It’s 2023 and there are thousands of financial products you have to sift through. Unfortunately, if you’re trying to watch a football game on Sunday afternoon you’re repeatedly reminded of all the bad options, like the Venerable annuity, while most of the good ones are glossed over. We’ll try to break it down for you and provide some clarity.
The Venerable Annuity
Not picking on the company specifically, as they’re actually just like thousands of other annuity providers. According to their website, they’re a variable annuity provider that has been around since 2018, and offers things like “state of the art technology” and “strong capitalization”. Sure. What they also offer is a way to lock up your money and guarantee yourself subpar returns when compared to the stock market. Ew.
Don’t forget, we’re not discouraging annuities while not offering you valid alternatives. You have endless options, including your workplace 401k, IRA, Roth IRA, Brokerage Account, Certificate of Deposit (CD) or High Yield Savings Account (HYSA). These are all superior products to an annuity in most cases.
When you need an annuity
I’d like to say never, but that’s not actually a choice. If you ask the Venerable Annuity company, they would tell you that EVERYONE needs an annuity. That’s even more wrong.
Realistically, if someone knows the exact amount of annual income they need to fill their expense gap for the remainder of their life, and wants to take limited risks, an annuity could be right for them. Obviously this is a highly personal decision and could depend on a number of factors including social security claiming strategy, pensions, and 401k and IRA assets. But nonetheless, there are some situations in which an annuity can make a ton of sense and allow someone to sleep really well at night.
The Good Annuities
The bad annuities are plenty, normally called a variable annuity, or a fixed annuity, or a variable indexed annuity, or a universal life annuity, etc. You get the point, it’s a whole bunch of different ways to refer to the same general product.
Instead, I’d recommend checking out Stan the Annuity Man, who offers Multi-Year Guaranteed Annuities (MYGAs). An MYGA can most easily be described as a CD-like annuity or a fixed rate annuity. In other words, you pretty much know what you’re going to get rather than reading through thousands of pages of disclosures. The other good annuity is a Single Premium Immediate Annuity (SPIA) which exchanges a specific amount of cash for a specific benefit over a finite period of time. The terms are pretty dang simple, and the product is self-explanatory. You don’t need a degree in micro economics to understand the terms of the product, which in our opinion, is a huge plus. As you can see below, MYGAs are pretty simple to break down. They give a surrender period, a minimum premium, and an annual rate. What more could you ask for?
Avoid Venerable and their peers
Sometimes, the best thing to do is nothing. I mean holy cow, how many of these companies are there? We’ve given you a few good recommendations in this article and hopefully that’s enough to get you started on the right foot. We’ll try to add some more information in the future that will hopefully provide more clarity on Venerable annuities and those like it!