President Obama declares his love for Annuities

President Obama and his administration declared their love for annuities, specifically income or immediate annuities that pay lifetime incomes, in an article in The New York Times.


More and more studies declare that the most efficient way to provide a guaranteed paycheck for life to our retirees is using annuities, and this article provides the frosting on the cake because it does a great job of weighing the pros and cons of using a lump sum to purchase a guaranteed lifetime income.


Guarantee Income for life is a HUGE issue right now. Most employers have either stopped their retirement or have lowered the match. Also, a 401K is subject market risk. Depending on when you decided to retire, you might not have enough time to make back what you lost. If your portfolio is down 10% you have to make 100% to get back to where you were. Your 401K is also subject to management fees and other expenses that can lower your return.


If a guarantee income product was offered, this would help lessen the burden on the Social Security system. As it stands right now, most people including the wealthy depend on their monthly Social Security checks. Uncle Sam also knows that the next big bailout will be the Social Security System. I just received my statement from Social Security and on the very front page it says in 2016 we will begin paying more in benefits than we collect in taxes. Without changes, by 2037 the Social Security Trust Fund will be exhausted. With approx. 17% unemployment, those people are not contributing to the system right now and the 2016 date is no longer realistic.

However, annuities in general provide the following:

Income for Life

Tax-Deferral

Avoids Probate

Guarantee's your principal

Long Term Care Riders

Optional Income Benefit Rider(s)


Annuities have been around for 200 hundred years dating back to around the time of the Revolutionary War in the U.S. Annuity companies are a much safer place to put your money into than most banks. Right now, there are at least three government owned insurance companies and today on CNBC at least 720 more banks are going to need assistance from the government. For the latest information on failing banks you can visit the FDIC website at www.fdic.gov. Community banks that invested in the commercial real-estate are the next to fall. Almost all of the commercial property I drive by vacant and the properties that have tenants are about 40% occupied. It does not take a genius to figure out that we are not out of the wood work yet.


Offering working people a chance to take some money off the table and buy annuities with some of their money would not only benefit the public but also lessen the burden we all have on the Social Security system. As always, you should consider speaking with an insurance agent about your options. The easiest solution might not in your best interest and it never hurts to talk to a professional about your particular situation.