The journey continues as you speak with a salesperson, most likely an independent agent who represents numerous insurance companies. They’ll probably map your overall financial picture to figure out what you need and what they can sell you. 

Next, they’ll present one or more annuities to you, answer your questions and await your final decision. You pick the one that has a bonus (sounds good!) and a “guaranteed rate of return.” You send your money, and soon receive a contract, which you will find unintelligible (because it’s unintelligible). Over time, you’ll receive a few surprises about this annuity.

That sales process is designed to sell products and earn commissions. What was omitted? Did the agent show you: 

• The taxable versus nontaxable income generated by your annuity, year by year, so you could calculate your after-tax result? 
• How certain features like the bonus could lower your after-tax results?
• Worst-case scenarios if the annuity company slashes your share of returns, in Years 2 through 7? 
• How that deferred income annuity is a de facto lifetime commitment? 
• How the annuity compares [after-tax] to putting your money into a five-year CD-like annuity, then later switching over to a lifetime income annuity? 

Maybe you received this info, but it was lost in the blizzard of other confusing data. 

Numerous economists conclude that [certain] annuities produce better retirement outcomes. Yes, annuities are beneficial, unless you choose inferior or unsuitable products. You can end up slightly or much poorer, thanks to bad product design or sales practices, unreadable contracts and lack of transparency.

Salespeople, even “fiduciaries”, are unlikely to be perfect 100% of the time. That doesn’t mean they have Ethical Deficit Disorder. But they’re human. Most of us, under pressure, could have moments of Honesty Slippage. 

When you shop for an annuity, if they lead the dance, you will make mistakes. Classic example: rating a market-growth or income annuity against the dangers of the stock market, rather than better annuity products. You probably skip calculating the taxability year by year. Or you grab the annuity with the bonus, unaware it’ll be of no benefit and will cost you. 

A structured game plan puts you in control. You can follow it or customize it. If you skip a Pre-Purchase phone call to the actual insurance company, and just go with a Last-Chance interrogation later, okay. Just don’t rely solely on what you are told by your independent agent who is not a party to the contract.  Your Annuity Game Plan scripts those phone calls for you. 

The game plan goes well beyond product evaluations. It’s designed to overcome ‘stupid data’ overload. Examples: terminology like FIA DIA FILA MYGA SPIA Fixed Fixed Indexed, and undue detail about hypothetical scenarios, side-show “benefits” and flexibility (which disguises poor cash payouts). 

The Game Plan guides you toward simplicity, away from complexity. And warns when Honesty Slippage is likely to impact you. It helps your efficiency; don’t waste time choosing from 20 bonus options, but rather zero in on—and here’s the most elegant word in finance—cash in your pocket. 

You can make informed decisions; skip the 90%-plus of market-growth annuities that have an incalculable risk embedded in them, or check them out with your eyes open. 

If your retirement is a game, and you aren’t bent on exploiting annuities to the max, then believe everything on YouTube and what commission-paid salespeople tell you. But I assure you: a Game Plan that showed me the potholes in the road, and which destination to aim for, would have put several thousand dollars more after-tax cash in my pockets. 

Author Joe Quinn does not sell annuities, but he may own stock in annuity providers, since they do pretty well selling to us.