Buying an Annuity in 2025
It has been an interesting month in Mexico with some things I like and some things I don’t. Catching bonefish is always at the top of my list and it snowed over three feet in Montana in February. Now it’s been warm enough for the past week for it all to be melted so I timed it just right. Much like other times I’ve taken an extended trip, my calendar stayed open and my schedule was full. What stood out to me the most in the past month is that things don’t seem to change as much in the annuity business as we’d like. I’m not talking about rates which are obviously better than they used to be. I’m talking about what you have to go through to find the right solution.
Buying an annuity in 2025 is not any easier than it used to be. Yes, there are better operators and a number of reputable people online but it only gives you more choices and there are just as many lazy agents as ever. Those are the guys who only sell one or two things to everyone regardless of circumstances and don’t ever shop around to offer a well rounded list of options. I guess it gives me more chances than I would have otherwise but it’s also answering the same questions over and over again.
I ran into a lot of retired people down here but most were Canadians. They’d all ask the same question. What kind of work do you do, that you can come down here for a month? I suppose that opens the door for a sales pitch but I don’t really work that way. I can’t do much for a Canadian anyway but the Americans would all ask the same question. Over the years, experiences like this have put me on the spot to figure out an easy line that can explain it but I haven’t quite nailed that down yet.
Do I give them something pro annuity, or tell them what to avoid? The pros can be done in a soundbite but that’s too salesy in my opinion. If you want guaranteed income or a protected asset with no fees, an annuity might be the best option. But since the subject of this made me think of all the bad advice a lot of people get, I should just tell you all what to avoid. People who prefer positive information don’t like that but it leads to positive results. It may not work as a sales pitch in the Caribbean but those aren’t necessarily who I’m targeting. You need to be able to differentiate between good advice and bad.
Here are the top five things to avoid if you plan to buy an annuity in 2025… and some links to a podcast where you’ll find more detailed information on each.
- Don’t buy guaranteed income that you don’t need.
There are still a lot of agents that only sell guaranteed lifetime income contracts. Often the annual income increase or roll up is misstated as the contract yield. I’ve seen a lot of people paying fees for something they don’t need. In many cases the consumer thought it was the only option. Annuities can be used in a lot of ways and income is only one of them. Just in case anyone needs a reminder, Annuities Are Not Just For Income.
- Never buy a MYGA based on rate alone.
Rate increases in the past few years have created really nice yields for safe money savers. When will it ever be good enough for you? Many of the highest yields are offered by substandard companies. If safety is the reason for using an annuity this is counterintuitive. There are also free withdrawals and renewal terms to consider, depending on how much liquidity you need. Be as picky as possible and look at all the options. I wrote a nice guide a couple years ago that will help you Choose the Best Fixed Annuity.
- Stay away from private equity led insurance companies.
This phenomenon has been becoming more prevalent since its inception in 2009 with the first company. In the past few years it has been the target of some serious reports that lead to questions about how the stability of these companies may have changed. Several prominent people in the financial services industry are now pushing for regulatory changes to eliminate what they see as abuse by greedy corporations who look to profit from a change in traditional company operations. You can always get something just as good if you avoid these companies. It’s just not worth it and I told everyone how to spot What Companies to Avoid earlier this year.
- Don’t buy any growth annuity without evaluating several options.
Don’t buy a fixed indexed annuity unless you specifically choose it over a MYGA. Don’t buy a Registered Index Linked Annuity without understanding the alternatives. And don’t buy a variable annuity unless you know exactly why you need all the fees.
- Only a bad advisor would sell nothing but Allianz ABC and 222.
I really thought this one would go away but I still hear it all the time. “He says that he only sells the Allianz 222.” When alternatives are asked for, many of these agents only offer the Allianz ABC. After years of poor performance, broken illustrations, and bonuses being sold the wrong way, you’d think that a lot of these guys would branch out to some new products. But there are still a lot of advisors who refuse to change and keep slinging the bullshit. Go ahead and buy an Allianz contract if you want but stay away from the guy who only gives you that as an option.
This list could get really long I’m sure but this is probably the best look at the crap you might run into if you are buying an annuity in 2025. You guys have to realize that there are still a lot of advisors who will never learn what you will by following this website for a while. Of course there are good people out there but unfortunately it’s still the exception and not the rule. Do yourself a favor and take some time to make one of the biggest decisions of your life. If you want to make sure you do it right then this is a good place to get it done.
If you plan to buy an annuity in 2025 then go ahead and make an appointment.
Bryan
Watch Episode 171: Buying An Annuity in 2025
Download Episode 171: Buying An Annuity in 2025 on Apple Podcast
Last Updated on March 7, 2025 by Bryan Anderson
