Indexed Annuities For Rock Solid Retirement Income
November 26th, 2010 | Author: weissheiss
I’ll never forget the first annuity I wrote as a young agent working for my father. My client, a teacher, signed up to contribute well over $900 a month into his 403(b) account.
I really didn’t know at that point that most of the teachers were contributing a lot less into their annuities. In my green mind this was something that I would be doing many times over in the upcoming years. However, it was the largest monthly contribution I would ever write!
As I drove from Oklahoma City to my dad’s Tulsa office with that first sale in-hand (which I had mailed in earlier), and a few other small ones, I couldn’t wait to see the proud look on my father’s face.
The conference room of the high-rise office was filled with about 30 agents that day. I had no idea my father employed this many agents! It suddenly dawned on me how he could afford such a luxury office! As he finally walked into the room to start the meeting, I wondered if he even knew I was there.
After the usual sales rah-rah, dad congratulated one of the agents for writing over $10,000 in annualized premium the previous week. I thought “Hey, I wrote over $14,000 – and it was my first week!”.
Even though I never got recognition for being the sales champ of our office in my first week of annuity business, I never did forget my first client, and his wise choice to max out his contributions.
What would motivate a person to do that? Well, my client was just a few years from retirement age. Though he had previously contributed to the 403(b) plan, he was now maxing it out for future benefits. A concept that so many Americans have yet to figure out. With his teacher’s pension, and his annuity income, this fellow could live well for the rest of his life! Even though he had worked most of his life in a profession that most would agree pays too little. I would be safe to say that come retirement time, my first client was better off than many others who had earned a LOT more income.
So what is an annuity, and what is an indexed annuity? And, more importantly, how can you benefit?
An annuity is actually the opposite of life insurance. In a life policy, you are insuring against the possibility of dying too young. With an annuity, you are buying insurance against living too long, and running out of income. An annuity can guarantee you a check for the rest of your life!
Many will say to keep your investments apart from your insurance, and for the most part I would agree with that. However, an annuity is an exception to the rule in my book. Now with indexed annuities, this vehicle can actually be a very wise investment choice.
An index annuity is just what the name implies. It is indexed to something. Normally the stock market. In other words it is tied to an index like the S&P 500. If the index goes up, you get higher earnings. If the market tanks, the annuity (at least the good ones) goes back to a guaranteed interest vehicle! So if the market is doing really well, so is your annuity. If the market is not so hot, your annuity will still be growing (normally at a rate better than most CDs are paying at that time).
There are some disadvantages to an annuity, but not if you use it as it was intended. You don’t want to put money into an annuity that you might need next week, or next year for that matter (unless you are looking for an immediate annuity with a large cash deposit to start). BUT, if you have other investments and cash that you can get your hands on, an annuity can be your ace in the hole in case everything else tanks.
Most annuities are backed by your state’s insurance guarantee fund. So, even if the company goes out of business, you should be able to get your money. Check to see what is available in your state. If they don’t have a guarantee fund. Take a trip and buy yours in a state that does!
There are even some off shore annuities that really shine, but investing in those is more complex than buying one here in the states.
I no longer write annuities, as I have moved on to trade and invest for a living. But, I have never forgotten the lesson I learned from my first annuity client!
Posted in Indexed Annuities | 
Tags: Annu, Annuity Income, Fellow, Indexed Annuities, Luxury Office, Retirement Income, Retirement Time, Wise Choice