Demystifying Annuities – What You Don’t Know Can Cost You More Than Money

Annuities are one of the most misunderstood financial products available to investors. What you don’t know about annuities can cost you money and more.

Did you know …

• Annuities can provide a predictable stream of income for the rest of your—or your beneficiary’s—lifetime?

• The annual reset feature of indexed annuities protects your principal and gains from loss no matter how much the stock market goes down.

Annuities can grow tax-deferred, making it possible to control when you pay taxes.

How Much Money Will You Need in Retirement?

A dollar doesn’t seem to buy as much as it did 10 or 20 years ago. Who knows how much a loaf of bread will cost in 10 or 20 years? Who knows how long you will live? Having a predictable stream of income can add certainty and reduce stress related to your retirement budget making it easier to plan how much retirement income you need. If you have an annuity with a guaranteed lifetime income rider, you won’t have to worry about outliving your retirement nest egg.

A Single Stock Market Crash Can Change Your Retirement Plans

In the wake of the 2008 stock market crash, investors with more than $200,000 in their 401(k)s lost an average of 25% of their money. It took these same people between 2.5 and 10 years to recover from their losses*.  Those who had to withdraw from their assets with market exposure took longer to recover because they locked in losses to create income. That means someone planning to retire in 2009 or 2010 had to work longer or make lifestyle cuts.

Pay Taxes Later and Earn More Money Now

The money you save in an annuity—and the gains it earns—can grow tax-deferred (Qualified or Non-Qualified accounts), or even tax-free (Roth). You don’t have to pay taxes on it until you start to receive payments. This lets you take advantage of a potentially lower tax bracket during your retirement years. You also may be able to ladder your annuities to create considerable liquidity while optimizing growth potential.

Discover All of Your Annuity Options

Annuities are not one-size-fits-all products. That’s why you’ll find an array of annuities available, and each serves a different purpose and provides different levels of safety.

• Deferred annuity:  allows clients to control when they are taxed, and flexibility on how they take income.

• Fixed annuity: pays a guaranteed minimum rate of return.

• Fixed indexed annuity: pays a minimum guaranteed rate of return with interest credited based on an index.

• Immediate annuity: starts paying an income now, within 12 months, and offers a variety of payout choices.

• Variable annuity: returns are based on the performance of mutual funds.

That’s not all. You can add riders to your annuity that gives you living and death benefits that provide lifetime income for you or your beneficiaries.

Do You Really Know if an Annuity Is Right for You?

Yes, annuities are complex products. There are excess withdrawal charges during the specified accumulation period. They may have fees for certain features or riders, and some also charge subaccount fees and annual policy fees. Understanding what features and expenses may apply to your situation necessitates working with an experienced professional who can evaluate your financial goals and discuss how an annuity can fit into your retirement plans.

For more information about annuities and to better understand how they fit in your portfolio, contact me today.

Shane Wayland


Annuity guarantees rely on the financial strength and the claims-paying ability of issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges, and holding periods which vary by carrier. Annuities are not FDIC insured.

“Index or fixed annuities are not designed for short-term investments and may be subject to caps, restrictions, fees, and surrender charges as described in the annuity contract. Guarantees are backed by the financial strength and claims-paying ability of the issuer. Please refer to our firm brochure, the ADV 2A Item 4, for additional information.” 2. On the whitepaper and landing page, please add the BWA disclosure: “Investment advisory services offered through Brookstone Wealth Advisors, LLC (BWA), a registered investment advisor. BWA and Brookstone Capital Management, LLC are affiliated companies. BWA and Vitality Wealth Advisors are independent of each other. Insurance products and services are not offered through BWA but are offered and sold through individually licensed and appointed agents.”