“Annuities Are Hot”

June 3, 2022 – That’s the word on the street according to the author of “Rising Interest Rates Means Annuities Are Hot.”

The article goes on to promote the current environment as an excellent time to consider dedicating a portion of one’s retirement portfolio toward annuities, especially if near retirement.

Not discussed in the article but still relevant is the fact that structured settlement rates have similarly risen making them an excellent choice for those involved in settling a personal injury lawsuit.

Structured settlement premium is up 20% in 2022Q1 versus 20221Q1.

One notable statistic supports the article’s contention that annuities have increased in popularity:

  • Fixed annuity sales are up 14% in 2022Q1 ($35.2 million) over the same period a year earlier (which was higher than the year before).

Although unstated, it’s probably not a coincidence that the increase in annuity interest coincides with the recent stock market challenges. When the riskiness of investing in the market becomes more pronounced, people tend to gravitate toward safer options with guaranteed features like fixed annuities.

While the article is very upbeat and encouraging about annuities, if I were to level one criticism of the article it would be that they suggest considering working with a financial advisor for guidance in this area.

The reason this suggestion may be worth reconsidering is because so many traditional financial advisors are notoriously negative when it comes to considering annuities. Even though economists and academics who study both traditional investing and annuities overwhelmingly favor annuities as the most efficient way to achieve income for life, many financial advisors frown on them.

Financial advisors, unless they specialize in income distribution, are more likely going to want to keep your money invested. (NOTE: Typical fee-only financial advisors charge ongoing fees for their service, whereas most annuity advisors receive a one-time commission usually equivalent to what the financial advisor would earn over a two-to-six-year period.)

One we do agree with. This IS an excellent time to consider annuities. Whether a structured settlement or a re-balancing of retirement funds, the climate for annuities hasn’t been this attractive for years.

Finn Financial Group