Wise Money Tools

Your Investment Guide to

Equity Indexed Annuities

A complete look at investing in Equity Indexed Annuities, what works, and what doesn’t work.

Why do we do all this retirement planning stuff? The simple answer is we plan for income. Retirement is supposed to be our “golden years.” It’s the time you finally get to do all the things you dreamed about. Traveling, visiting grandchildren, golfing, getting together with friends, maybe buy a boat or an RV, and have some fun.

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Those who prepare and are ready for retirement tend to enjoy those years. Those who don’t…well, it’s not so pretty.

There are two questions every retiree asks:

  1. Where is my income or paycheck during retirement going to come from?
  2. How long will my money last?

Not knowing the answer to these two questions and not having a plan of guaranteed lifetime income will be the cause of a stressful retirement.

Let me tell you a quick story –

There was an older couple that decided to take a road trip across the desert form LA to Las Vegas. Have you ever driven between Los Angeles and Las Vegas? Desolate is an understatement. It can also get hot, very hot!

This couple sets out on their trip in the middle of the summer. They have a nice car with all the bells and whistles. They have the radio on, the air conditioning cranked up, cushy seats and they are all set for their journey.

Not long after they started, they noticed the gas tank was nearly empty. Worried they needed gas they finally saw a sign that said next gas 150 miles. Making some quick calculations and assumptions, they realized they were never going to make it to the next gas station.

Now the frustration and arguing began. First the blame game, why didn’t you fill up the car, how could you do this, why weren’t you more prepared, you knew how long the trip was going to be, and on and on.

Realizing air conditioning took additional fuel mileage, they decided they’d better turn it off and put down the top on the car. That too was an argument as to weather or not there was more drag on the car with the top down and used more fuel.

With the top down, they began to really heat up. The sun bearing down on them, no air-conditioning, it was miserable.

The arguments went on and on until finally they ran out of gas, miles from the nearest station.

This feeling of knowing you are going to run out of gas is similar to those who know they are going to run out of money in retirement or worried they might.

Like this couple, they knew they were going to run out of gas, they just didn’t know exactly when, and because of that, the entire trip was miserable.

The devastation of running out of money in retirement is not a one-day event, the actual day you run out of money

It’s the anguish of weeks and years leading up to that day wondering when you are going to be out of money. Kind of like the frustration of knowing you are going to run out of gas.

It’s the pain of watching every dime you spend and not being able to do what you want to do. The golden years are no longer golden.

Then the burden you may become to your family for support if you in fact run out of money.

It’s not fun – no one wants to run out of money.

Can you imagine a retirement where you had to watch every penny saving and holding on to it because you had no idea how long it needed to last?

Worried about eating out, going to the movies, taking a trip, simply enjoying life.

One of the questions I get asked all the time is have we saved enough and how can we make sure our money lasts the rest of our lives?”

Dr. Menahem Yaari turned the economic world upside down when he stated in 1965 that a retiree who wanted to maximize his income would put all of his money into a lifetime income annuity and that there was no other alternative that could guarantee a more optimal solution.

May an annuity could make sense for you too. Only one way to find out.

We should have a short conversation, get an idea of what you are trying to accomplish, and at the very least you can cross if off your list if it’s not a good fit.