How Many Annuities is Too Many ? It Depends Whom You Ask.
I have another confession to make in addition to the
one you already downloaded...
I have put some of my long term clients
in up to a dozen annuities, in some cases
totalling well over 1 million dollars....
So, depending upon who is actually reading
this, there could be a variety of reactions....
From the "Mutual Fund Broker":
Totally Inappropriate: "Your Clients Should be
Diversified in Mutual Funds, Bank Products,
Real Estate Investment Trusts and an assortment of Large and Small Cap Stocks...."
From the "Consumer Advocate":
Unnecessary: "Your Clients Should Not "Tie All their Money Up with Insurance Companies - What happens if they Need Access to it?"
From another "Insurance Professional":
You lucky guy! I wish I had clients like that!
Now, (especially as it pertains to these first 2 critics above), are these criticisms truly valid if it just so happens that these same clients happen to.....:
1) Despise Risk. Been there, done that. Once was enough. No gracias.
2) Love Guaranteed Rates of Return. They love CDs if they can find good ones.
3) Hate Spending Their Money Frivolously. They Love to Save. It actually excites them !
4) Appreciate Emergency Access provided by their Annuities, either through annual 10% withdrawal privileges, or accumulated interest, or waivers in case of sickness or unemployment etc...
5) Believe in Insurance. They simply "get it" and are not ashamed. They know that love them or hate them, those Insurance Bad Boys may truly be the largest industry on the planet and the benchmark of all financial security, from "my house to the White House."
Is the mutual fund broker or the consumer advocate still accurate in those aforementioned criticism if it turns out that the annuities these clients own just happen to solve all of their financial desires ?
It would seem to me that those criticisms would be rather empty, at least for these clients.
That is why this website has been designed the way it has - with articles like these on behavioral aspects of annuity owners. There is so much "chatter out there" on the annuity that the word truly is an ambiguous word, and only by exposing the reasons why consumers have chosen to secure monies into annuities can some of that chatter be brought into clearer perspective.
So it certainly depends on "whom you ask" if "many annuities are too many annuities..."
An interesting analogy to this question is to once again reflect on the purpose of the annuity.
Asset Protection Availability
S . N . A . P . I say!
Each annuity represents a "wall of protection"
around a family's finances...
Now, what happens when you add another wall
around that home?
What terrible thing has happened?
What devastating financial error has this family
egregiously committed or been persuaded to commit
by some unscrupulous and sly insurance agent?
Nothing, really. Just an added layer of protection against future unknowns. Unknowns in the stock market, unknowns in the banking world, unknowns in the political world etc.....
Unknowns that insurance companies are actually paid to manage the risk for; hence the name, Risk Management Companies.
Think about it. You have entrusted your retirement to a:
"'Risk Management Company" -
This is nothing to be Ashamed of!
After all, you are a card carrying Ambiguous Annuitant !
Now, to be transparent while we are on this subject....please make sure that if you decide to put large chunks of your retirement money into annuities, make sure you do not have a liquidity issue. Make sure you have spending money for unforeseen emergencies. Most good annuities allow you to withdraw most of your money for severe sickness or confinement issues, but if you decide to take that world cruise and you suddenly need $50,000 from your $100,000 annuity contract, your insurer will not be pleased and you will receive a surrender penalty. So, please, use discretion...
Finally, it is not buying too much chocolate that makes you sick....right.....but it is eating it of course..
So, store your chocolate up and savor it when the times are right.....