This question was posted by Peter G…….


My Financial Advisor wants me to buy annuities. What does the Monday Morning Millionaire think about annuities?

Monday Morning Millionaire Program Answer:

Retirement programs need a plan B in case things don’t work out as we hope. Annuities are the best plan B; there is no risk that you will run out of cash, and the rates of return are favorably taxed and relatively high. (Some of the payout is your own money coming back to you.)  If you live long enough, your annuity issuing insurance company will be begging you to die.

Use annuities together with your government pensions and defined benefit pension (if you’re lucky enough to have one of those) to finance all the mandatory spending needs you should budget for: food, rent (or 3 percent of your house value annually for maintenance, assuming your house is paid off), clothing, transportation costs, and so on.

There are many annuity variations. For the ideal annuity solution for your specific needs, get fee-only advice after considering the subject and narrowing down your choices. Schulich business school professor Moshe Milevsky’s excellent book, Life Annuities: An Optimal Product for Retirement Income, available for free, is worthy of careful study.

Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me

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