Page 13 - Know-So Money, Hope-So Money, Retirement Secrets Wall Street Doesn't Want You to Know

popular annuity from a major life insurance company that is marketed

to millions of people as a safe investment with a guaranteed rate of
return of 6%. So once again we called the company and found out that

in order to get the advantage of the 6%, he would have to draw income

from his annuity over his lifetime. If he ever wanted to access the actual
money in the annuity, he would have to take the money from the funds

that had shrunk substantially over the years, less annual fees of about
3.5%.

So, once again, a needlessly and inappropriately risky investment that

charged a fee to mitigate a portion of the risk that should have never
been taken in the first place.

Needless to say, he was quite unhappy to learn the truth.

But What About the Tax Benefits?

This is one where we’ve really been sold a bill of goods. Remember the
old “tax deferred annuity”? Well you don’t hear so much about that

anymore. Here’s why. Annuities ARE tax-deferred, that’s correct.
However, when you finally do pay taxes on them you pay ordinary

income tax, not the much lower capital gains taxes you pay on stocks

and some mutual funds.

Back in the day, when VAs were initially introduced, this wasn’t a big

deal, because capital gains taxes were the same as ordinary income tax.
So, tax deferral had some advantages.

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