Are Shield Annuities A Good Investment

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Some Annuities Charge High Fees

Kristin’s Experience with Shield Level Annuities

Owners of certain types of annuities can end up paying high fees. For instance, a variable annuity might charge fees between 2% to 3%, per Nationwide, which can shrink the value of your account and the return on your investment.

Among the costs you might encounter with a variable annuity are:

  • Mortality and expense risk charges. An insurer imposes these charges to cover guaranteed death benefits.
  • Administrative fees, such as recordkeeping.
  • Charges for certain add-ons, like long-term health insurance or stepped-up death benefits.

What Is A Mutual Fund

A mutual fund is a pool of investments owned by many investors. These investors buy shares in the fund, and the fund invests the money, based on its stated objective. Mutual funds include choices in major asset classes such as equities , fixed-income and money market securities. Investors share in the gains or losses of the fund, and returns are not guaranteed.

Annuities Can Be Complicated

Some annuities are too complex for many to understand without help from a financial professional.

Unlike other retirement payment plans, an annuity has the most complicated structure, Stewart said. Generally, insurance companies might sell the most attractive package, which is the lifelong benefits however, the high taxes and the payment calculations are grossly misunderstood by retirees.

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What Is Wrong With Annuities

Annuities can be a good option for most people, but some drawbacks. The main ones are the long-term contract, loss of control over your investment, low or no interest earned, and high fees. There are also fewer liquidity options with annuities, and you must wait until age 59.5 to withdraw any money from the annuity without penalty.

What Is Lifetime Income

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When we talk about lifetime income at TIAA, we are referring to payments in retirement that can help cover essential living expenses.

Just as you may have built a diversified savings plan for retirement, you can apply the same strategy to pay yourself in retirement. Diversifying your income sources can provide you with both guaranteed lifetime income and also income growth potential.

Building an income floor is one effective method for creating a lifetime income stream. By identifying how much it takes to cover your everyday billsand ensuring that is metyou can focus on enjoying your life in retirement. Below are three common strategies:

  • Social Security, the federal governments retirement benefit, can provide a portion of your income floor. To maximize your monthly payments, consider waiting to claim your benefits at least until your full retirement age. If you are married, explore your options together to make the most of spousal benefits.
  • Traditional defined benefit plans provided by employersalso known as pensionscan go a long way, but they are becoming a thing of the past. At last count, pensions were offered to less than 17% of American workers.2
  • Annuities are insurance products designed for retirement and other long-term goals. They can help bridge gaps in the incomeOpens in a new window you need to cover everyday expenses.

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The Annuity Gators End Take On The Brighthouse Income Annuity

While an immediate annuity may not be right for everyone, the Brighthouse Income Annuity could be a good option for you if you are seeking the following benefits:

  • > A reliable income stream right away
  • A place to move funds from an IRA, 401, or other type of retirement plan so that you can convert it from a lump sum of savings into income
  • A solution to the worry about running out of income in retirement

Where it works the worst:

However, even though the Income Annuity from Brighthouse Financial offers some nice benefits, this particular annuity may not be for you if you:

  • Feel that you may need access to all of your funds for other needs or emergencies
  • Do not plan to use the annuity for income

But The Broker Gets A Fat Commission

The labyrinthine rules that govern indexed annuities arent the only reason theyre controversial. Insurance companies usually pay brokers a hefty commission to sell such products, which fairly or not, can raise suspicions about why theyre being recommended. Seeking the advice of a reliable investment professional, especially one who has no financial incentive to push a particular product, can help you make a decision that best suits your goals.

Note, however, that these commission do not directly impact the guarantees or returns you will receive from the annuity if held to term.

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Ordinary Income Vs Capital Gains

A common criticism of annuity income is that its taxed as ordinary income, which is taxed at of 22% to 35% for middle-income households. However, this aspect of annuities is less of a disadvantage than it may seem.

Traditional 401 distributions and traditional IRA distributions are also taxed as ordinary income. and Roth IRA distributions are not taxed because you invest in them with money on which youve already paid income tax.) The critical comparison applies to investments held in nonretirement accounts for more than a year. These are taxed at long-term capital gains rates when they are sold.

The Internal Revenue Service classifies capital gains as short term or long term . Short-term capital gains are taxed as ordinary income. Long-term capital gains are taxed at 15% for middle-income households and 20% for those earning over $445,850 or more than $501,600 .

Annuity And Retirement Income Planning Advice You Can Trust

Shield Suite Fixed Index Annuities from American Equity

If you have been seeking in-depth annuity information online, then you have likely become very well aware that there is no shortage of annuity review websites. Many of these websites, however, are much more interested in giving you only the basics, in return for getting your contact information. This is not helpful when considering a confusing product like annuities especially hybrid annuity products like buffer annuities.

If you have stumbled across our website for the first time, and you arent sure what we do, then please allow us to introduce ourselves and to welcome you here to AnnuityGator.com. We make up a team of annuity experts who focus on providing our website visitors with comprehensive and unbiased annuity reviews.

We have been doing this for a very long time now and far longer than many of the copycat annuity review sites that you may already have come across. Because of that, we have become a highly trusted source of annuity information.

It is also possible that you recently have attended a seminar about annuities, where the presenter offered you a free lunch or dinner, while he or she went into the many details regarding the Brighthouse Shield annuity, or some other similar annuity.

So, if youre ready to proceed, lets dive in!

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Annuities Can Be Complex

Annuities come in many varieties, and that fact alone is enough to create a lot of confusion among consumers. Should you buy a single premium immediate annuity? A deferred payment annuity thats variable? A fixed indexed annuity? It can be overwhelming to unpack the different features of each annuity, especially when one insurance companys fixed indexed annuity will have different characteristics than anothers.

Theres also a whole new vocabulary youll need to learnmortality and expense fee, joint life payout, subaccount, surrender fee, participation rate, exclusion ratio, market-value adjustmentto understand all the different types of annuities. This complexity can lead to people buying annuities without fully understanding the terms. They may end up purchasingor being solda product that is not the right fit for their needs.

A mortality and expense risk charge, for instance, is often imposed on holders of annuities and other products offered by insurance companies. It compensates the insurer for any losses that it might suffer as a result of unexpected events, including the death of the annuity holder.

You Wont Be Able To Control Your Investment

Some annuities require you to give up control over the money in exchange for an income stream. Who wants to give up control?

You might not have enough money for when you retire.

Different annuities provide various monthly payments. Therefore, you want to ensure that you buy an annuity with the highest monthly payment.

Your annuity might not earn any interest.

Some annuities do not provide enough growth potential. Limited growth means the retirement plan does not grow fast enough and has less money when you retire.

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Seniors And Investments Frequently Asked Questions

  • While no investment is ever entirely safe, savings accounts and Treasury securities are the most secure places to invest, though their returns will be relatively low.

Amie Clark

Amie has been writing about senior care products and services for the last decade. She is particularly passionate about new technologies that help improve the quality of life for seniors and their families. Seeing her parents and grandparents age made Amie ask herself, Would this be good enough for my loved ones? In her spare time, Amie enjoys outdoor adventures and spontaneous road trips. Learn more about Amie here

Information

Learn If Indexed Annuities Are For You

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Indexed annuities can be good for your portfolio. After all, it has limited downsides. However, its low risk means having limited upsides as well. They have the characteristics of both fixed and variable annuities, allowing them to offer the best of both worlds.

Still, you have to look into the fine print as calculations can be complex. Find the best fixed index annuity rates for you.

Are you looking for more helpful guides? If so, feel free to visit our website today.

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Brighthouse Financial Customer Complaints And Satisfaction

Over three years, Brighthouse Financial has drawn fewer complaints to state regulators than expected for a company of its size, according to a NerdWallet analysis of data from the National Association of Insurance Commissioners.

Additionally, Brighthouse Financial ranked No. 21 out of 21 companies in J.D. Powers 2021 U.S. Life Insurance Study for overall customer satisfaction

Reasons Why Annuities Make Poor Investment Choices

  • Annuities are long-term contracts with penalties if cashed in too early.
  • Income annuities require you to lose control over your investment.
  • Some annuities earn little to no interest.
  • Guaranteed income can not keep up with inflation in certain types of annuities.
  • The annuity might not provide a death benefit to your beneficiaries.
  • Annuities offer regular but limited liquidity, sometimes none at all.
  • Fees can be high in investment-based annuities.
  • You have to wait until age 59.5 to withdraw from the annuity.

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Brighthouse Financial Life Insurance Review 2022

Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list ofour partnersandhere’s how we make money.

Bottom line: Brighthouse Financial isn’t the best option for everyone, but its wide range of policies and low number of complaints make it a good choice for some.

Policies offered:Term & permanent.

Established by MetLife in 2017, Brighthouse Financial sells life insurance and annuities to individuals. In contrast, MetLife focuses on employee benefits. Brighthouse Financial life insurance policies are sold only through financial professionals.

Why you can trust NerdWallet: Our writers and editors follow strict editorial guidelines to ensure the content on our site is accurate and fair, so you can make financial decisions with confidence and choose the products that work best for you. Here is a list of our partners and heres how we make money.

What Is A Good Monthly Retirement Income

Unbiased Annuity Review – American Equity Asset Shield 5/7/10 – Fixed Index Annuity

Median retirement income for seniors is around $24,000 however, average income can be much higher. On average, seniors earn between $2000 and $6000 per month. Older retirees tend to earn less than younger retirees. Its recommended that you save enough to replace 70% of your pre-retirement monthly income.

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Before We Get Into The In

This is an independent annuity product review. It is not a recommendation to purchase or to sell an annuity. Brighthouse Financial has not endorsed this review in any way, nor do we receive any type of compensation for providing this review. This annuity review is meant solely to be an independent review at the request of our readers so that they may see our perspective when breaking down the positives and the negatives of this particular annuity. Prior to committing to the purchase of any type of insurance and/or investment vehicle, it is critical that you do your own due diligence, and that you also talk with a properly licensed professional if you have any questions that relate to your specific situation. All of the names, materials, and marks that have been used in compiling this annuity review are the property of their respective owners.

Want to more about how annuities really work? to receive our updated annuity report.

Inflation Can Erode Your Annuitys Value

Inflation erodes the value of any investment. If youre earning an 8% return in the stock market and inflation is 2%, your real return is only 6%. If youre earning 1% from a certificate of deposit and inflation is 2%, your real return is -1%. Likewise, if your annuity payout is not adjusted for inflation, it is unlikely to keep pace with your expenses, given long-term historical average inflation rates of just over 3%.

The good news is that you can protect your annuity from inflation by purchasing an annuity that builds in this benefit or by purchasing an inflation protection or cost-of-living adjustment rider. Expect to pay extra in exchange for this benefit.

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Annuities When Saving For Retirement

If youâre a long way from retirement, an accumulation annuity can help you save while enjoying the potential for tax-deferred growth. While you could eventually get your money back from an accumulation annuity once it hits certain milestones, many people choose to convert accumulation annuities into a stream of income to provide regular, guaranteed payments. While you wonât pay taxes during accumulation, you may pay income taxes on a portion of the withdrawals you make or payments you receive.

Fixed annuities grow at a fixed rate and are a good option for someone seeking more certainty.

Variable annuities do not grow at a fixed rate, as they can have exposure to the markets through subaccounts that you choose. This means that the growth rate of your annuity can fluctuate*, but annuity providers often add riders that can guarantee a minimum level of income or return.

Benefits Of Variable Annuities

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Here are some of the appealing features of variable annuities:

  • Tax-deferral. Money in a variable annuity grows without being taxed. It’s taxed later, when you withdraw funds. s, too — and money in Roth IRAs and Roth 401s also grows without taxation but can be withdrawn tax-free.)
  • Income for many years. You may opt to be paid until you pass away, and that can help you not run out of money in retirement.
  • A “death benefit.” Some variable annuities will let you choose a beneficiary to receive a certain sum should you die before you receive all guaranteed payouts or if your account’s balance is above a certain level. You pay for this benefit, though.
  • Control. Variable annuities can give you more control than fixed annuities, letting you choose how the money in your account is invested — conservatively or aggressively or somewhere in between. This isn’t a good thing for everyone, though, especially if you’re not a savvy investor. If your choices turn out well, you can end up with bigger checks, but there are no guarantees and you’re also exposed to the risk of investments underperforming, leaving you with less than you’d hoped or planned for.

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What Is An Annuity

An annuity is a contract between an investor and an insurance company.

The investor makes one payment or a series of payments to the insurance company. In exchange, the company guarantees income for a fixed period of time or until your death.

There are three main types of annuity available, although there are also various types within these broad categories.

  • Fixed annuity. You receive a guaranteed fixed amount with each payment, such as a single premium immediate annuity .
  • Indexed annuity. This is a fixed annuity with a twist: A portion of your money is invested in a stock market index, such as the S& P 500, and the principal is guaranteed if you hold the contract to term. The trade-off, though, is that your returns on the index are capped.
  • Variable annuity. You get the benefit of lifetime income, but the payments you receive depend on the performance of a portfolio of securities.

Are There Disparities Between The Potential Sources Of Retirement Income And Retirement Expenses

Assess projected retirement expenses and unexpected costs against retirement savings and portfolio investment mix. Retirement expenses may exceed income in retirement, in which case an annuity might be useful.

In the event that you outlive your savings, an annuity may provide some protection. By paying into an annuity, you receive a guaranteed income stream from the insurance company. In some types of annuities, the guaranteed income continues throughout the annuity owners life despite market fluctuations.

You may be able to apply for an annuity to help fill gaps in your retirement income plan with the help of a financial professional.

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