Annuity or Anomally Update April 26 2025

With no downside possible, but participating in up markets, certain annuities can allow you to relax knowing market upsets won't hurt your balances.

I published a newsletter last week detailing how it may be possible to garner double digit returns and/or a steady income stream for life even if you end up collecting more than you put in. With the markets continuing to erode, people are getting worried and rightly so.

With concerns about keeping up with inflation, running out of money or losing a good portion of your retirement funds in a market crash, the search is on for viable and realistic alternatives.

There are strategies an investor can consider instead of just buying stocks and hoping they go up. 

Annuities are popular with some. While some analysts and advisors bad mouth anything that even resembles an annuity, the truth is most of us may already be participating in an annuity unknowingly.

From the Oxford dictionary, an annuity is described as: “a fixed sum of money paid to someone each year, typically for the rest of their life and/or a form of insurance or investment entitling the investor to a series of annual sums”.

Basically you give an entity money and they pay you back in payments over a specific period of time. I consider pension plans to be an annuity like mechanism as well as social security. Whole life insurance policies may also resemble annuities.

In all of these programs, an investor has paid money to some entity and that entity has promised to pay something back to you later.

In the case of social security, that entity is the U.S. Social Security program. In pension plans, like CalPERS, CalSTRS or a corporate pension plans, the entity may be a company or entity you worked for or are associated with.

I find it a bit humorous that annuities are looked down upon when even those that steer investors away from them may participate in an annuity like retirement plan themselves.

Truth be told, annuities can be complicated and in my opinion, have to be looked at very carefully before investing in one. I look at literally hundreds of types of annuities and most of them are, in my opinion, have too many unknowns. The contracts are lengthy and, even to me, be confusing and unclear.

That said, there are a few I find that are simple and easy to explain and can be fully understood by the client.

Many can offer upside market participation yet will avoid any reduction in principal if the market crashes. Some offer lifetime income that can pay out more than you put in and others may offer a return higher than the market in certain circumstances.

When I first meet with investors, some tell me “I want to make money but don’t want to lose any”.

Although this statement may sound silly, when I hear it, I immediately think of a particular annuity that may do exactly that. Enable the investor to participate in up markets but avoid the downside.

Many Americans may already unknowingly understand how an annuity operates if they think of any social security, pension or retirement plan that they may already participate in. Although annuities are none of the above, conceptualizing how the above programs pay out may help an investor better understand the annuity concept.

Disclaimer: Annuity product guarantees rely on the financial strength and claims-paying ability of the issuing insurer and are not guaranteed by any bank or credit union and are not insured by the FDIC or any other federal government agency. Surrender or early withdrawal charges may apply to during the surrender period. Rates may be subject to change during the life of the contract. Annuities may or may not be suitable for all investors. Please review the prospectus carefully and consult your financial and tax professional before investing. This article expresses the opinion of Marc Cuniberti and is not meant as investment advice, or a recommendation to buy or sell any securities, nor represents the opinion of any bank, investment firm or RIA, nor this media outlet, its staff, members or underwriters. Mr. Cuniberti holds a B.A. in Economics with honors, 1979, and California Insurance License #0L34249 His insurance agency is BAP INC. insurance services.  Email: news@moneymanagementradio.com