To understand annuities, you have to understand your financial profile. The first step in developing a financial profile is taking a risk tolerance test. The test itself is not a pure science, but it is an indicator of your attitude towards money. It’s not surprising to discover that most seniors evolve into money conservatives as they approach retirement. After the lost decade where four out of ten years experienced significant losses, and the market turbulence of 2018, guarantees are at the forefront of geriatric thinking. Non-qualified, fixed rate annuities continue to outperform bank certificates of deposit, even from virtual banks and they have the luxury of deferring taxes until distributions are made. The rate plus the deferral has economic leverage. If fixed rates hit 5% guaranteed for 5 years, many future retirees ten years from retirement will more than likely flee the equity market for safety. So, 5 for 5 is the benchmark. Another milestone to be aware of is 4% internal rate of return (IRR) with lifetime annuities, a composite of higher rates, increased mortality credits and extended life expectancy. If you can average 4% IRR with zero beta risk, i.e. no risk but the insurance company itself, then   Read more…