money, and then they send you a 100-plus page contract with 30 days to cancel it and ask for your money back. Many people who buy annuities think they are investing their money in stocks and bonds. Instead, they don't even realize that they are buying a life insurance policy with virtually no death benefit. The only thing they have is a contract between them and an insurance company.

[RoboVil]

Just to add my 2 cents - QQQI and JEPQ are two non-qualified dividend paying ETFs which return 10 to 14% with some slight risk as the base value will vary with the Nasdaq (but the dividend continues regardless) which will generally go up. Non-qualified means you are taxed at regular rate not dividend rate. But even in a taxable account you still do not have other deductions taken out as you would in regular income. I prefer putting some of my money in these instead of 5% savings accounts.

[MrFlorida]

Glad you like your investment guy, just remember, these guys are in business to make money off of you, they are not your friends.

[RoadToad]

JEPQ 3 yr return 0.0 how is this "good"

[retiredguy123]

I am curious, will the view on annuities change if a certain candidate gets in office and is able to enact a tax on money not yet earned, aka unrealized capital gains?

No politics please, just asking how such a thing may or may not alter views on annuities.

Also, if one is seeking safety, but not stupid levels like a savings account whose interest is far below inflation, what is recommended? For a risk adverse person. Asking for a friend (and in this case, I really am. :) )
Personally, I don't think the view on annuities would change. The only proposal to tax unrealized capital gains that I have heard would only affect people making more than a million dollars per year.

Regarding higher interest rates, I don't know of anything that is safe and has a higher return than a money market account, such as what Vanguard offers. Currently, they are paying about 5.25 percent, which is slightly higher than the current inflation rate. I also keep some cash in the Vanguard High Yield bond fund (junk bonds) that is paying about 6.25 percent.

[LonnyP]

I really hated when my parents bought those, but they too thought they were great. There is one reason financial advisers love to sell those.

[jimjamuser]

hmmm, monthly income taxed at income rate levels versus lower dividend rates?

is your taxable income > 89K?
if your taxable income is not over 89K, never mind. .

monthly income taxed at 22% over 89K
versus ETF dividends taxed at 15% over 89K?

JUST CURIOUS, with high fees and higher taxable income bracket than monthly ETF bond and stock distributions, what was the rational from your financial planner for annuities?

former finance guy
I prefer
ETFs

[manaboutown]

I just found this and am providing it for information purposes only. I am NOT making any accusations.

"Annuity Twisting and Churning
Life insurance and annuity agents may deceive clients, convincing them to surrender their contracts and reinvest in instruments where the agent is the main party benefiting. These practices are known as twisting and churning. Many states have laws that specifically prohibit these transactions.

With annuity “twisting,” agents encourage investors to exchange an annuity from one company for an investment from another company. However, subsequent annuity investments are usually worth less than the initial investments, and annuity surrenders often result in costly penalties. Agents pushing the new policy then walk away with a large commission.

Annuity “churning” occurs when dishonest insurance agents convince annuity owners to trade annuity contracts for other ones from the same company. Clients may owe additional premiums or lose value on the policies previously owned. While the consumers usually come out in a losing position, the agents pad their pockets with sales commissions.

“Twisting” and “churning” are fraudulent activities, but exchanging an old annuity for a new one isn’t always a bad idea. That said, a good insurance agent or financial professional will always make sure an exchange is beneficial to an annuitant."

From: Annuity Scams: Fraudulent Schemes & Illegal Practices (https://www.annuity.org/annuities/scams/)

[Stu from NYC]

Hopefully the OP has been reading this thread and has learned something.

[Tvflguy]

Glad you like your investment guy, just remember, these guys are in business to make money off of you, they are not your friends.

hmm. So are banks, mutual funds, brokers, etc etc. I believe that all business involved with finance etc etc are in Business to make money…just remember.

[dewilson58]

hmm. So are banks, mutual funds, brokers, etc etc. I believe that all business involved with finance etc etc are in Business to make money…

Delete "involved with finance etc etc" and the statement is correct.

[Tvflguy]

Hopefully the OP has been reading this thread and has learned something.

I’ve learned something. To each their own. If they are pleased so be it. So many here are myopic. And some narcissistic. I would believe that the OP is very conservative with their finances. And perhaps serious about not taking much risk, especially with what can happen and impact Wall Street and such the next few years.

[Tvflguy]

Delete "involved with finance etc etc" and the statement is correct.

Meaning Advisors, Tax Prep, Money Managers etc etc. ALL are in business for profit.

[dewilson58]

Meaning Advisors, Tax Prep, Money Managers etc etc. ALL are in business for profit.

Meaning every business is in the business for profit.

[TheWarriors]

I don't understand what you are saying. Money that you "earn" in either an IRA or an annuity is taxed as ordinary income. It is not considered a capital gain. I am currently withdrawing RMD funds from my IRA, and it is taxed as ordinary income. If you buy an annuity, you are buying a life insurance policy, so you don't actually own any stocks or bonds in your name, and you cannot accumulate any capital gains, only ordinary income.

If you are at the RMD point of life, taxes are the last thing you should be concerned with ;)

[TheWarriors]

Glad you like your investment guy, just remember, these guys are in business to make money off of you, they are not your friends.

If investment planners knew what they were doing, the last thing they would be doing is talking to you. They’d be selfishly reaping the benefits of their knowledge.

[dewilson58]

If investment planners knew what they were doing, the last thing they would be doing is talking to you. They’d be selfishly reaping the benefits of their knowledge.

Could be doing both.

If I listen to someone about investments....................I want them to be a lot lot richer (thru investing) than me.

[Dusty_Star]

I’ve learned something. To each their own. If they are pleased so be it. So many here are myopic. And some narcissistic. I would believe that the OP is very conservative with their finances. And perhaps serious about not taking much risk, especially with what can happen and impact Wall Street and such the next few years.

& of course OP is your partner.

[Stu from NYC]

If investment planners knew what they were doing, the last thing they would be doing is talking to you. They’d be selfishly reaping the benefits of their knowledge.

Remarkable when you ask these so called investment planners their background, so many have just done some on the job training and have access to computer program. So few people will ask questions like this.

I do and often have to ask numerous questions to finally get an answer.

[Packer Fan]

Annuities are sold and never purchased. Sales rep does very well selling them.

I love it when people spout platitudes that are just not true. I have several annuities that I quoted out to a bunch of companies- two for the income riders and 6 MYGAs in a ladder to lock in high interest rates for years 3-9 of my retirement (average of 5.9% compounded daily). Nobody sold me anything and they are all part of a comprehensive retirement plan that also includes stocks, bonds, cash, and a social security claiming strategy. I also have several friends who have done the same.
I don’t like some of the sales practices used to sell indexed annuities either but it does not mean all are bad. I also think paying anyone 1% of your assets to “manage” them is just as big a ripoff but it doesn’t mean all financial advisors are crooks either.

[Packer Fan]

We both have owned Variable Annuities for over 10 years. Have been receiving $$$ from them monthly which is...nice. But, knew that fees were very high.

We met with Amerity Financial, Ross Beattie this week. He is located near the Brownwood hotel on Rt 44. 352 633 3777. Our experience with Ross was exceptional. He reviewed our finances, and the Variable Annuities we had in detail with us. Called each of the Annuity companies to obtain all info re status, past fees, transfer info, etc. Very professional and very knowledgeable.

In the end we transferred funds OUT of these Variable Annuities into Fixed Indexed. They have FAR lower fees, more income, better rates of return. All around a better financial move. We are extremely pleased.

Ross was a wonderful expert in this field, zero pressure, and provided unbiased information of possible moves. We highly recommend him for anyone with a Variable Annuity, or considering Annuities in general. Annuities may have a bad reputation, BUT if invested properly in the best instrument they can be a great source of income with solid security.

So after reading the whole thread I went back
To the OP to answer because there was just so much bad information.
1. Variable annuities and indexed annuities are NOT investments (ok bad investments). If you want an investment buy indexed ETFs. These annuities are only good for one thing- the income riders. I have one of each specifically for the income rider which gave us more income than a SPIA without losing access to the principal. Mailbox money and longevity insurance- that’s it.
2. With Multi year guaranteed annuities (MYGAs) paying over 5% guaranteed why would you buy an indexed annuity? You will never make more than 5% with one- the fees are too high. I can tell you why you didn’t - this dude sold you a bill of goods because he got a big commission. You said nothing about income riders so I assume he never mentioned MYGAs did he? Yeah.
3. This feels like churning. He moved you to a different annuity for his commission. This is what gives annuities a bad name.

I am obviously not anti annuity - I am very pro annuity with the right type and for the right reasons but this doesn’t feel that at all