Over the last 21 years of my career in the financial industry, I have constantly been amazed at the misconceptions and lack of knowledge the public has about annuities. I understand that annuities are rarely (if ever) discussed in schools or colleges, but the average investor’s preconceived notions about these incredible retirement vehicles are grossly inaccurate.
My eyes were really opened to how widespread a misunderstanding there is one Christmas holiday in 2004. As I sat around the kitchen table with my two older brothers and listened to them describe their understanding of annuities, it became apparent that there needs to be more education about these retirement planning tools in our country. You see, both of my brothers are very intelligent individuals — one a chemist and the other a medical physicist. By most accounts, I would be labeled the least educated sibling.
As I inquired about their understanding of annuities, they both had concluded in their mind that these were “rip-off” investments offered by money grubbing insurance companies and that if you died young, the insurance company would keep all of your money, leaving your spouse and/or kids penniless.
Wow. What an eye opener!
Where did they come up with this incredibly incorrect information? My only conclusion was that like many Americans, they had heard misinformation from one of the many uneducated talking heads on the radio, television or Internet. It amazes me how such smart people can take advice from celebrities who don’t know what they’re talking about.