“I invested in an annuity in early 2008 – right as things got really bad in the stock market. My advisor explained I would get a lifetime of guaranteed income. I put in $98,000. It has only grown to $119,000 in ten years, but my guaranteed annual income is now almost $10,000. I really like that part now that I’m close to retirement.
I recently responded to a mailer to meet with an advisor who claims to be a ‘retirement income expert’. He says the investment returns on my annuity have been ‘very bad’ and it’s time to ‘cut my losses’. He is recommending I move my investment to a new annuity with his company.
Is this a good idea?”
Almost certainly not!
Well, perhaps a good idea for the salesman who might earn a commission topping $10,000 for directing you to certain annuities on the market today. Not for you. Financial regulators and consumer protection agencies rightfully frown (or worse) on salesmen who talk clients into leaving behind valuable benefits simply to generate a commission for themselves. While that may not be the case here, there are sufficient red flags in your question to warrant a 2nd opinion and proceeding with caution.
The correct answer can only be determined by finding out what best helps you meet yourfinancial goals. If having $10,000 a year guaranteed lifetime income provided to you is an important priority and if you feel your current company is financially sound (your guarantee is only as good as the ability of the company to meet their promises) – you want to stay where you are.
If you are truly unhappy with your investment returns (they have been modest, but $21,000 gain is not a sharp stick in the eye) you should have a financial advisor (not salesman) review your current policy to determine if there are investment options within the contract that might provide you with the opportunity for better financial performance in the future. While not guaranteed, some investments are better positioned for the possibility of growth than others.
Both of these steps would allow you to stay with your current contract – which is most likely the correct action for you to take.
If after both these steps you are unhappy with your current contract a move may be in order.
If you would appreciate a 2nd opinion review of your contract and overall financial position just contact our office.
If you have questions or comments, please send them to [email protected]