Annuities  – Confused? 

Confused about Annuities? So are the so-called experts. After watching this annuity word salad, I could hardly believe this coming from the formerly prestigious Barron’s Report.  Over the next several posts, I will help you separate the fly excrement from the pepper, as an esteemed professor of mine used to say. 

In this video featured on Fox Business as the Barron’s Roundtable on July 21, 2023 (, we are invited to listen to a panel of four people who, supposedly, are about to tell us all about annuities. The panel is “moderated” by Jack Otter, who has his thumb on the scale throughout the 5-minute discussion. In googling Jack, we see that he is a journalist with a Wall Street background and editor at large for Barron’s Group. 

Jack opens with this: “For many people planning for their retirement, annuities are a hot buy right now. Sales hit a record last year as stocks and bonds fell hard but annuities offered increasingly tasty payments. Barron’s this week does a deep dive into these controversial financial products. Traditionally, annuities were those things that were sold and not bought. That has been changing a bit recently.” 

Let’s stop there to consider what’s been said so far before Mr. Otter hands it off to his colleague Ben Levisohn. 

So here comes the hype right off the bat. People who are planning their retirement should avoid anything being marketed as “hot right now”. “Hot” is a marketing hook designed to draw you in for fear that you are missing out. We call it FOMO…fear of missing out. But in fairness to Jack, his first job is to get you to listen to his video.  

Jack tells us that sales hit a record last year and posts a bar graph to prove it. That’s great. But sales of what? Annuities, yes, but what kind of annuities? They never say. And it’s a critical question which goes unanswered throughout the 5-minute video. 

He admits that stocks and bonds “fell hard” last year. Hard to deny. Here are the actual “fell hard” numbers: 

Nasdaq Composite Down 33.1% 

Russell 2000 Down 21.6% 

S&P 500 Down 19.4% 

Dow Jones Industrials Down 8.8% 

(Your broker’s fees of 1-3%, unchanged) 

Ah! But now here come annuities to the rescue, right? Jack says they offered increasingly “tasty” (another one of those taunting marketing hooks) payments. Well, wait a minute. What do you mean “payments”. He means payments made to the annuitant who buys a SPIA, a single premium immediate annuity. But a SPIA is only one type of annuity, and a type we do not recommend under prevailing economic circumstances. 

During the entire discussion over the first half of the video, no one bothers to point out that they are talking about SPIAs. In fact, as you will see, it is not until the last panel member speaks that any words like deferred, variable, immediate, or fixed are uttered. Deliberate obfuscation or ignorance? You be the judge. 

This annuity word salad is presented as a “deep dive into these controversial (another hook) products”. If this is a deep dive, you had better be careful because it is a dive into shallow water. Mr. Otter just told us the market took a dive last year and that annuity sales broke records, yet annuities are somehow controversial. Hmmm… 

And to close out his intro, Mr. Otter tells us that “traditionally annuities were those things that were sold and not bought and that has been changing a bit recently.” Wow! Annuities are now “those things” and people are actually buying them intentionally and proactively rather than having to be sold. If, by your statement Mr. Otter, you mean that people are more receptive to considering annuities, then you are correct. Despite the deeply held institutional, self-serving, prejudice within the Wall Street community, many people are losing confidence in the perpetual Bulls of Wall Street. Consequently, they are increasingly and correctly unwilling to bear market risk that they cannot afford to take in their retirement years. 

To be continued… 

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