How an Annuity Can Increase Wealth in Retirement

I have made this claim during personal meetings with people and more recently updated a few places on the website to reflect the idea. You can own an annuity that allows you to increase wealth through retirement. It’s not the annuity that does this, it’s how you use the annuity that makes it work.

This is something you’ll have a hard time finding elsewhere. It takes independence of thought and confidence in understanding basic financial principles for a person to do it successfully. The reason is that the insurance industry has a very specific way of promoting products that are meant to protect assets and produce income in retirement. Agents and advisors for the most part are more than happy to stick with the status quo and simply sell the way everyone else sells.

But since I do business all over the country from my office in Montana, I need to have an advantage over other products and services. Otherwise, why would you trust someone this far away? I will show you why.

When you buy an annuity to produce retirement income you have to take it from an investment portfolio that has potential to grow. So the annuity reduces your investment portfolio in exchange for a monthly paycheck. It leaves less money available to invest for long-term growth, which is what you need to fight inflation and increase wealth.

If you model the effect on your portfolio you will see that while the annuity protects your income it essentially prevents you from maintaining the same level of wealth through retirement. The reason the annuity costs so much is because it provides income for all years of retirement. This doesn’t make sense to me.

Since the point of the annuity is to insulate your retirement income from market volatility wouldn’t it make more sense to have an annuity that covers income only during the time when you can’t take money out of the stock market?

On average it takes the stock market 3.3 years to recover from a bear market. During the Great Depression, it took around 7 years for the stock market to return to previous highs. If that’s the case, then why not just have enough set aside to cover income when the value of the stock market is depressed?

This is the idea behind what I call the AST Flex Strategy. Instead of using an income annuity, use a deferred annuity as a protected pool of cash that you can use to draw income when the market is down in value. When the market is performing well you can sell stocks at high values and leave the safe money alone for the next time you need it.

This allows you to spend less on the annuity and leave more working in the stock market for long-term growth. The result is all the protection needed, more long-term growth, lower fees, and a substantial increase to your net worth in comparison to traditional income annuity plans. That’s what everyone else sells so I’ve seen it a thousand times and nothing so far comes close to the output of the AST Flex Strategy.

Where the traditional income annuity decreases your net worth, the AST Flex Strategy allows you to increase your net worth. In most cases, the difference is several hundred thousand dollars or even much more, depending on your situation. That’s how an annuity can Increase wealth in retirement

The details of exactly how it works are something I plan to keep to myself and share only with clients.  When you see how it’s done you won’t believe what a difference it makes. It gives you more money, more control over your assets, and more opportunity to adjust the plan as time goes by.

Go ahead and buy an income annuity or indexed annuity with an income rider, but if you do so without giving the Flex Strategy a look then you are just stubbornly refusing to put extra money in your pocket. It’s ridiculous to think about approaching retirement any other way.

If you’d like to see how it works go ahead and sign up to get the Indexed Annuity Guide or just give me a call.

Bryan J. Anderson


Further readings

Fixed Indexed Annuity Guide

Fixed Indexed Annuity Withdrawals

How Much Do Fixed Annuities Pay?

Last Updated on January 12, 2024 by Bryan Anderson