Dave Ramsey Is Wrong About Fixed Index Annuities

A listener to Dave Ramsey called in asking about fixed index annuities. What was his response? Of course, Dave didn't have the best advice. He goes a mile wide and half and inch deep. In this video, I'll spell out the truth about fixed index annuities so you can determine if it's worth exploring as part of your retirement plan.

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[bman]

I put $330k into an annuity back in 2010. It’s now at $696k and I just triggered the lifetime income which I received $3k per mth ($36k/yr)… it includes a rider for my wife. Between the two of us, we’ll receive steady monthly income for the next 30+ yrs.. I realize I could have potentially made more by investing that $330k, but I have other investments in the market.. I got the annuity so as my wife and I get older, between SS and the annuity, we’ll have a base income that is not market driven… I think it’s important to have some portion of your retirement income stable regardless of market volatility..

[missouri]

Excellent excellent commentary.
And you were 100% correct in your analysis of Dave Ramsey when it comes to annuities
I have over a half $1 million into two separate fixed index annuity’s.
I watch Dave Ramsey over the last 20 years and I watch your station as well But just like the things that you say about Dave Ramsey not knowing or understanding I could say the same things about you when you bash Dave Ramsey so that’s why it makes it so confusing out there as to what to do.
But on this one you are 100% right I use the fix index annuities as my bond alternative and then I have, a little over 300, 000 into growth ETFs.
And by the way I was able to figure out the mutual funds that Dave has and although they have been good, they are certainly not the best or near the best and they are high cost and perhaps that would be a great video for you to do
I look forward to your videos every week with her. I agree with him or not so thank you.

[levargwilson]

I appreciate your great "nuggets". There are so many that blindly follow the Ramsey philosophy in error.

[tomm.]

Dave Ramsey has some good insight but he’s not the end all. There are some many ways to do things to save money and increase your wealth

[DatKat]

a gain without a fee is better than a fee without a gain

[MrGiggity]

You can only guarantee against losses by limiting your upside. You might as well just put the funds into a money market account.

[dustinw]

Is the FIA cap rate a fixed rate? Say I find an FIA with a 7% cap rate and its a 7year contract. Is that 7% cap only for the 1st year and then they can change it on me? What specific insurance companies do you recommend shopping when looking for an FIA?

[SBqwerty]

I agree annuities are not comparable to stocks (esp ones with a floor). The comparison to bonds is also problematic though because bonds are liquid vs annuities not so much. During the distribution phase of retirement accounts bonds can be rebalanced with, for example, indexes in a 3 fund portfolio. Given that, we should discuss annuities on their own merits and the fee structure they come with. If, for example, the financial advisor is paid 3% of assets per year (making this up) it almost surely rules out that annuity being a viable financial product, even adjusting for the lower longevity risk.

[WWIIPacificHistory]

It’s insane that this foremost financial expert is completely clueless on the options strategy that indexing utilizes to protect the downside of pseudo market participation! It actually really makes me upset that as famous as he is he doesn’t know this!

[paulbrungardt]

Whenever someone comes to you, to sell you something, he is there for his financial benefit. Any college dropout can sell insurance. Buy term insurance and invest the difference in S & P 500. Every 10 year period will have a down market. That would be a good time to buy, buy, & buy !

[ryanyoder]

Agree about Dave Ramsey. He causes harm while helping people. He is like Dr Phil.

[livingtruth]

So Dave Ramsey has a problem with an annuity agent earning a one-time commission? What does he think goes on with mutual funds? The broker typically earns at least 1% forever, which comes directly out of the client's account, every year. So if you have 1 million in mutual funds, you're paying the broker at least $10, 000 a year out of your own money! And he's implying that this annuity commission is a "fee" which it is not - it is paid from the operations of the general company and does not come from the client account. Big difference. And does he not think that wealth managers are driven by the money? If their client portfolio has $100m, they earn $1m a year just getting up in the morning.
And don't give us this stuff about doing it all yourself and no-fee mutual funds. The vast majority of working professionals don't do that because they simply haven't got the time while balancing a full-time career of their own, family, and other responsibilities. Mutual fund investing is good, but it's only one part of the equation, and certainly not the foundation.

[Donn]

What percentage of finances should be in a Annuity? I heard a limit of about 25%. Thx

[macharper]

If index annuities had a floor of 5% then we would all be in index annuities. They don't even have a cap usually of 5%.

[FinancialGuyLou]

I showed this clip months ago to my entire group. We listened to the entire call and we were totally looking at each other in bewilderment.

Another thing to point out, this caller called the show close to the end of 2021. We all know what happened there. The market was great! We were at the end of the bull run. What happened in 2022? The market went down 20% and this caller lost 20% of what was in his 1.4 million dollar retirement account.

Way to go Dave Ramsey! Sound advice 😂😂

[RobbyJakar]

Doesn’t Ramsey have an outstanding litigation against him on something? Or recently settled something? His advice is faulty at best and downright detrimental at worst. The only thing he has right is budgeting tips and tricks. Beyond that, people need to “graduate” to the Power of Zero paradigm.

[beerbrewer]

I am the first to admit that I'm very ignorant on all things financial. However I will say this: *Don't ever* take advice about a product from the person selling that product. I am a big fan of Vanguard and Fidelity. But I'm just a mechanic so the hell do I know?

Should I buy an annuity with my IRA? He wants all of my over $200...just made Vanguard my financial advisor...

[ChrisSmith-zspk]

very pro annuity.take with a grain of sand. His book is disappointingly skewed and misleading .

[Dempsey]

Dave Ramsey has an agenda and many times it is not in the best interest of the retail consumer.