Americans are facing a fiscal tsunami. It will require a miracle for most of them to stay in control of their financial futures. Fortunately, we sell miracles. We sell the miracle of compound interest, which Albert Einstein once called the eighth wonder of the world. If he were alive today, he would say the miracle of tax-deferred compound interest is the ninth wonder. This miracle provides our clients with triple compounding: interest on principal, interest on interest and interest on the taxes they would have paid in an investment taxed on an accrual or yearly basis.
Even as taxes increase, tax deferral helps Americans accumulate larger lump sums that will provide them larger guaranteed paychecks for life. Even better, this can be done without any additional risk. Income annuities provide the same income as a stock, bond and cash mix, using only 60 percent of the money required by that allocation.
Studies at the Wharton School, the University of Pennsylvania, and the University of Illinois all found that annuities are the most efficient way to provide a guaranteed paycheck for life. The president and his administration have sung the praises of annuities and the guaranteed income they provide.