Page 133 - Ready Set Retire

Ready. Set. Retire!

net of fees, just to get back to square one. That might happen,
but it might not. Now the cost of waiting become severe. You
have a choice of diverting the amount you require to provide
the $18,000 per year to the annuities while you still have
enough, $360,000, thereby closing off the possibility of
recouping the loss, with only $40,000 left; you would have to
have a return of over 20% to recoup the original balance over
a 10-year period, and that would require just leaving the money
alone and letting it grow. This is what’s known as a “Less Now,
Less Later” scenario.

Variable Annuities, a Good Idea?

More often than I would like, I meet people whose advisors
sold them a variable annuity as a “safe haven” and
“guaranteed” place to grow their money. This is not usually a
good thing for the client, so why are they the number one
annuity sold by the planning industry?

Most planners are stock brokers, and are constrained by what
their broker/dealers permit them to sell (remember the
discussion about fiduciaries at the beginning of this book).
Most broker/dealers do not either understand, like, or deal in
fixed or fixed index products...they are in the securities
business. The old saying, “to a hammer salesman, everything
looks like a nail” seems to apply.

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