Funding Your Retirement With An Annuity...Does It Make Sense?

In this video we'll take a look at if annuities make sense in 2022, with a specific focus on the retirement stages of life. The returns are not great, but if it provides you with what you need in retirement, then it could be an option for you. Just remember, everyone's situation is different, so if annuities are a good option for your neighbour, they may not be for you!

6 ways to level up your financial plan:

OUTLINE
0:00 - What Is An Annuity
1:15 - Payments
1:45 - Where To Purchase
2:15 - Type 1: Life Annuity
3:43 - Type 2: Term-Certain
4:21 - Type 3: Variable Annuity
4:52 - Why Buy One
5:40 - Funding Your Retirement
6:25 - Annuity Program
7:12 - Example One
8:36 - Example Two
10:21 - Other Options
11:01 - Assuris Insurance

This presentation is intended for information purposes only and does not constitute an offer to buy or sell our products or services nor is it intended as investment and/or financial advice on any subject matter. Every effort has been made to ensure the accuracy of its contents. Certain of the statements made may contain forward-looking statements, which involve known and unknown risk, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Returns are not guaranteed and past performance may not be repeated.

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DISCLAIMER: The videos and opinions on this channel are for informational and educational purposes only and do not constitute investment advice. Adam Bornn is not registered to provide investment advice and as such does not provide recommendations - those looking for investment advice should seek out a registered professional. Adam is not responsible for investment actions taken by viewers and his content should not be used as a basis for investment trades.

#retirement

[eliz]

Finally a thouroughly explained video, with actual numbers run, thank you! I watched so many videos and I still didn't know what the heck an annuity was. But now I finally do - thank you, thank you!

[jdgolf]

Another point you touched on later. Annuities are guarenteed by states. In Michigan, anything up to $250, 000 is protected. Also, if an insurance company goes under, another company will most likely pick it up, as they will make money. The money used to purchase an annuity has specific government rules on how it can be invested, so badically, the money will be available. Even if an insurance company goes under, the annuities funds will be protected, as they are probably invested in 10 to 30 year treasuries, which if you watch, fixed rate annuities generally follow those yields.

[jdgolf]

I am commenting at about 4:30, so maybe this will be discussed later. Unless you are single with no beneficiaries or you don't want to leave anything to someone, you should NEVER do a straight lifetime annuity, or term certain. If you have a spouse or beneficiaries, you should do a joint lifetime with term certain. This is what I bought with my lump sum pension. It is guarenteed for as long as either me or my spouse is alive. It is a 20 year certain, so if we both die before 20 years, our beneficiaries will continue receiving payments until 20 years has elapsed. Will always get money back, plus about 2% over 20 years. The real benefit comes after the 20 year period. That's why it's an insurance policy!

[mgallegos]

The more I think about putting an annuity in place the less inclined I am to do so. Reason: the lifetime income is not enough to make it make sense. Insurance companies sure hedge their bets and don’t care if it’s enough money for the client.

[grneal]

seems like a high yield savings account would be a better option in most cases.

[skwira]

So I would say one benefit of a Term Set Annuity is if you put off social security until 70 1/2. Use that from 62 to that age and then take social security and then you can get lower payments after social security kicks in. I don't want to do it this way for myself, but I can see it being useful that way.

[Aarya-Indya]

Hi Adam, can you please do a comparison of RRIF vs annuity for your RRSP

[tedharman]

Hi Adam,
One of the big things to consider when looking at annuities is the health of the individual. Insurers will do medical assessments of clients and possibly raise the age of the annuitant, thereby increasing the benefit they receive from the annuity.
Enjoy your videos, keep up the great work.

[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 !

[mohtelrob]

Hey Adam, now that interest rates are increasing does this strategies make more sense? The other question would be, Is this strategy used as another source of guaranteed income? Thanks enjoy your videos. You speak in easy to understand language.

[mjmf]

My annuity earns me around 5.5% annual return (pay out after 1 year of joining) and forms only 16% of my overall investment portfolio. It is a stable and guaranteed dividend income, it’s good for those who want a stable dividend income foundation so that they can take more risk with their other investments. And my annuity principle is not only protected to be passed my nominee should I pass away, it also increased in value by a percentage after the 7 years break-even period. The catch is the surrender fee which is very high before the 7 year period.

[bobbycoln]

You are talking about Annuitization of an Annuity, getting a lifetime income from it. You are basically setting it up like a Pension plan. Many different ways to Annuitize your Annuity. You don't have to annuitize an Annuity to enjoy the benefits of the Annuity. Very few people ever Annuitize their Annuity. Why Annuitize it when you can take the interest each year and preserve the Principal to pass on to your heirs? The difference in what you receive from annuitization and just pulling the interest is minimal. When you annuitize, you lose control of the Principal.

[hkim]

What if insurance company file chapter 11 bankruptcy, just like some of the banks in today’s market ???

[JohnDoe-peiu]

Hello - What are your thoughts on Allianz Benefit Control ABC - Fixed Index Annuity? Thanks.

The return as stated is less relivent for me than the relative income generated by each approach.. I look at what is my annual payout for X dollars in capital in an annuity and compare that to the annual payout if that same amount was put in a RRIF. Or rather what annual return do I need from a RRIF net of fees to get the same income as an annuity with the same initial value for life or age 95 to be conservative.

If I want to leave an inheritance I perfer tax wise to use joint last to die insurance which has the advantage of not being subject to income tax unlike estate assets usually will end up taxed at the highest marginal rate.

[nickwade]

Hi Adam,

I have been curious about annuities and this segment covered most of those questions, so thank you. I just have one other question and sorry if it was covered and I missed it. Question: if you convert your RRSP to an annuity is it a tax sheltered transaction or will the balance of the transaction be added to your income? Thanks Nick

[urbanart]

Income is not based on interest rate. SPIA or DIA payment depends on longevity. MYGA is pure interest rate. You don't understand annuities

[allans]

Are these insurance companies insured like FDIC in case they’re insolvent
Are you protected against the company not being around in the future

[govinda]

Someone at my bank was trying me to start a Jackson IRA Roth annuity. It would be after tax investment. How is this different? He stated the principle would be safe but it could grow in interest since it is invested in funds.

[christinee]

Retired here at 55 and drawing down RRSPs early and delaying cpp / oas. However, pulling 50k a year while having a dividend portfolio in non registered is putting me into a higher tax bracket. Would a non registered annuity not help with reducing the taxation (including OAS clawbacks later on in life)?