Are Annuities Bad? The Truth About Ken Fisher

Today I’m going to be telling you the truth about Annuities and Ken Fisher’s advice. Is he justified in his hatred of annuities? Today we’ll be breaking down his issues with annuities, and talk about what the truth is about these “problems”.

Annuities are a great way to plan for your retirement. If you’re looking to create a solid retirement plan that includes a solid guaranteed income at half the cost of other strategies, then annuities should be on your radar. Plus, if you set them up correctly, you can make that guaranteed income tax free for life!

0:00 Intro
0:37 High fees in Annuities
1:57 Annuities don’t live up to their promises
4:25 Problematic for taxes
5:59 Illiquidity of Annuities
6:39 Physical size of contracts
7:26 No real benefits
8:41 Only financial advisors benefit
9:38 Better ways to invest

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Instagram: @davidcmcknight

[ScrivenArt]

This is one of my new favorites! You have helped me help so many people with retirement planning and in return I have sent nearly every client to your podcasts, books, and documentary. Thanks for being my indirect business partner!!

[randolphh]

As usual the truth is somewhere in between. We have some longevity annuities. Main problem is minimal inflation protection for many products. This somewhat offsets the value of guaranteed income.
Personally believe a little of both approaches is good for us.

[lincolnselk]

Wonderful stuff. Newer to the financial planning world and I'm blown away by the amount of finger pointing, smoke and mirrors, etc.

[jeffdrake]

Thanks for the education and the truth!

[RetirementPlanningEducation]

Great video, David! There are definitely instances where annuities are sold instead of bought and not what's best for the client. But, Ken Fisher's dogmatic and biased view against annuities is WAY off base on many levels, as you pointed out (and I'm sure he knows that...)

[austinburns]

I have been seriously debating buying an annuity. The challenge for me is that since the annuity insurance company gets too keep all of your principal, the actual payout (assuming you start after 60 sometime) is closer to 0% to 1%. Secure yes, but won’t keep up with inflation - so not really secure. Most of the payout is just providing your principal back to you 6% at a time. That is, putting 600k in the bank and taking out 3, 000 a month will pay the same as the annuity. Guaranteed for 17 years at 0% return. Even if you live a few years past the time when all the principal is gone at the insurance company, the total return is then is 1% at most. The insurance company just pockets all of the investment return during that 17 year period and provides a small amount back you you if you live longer than expected. It seems like the insurance company assumes virtually no risk and no skin in the game. If they offered 50% of the principal back, then it would be a fairer deal. Just think’in.

[cartracer]

thanks for the video. i was looking into future income guaranteed annuity. current rates are 9.30 percent, single life with cash refund. . the rates now are higher than ever. i know about the inflation concern. i receive a small pension now and still work and my pension has no inflation built in but i like that extra income every month for life. there is no perfect solution for whatever you invest in.

[darrennorton]

David hit it out of the park with this one. Love it. going to share it.

[robertiola]

Thank you for this Dave. So many of these "financial celebrities" make their charges and go unchallenged. Whether its in their advertising or when being interviewed by ill informed journalists, they make their claims with impunity. Annuities are a tool and when the right tool is used for the right situation, everybody is happy. Well done Sir.

[mikeniemczyk]

Way to go Dave!! Thank you for work in clarifying the misinformation for the misinformed.

[richardpaul]

The insurance company makes a lot out of annuities. If giving up that return in return for absolute predictability floats your boat, then buy an annuity.

[garyhafer]

Thanks Dave.
I want both! Annuities to provide a "paycheck" for life and a portion invested in the market to help outpace inflation long term. Work with someone that can help you address your #CashFlow #DebtManagement #ProperProtection #EmergencyFund #BuildingWealth and #PreservingWealth

[PureMagma]

Too bad Fisher is financially shielded against the U.S. Attorney General's office charging his company for Deceptive Trade Practices (like Truth in Advertising or even malfeasance...)

I value your concise, knowledgeable explanations and am very grateful for your YouTube channel and your books!

[thejasoncunningham]

Awesome video David! I plan to buy your books over the holidays

[ASKSetLifeIAM]

Thank you so much for the amazing empowering contents that will Impacts people's lives. So grateful 🙏 for that Mr. Knight.

[JenFishburne]

Excellent presentation and analysis, David!

[Blublod]

No question about the fact that Fischer Investments are no fiduciary despite their insistence that they are, but the fact remains that annuities are definitely the wrong way to go if what you want to do is grow your money. The only way to keep the money grubbers’ hands out of your retirement savings is to educate yourself and DIY it.

[DevonBism]

The truth? The truth is this is rant is very much skewed. The fact that you only speak of the positives and dismiss any negatives tells me everything I need to know. You don't address inflation at all, which is a huge downfall. And you can't come up with a reason someone would need the money? Are you serious? Never heard of an emergency and need the money? Spoken like a true insurance sales guy. Anyone reading this should do themselves a favor and continue to get educated. Never listen to anyone that only tells you all the positives and avoids telling the negatives. And always, follow the money...

[half_a_bubble_off]

One fallacy of the comparison that the annuity far outpaces the 4% (or 3%) rule leaves out that the 4% rule was calculated with withdrawals being adjusted for average inflation. The typical annuity has no inflation factor. Over potential 30 years of retirement, that is a huge difference. Yes, Fixed Index Annuities can address that, but they are a complex product typically requiring a 10 year or so period to begin withdrawing income.

[stricklandpilman]

It's my third month being retired now. And life hasn't been so difficult as I thought basically because I put my head down and made ways for other source of Income. I'm a huge fan of earning more money, and I think everyone should have a side hustle. Side hustling can allow you to earn that little bit of extra money that can help you achieve your financial goals faster - whether it's paying off student loans or saving for retirement.