Annuity Basics: EDU #2622

About this episode

Jim and Chris discuss the basics of annuities in the context of National Annuity Awareness Month.

Chris’s Summary Jim and I tackle annuity basics to start off another National Annuity Awareness Month. We cover what annuities are as insurance contracts, the four parties to a contract, the accumulation and distribution phases, and the key differences among the major annuity types. We also touch on tax deferral rules, LIFO treatment, and the historical and industry context behind why annuities remain so widely misunderstood. Jim’s “Pithy” Summary Chris and I use National Annuity Awareness Month to get back to annuity basics. I have a book in my office, Lee Welling Squier’s Old Age Dependency in the United States , written in 1912, before Social Security existed, that begins by asking why people don’t use annuities to help provide against want in old age. That question stuck with me because I was taught early in this industry that annuities were horrible, while pensions were wonderful. But, if a pension was one leg of the old three-legged stool, and the 401(k) helped pull that leg out, then maybe we ought to at least understand the product that can mimic some of that pension-like income for retirees who need it. Not love it. Not hate it. Just understand…

People in this episode

Hosts: Jim Saulnier, Chris Stein

Topics covered

• annuities
• insurance contracts
• retirement planning
• tax deferral
• financial education

Keywords

• annuities
• retirement
• insurance
• tax deferral
• financial planning

Mentioned in this episode

Books & works: Old Age Dependency in the United States

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