The HUGE Mistake That 99% of Annuity Owners Make

What's the 1 mistake that almost all annuity owners make? Annuities are a powerful retirement tool that mitigates longevity risk less expensively than any other retirement approach. But nearly every American that owns an annuity is doing it wrong.

They often own those annuities inside their tax-deferred bucket, which means they'll be paying taxes on that later in life when the tax rate will likely be much higher than it is today. This means you won't really know how much income you'll get. It's difficult to plan for retirement when you don't know what you can count on.

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[johngill]

I do plan for my taxes to double as worse case scenario. My estimated taxes in first 6 years of retirement is 9% (5% after that). If it goes to 18% I still paid less taxes than I did while working.

[paulbrungardt]

My boss is a multimillionaire. He says : " Never buy anything from someone who comes to you, to sell you something." He is there for his benefit, Not Yours ! Buy term insurance and invest the difference.

[jedwards]

Obviously if taxes go up you will pay more on IRA withdrawals. It doesn't really matter if its an annuity inside the IRA or a portfolio of stocks.

[MrCharlesEldredge]

I got some good information from this video. Thank you.

[adrianaanestis]

I have fixed annuity amd it offered a 30% bonus for 10 yr term. I am 48. I usee money from my old 401 k to open the annuity. I was concerned about paying higher taxes on that distribution in 10 yr plus.

[richmmdt]

WHEN MAKING RETIREMENT PLANS, AN ANNUITY IS GOOD BUT HAVING PASSIVE INCOME IS MORE CRUCIAL. Big ups to everyone working effortlessly trying to earn a living while building wealth. I'm 40 oand my wife 34. We are both retired with over $3 million in net worth and no debts. Currently living smart and frugal with our money. Saving and investing lifestyle made it possible for us this early even till now we earn monthly through passive income.

[habbadabbado]

Commissions, fees and charges are too high! You can create an income stream with the right mix of stocks and bonds.

[curiouscurious]

great post and great points, and its like taking a bath with your socks on, annuities are tax deferred anyway.

[Joe-lkoc]

62 yrs old and my wife and have 2 DIA that will begin paying $50K yearly beginning in Aug 2027. We also have $634K in 1-5 year CDs and another $13K in a ROTH. I get $23K yearly in SS. What should our tax plan be in this scenario?

[shelleycharlesworth]

So I have about $300, 000 in an annuity……my late husband and I began contributing to this more that 30 years ago. I’m 76 and they -Venerable-keep offering me a certain amount per month for the rest of my life.
Let’s say I start taking that amount now—it’s about $2, 000 a month—and I die in 3 years-will my beneficiary keep getting that
Amount for 7 years past my death?

[steves]

What if the annuity was bought with after tax dollars? I would think only the divideds and interest earned is taxable?

[jorgevelasquez]

Ho much can you convert to Roth per year?

[Brockdorf]

Studies and surveys conducted by financial institutions have indicated that between 40% to 60% of annuities may be held within tax-deferred accounts.

[lowridinpacker]

Your advice about not doing an annuity in an IRA is just wrong. The main reason to buy an annuity is for income guarantees. You are going to pay income tax either way at marginal tax rates. I have 2 FIAs in an IRA. I will do Roth conversions with other pretax funds. Most of us that will be using annuities will be way above the level where we can pay no taxes. We have too much in pretax to evr convert it all. Roth did not come around until 1996. If you want to avoid taxes convert the funds to a Roth then buy the annuity. Not surprised you are selling a book. I saw that coming. Also, people have been saying taxes are going up since the 90s and they are lower than ever. On top of that my taxes will be lower in retirement no !after how much they raise the top brackets.

[johngill]

Know matter how you take your income from your IRA it will be provisional income. Does matter annuity, yearly or monthly distributions.

The question is will you pay more or less taxes then you did to get it in there

[gg]

Wrong? If you buy an annuity in deferred account your payments can satisfy the RMDs, which you would of had to take payouts and pay ordinary taxes on anyway. Two birds with one stone. It was bought with money that was set aside for the long term your IRA money, so your not locking any of your spending money away!

[geoffreyshields]

What are your thoughts on an annuity created with proceeds from an IRA that offers a low interest loan from those funds that can be used to pay the tax burden from the distribution?

[yodakbarrabucci]

What’s the best investment of 15K if I don’t touch it for 10 years ? Thanks.

[johngill]

Your right I don't know how much tax I will pay in the future but I do know how much income I want in the future. I'm betting my total taxes will be lower because our tax system is progressive. And my contributions were at my highest marginal tax rate

[joemccarty]

I’m planning on purchasing a FIA. I am able to use Traditional or Roth money to do so, but am confused as to which makes the most sense. If I use my Traditional IRA money, my FIA lifetime income will be taxed for the next 30 years, but my Roth will grow in the market tax-free for just as many. Is there a definitive right financial decision here, or does it really just come down to what tax rates are going to be in the future? It seems like both options have pros & cons. I hate to guess or gamble with such a big decision. Any clarity is appreciated.