You Make More Money With Annuities
Sometimes it seems like I’m not explaining things clearly enough. Annuities help you do all sorts of things in retirement to produce simplicity, security, and profitability. Yes, if you do it right you will have more money than if you had not done it. Everything of value that we buy has to be worth the cost, otherwise it’s a waste of money. With annuities you can look at it in terms of what’s most important to you. When I say that portfolio value increases with the right annuity strategy it means that you will have more money than if you didn’t use an annuity. When I show you how to leave the largest legacy with an annuity as part of the plan, it means you leave more money to the next generation than if you hadn’t used an annuity.
How else am I supposed to say it? Over the course of my career I’ve sold some substantially large contracts to some very successful people. They all did it because they understood they would become wealthier with the annuity. It’s not a debate about where your money will grow the most. We all know the stock market provides the best growth over time but things change when you start taking systematic distributions. Dollar cost averaging works for you during the saving years and the exact opposite is true when you get to the spending year. And considering what’s at stake, reverse dollar cost averaging is even worse.
I suppose everyone needs to hear it from a different perspective, depending on what’s most important to them. Again, what is your biggest concern in retirement? It’s hard to imagine that I haven’t covered it somewhere along the way, at least partially. Some people get it right away but it takes others a while for the light bulb to come on. Let’s take a look at some past episodes to see where I’ve said this so you can see the perspective that makes the most sense to you. I’ll try to be absolutely clear about the value proposition.
A few years ago I met with a couple that had a big enough portfolio to support a high spending goal in retirement. The husband was all for using an annuity to get the safest and most convenient retirement possible. The wife didn’t want to spend the money. On top of the income she wanted to leave as much money as possible to the kids. We ran multiple scenarios and without the annuity they are running a significant risk of running out of money altogether. That means they won’t get the income or leave an inheritance. With an annuity in every scenario there was a substantial portfolio remaining. They had more money with an annuity so I recorded this episode: Annuities Create a Legacy.
Earlier this year one of my clients had a MYGA coming out of surrender. It was a perfectly developed plan because he was able to protect a chunk of money for a few years and buy some guaranteed income when the payouts are really high. His investment advisor strongly suggested he put the money back into the stock market and under his control. With RMDs just a few years away, a steady stream of cash flow benefits him in several different ways. With an annuity we can safely predict a much larger portfolio balance, which gives the investment guy much more money to manage. He just has to be patient and do what’s best for the client today. If your investment advisor objects to you using an annuity then show him this episode: Annuities Create Bigger Portfolios. I don’t need to argue with investment managers because I know how it works. One by one they are starting to see the light.
We haven’t talked about inflation in a while. No matter what anyone says there’s not much you can do about it. The best way to fight it is to have more money. Sounds easy enough so then using an annuity to provide income and take pressure off your portfolio actually helps your assets grow more which means you have what you need to handle spending increases. I’m not talking about inflation adjusted annuities because those aren’t worth the extra money. I’m talking about a bigger portfolio. I covered it all last year in a different episode right here: Annuities Helping With Inflation. Is it starting to make sense now?
In one of the very early episodes from more than three years ago, I talked about a couple who had a seven figure portfolio with Fisher Investments. They were right at RMD age and were uneasy about the market. Why it’s considered appropriate to have a couple like that 100% invested in equities is beyond me but that’s what they had. Since systematic distributions were right around the corner a stable asset would be critical in the long run to maintain or even grow the portfolio. I ran the numbers and found that in a terrible scenario 25% of their money in an annuity would improve the total remainder by a large margin. In a favorable market scenario the remainder looked the same with or without an annuity. That’s why I recorded this episode: Why Not an Annuity? It’s safer and you can do just as well or better. Why not?
And one of my favorite episodes is How to Beat The Market With an Annuity. This was a light bulb moment for me when I figured it out several years ago, only to discover it had been academically proven by Wade Pfau long before. The reality is that you guys all have more at stake than ever before. With larger portfolios from a wild stock market and fewer working years to make it up if things go wrong, the more you put into an annuity, the bigger portfolio you’ll have when it’s all over. It’s the most efficient way to retire. Now, it’s completely feasible considering the both it would take to manage this but it’s a fun exercise nonetheless.
Is everyone in the back still awake? Yes, we are talking about more money, bigger portfolios, legacy if you want it, or an inflation hedge if you need it. I’m not doing this because it’s easy, I’m doing it because it’s the best path. My clients that understand it now are only going to become happier as time passes. The results will play out in real life so I’ll have nothing but good stories to share as I approach retirement. If you want easy, guaranteed, and max profitability then get on my calendar.
Have a great weekend!
Bryan
Watch Episode 199: Making More Money With Annuities
Download Episode 199: Making More Money With Annuities on Apple Podcast
Last Updated on October 20, 2025 by Bryan Anderson
