Alpine Will Lawyer Says “Exercise Caution When Purchasing Annuities”
Will lawyers in Alpine have a variety of tools at their disposal to help their clients make the best possible choices when it comes to creating long-term plans for their wealth. Wills, trusts, prenuptial agreements, insurance policies…there are so many ways to grow and protect what you’ve worked so hard for. In many, many cases, and annuity is a great strategy for having an ongoing income during the retirement years.
That said, annuities are not always the right choice. It’s a good idea to thoroughly consider the pros and cons of an annuity with your estate planning lawyer in order to determine if it’s the right one for you. The answer may be a resounding “YES!” which is great, but there are reasons to think twice before setting things up.
For example, it’s easy to forget that annuities are a form of insurance. That means that they must be purchased just like any other type of insurance policy, from a sales person. The person in question sells the annuity as a means of supporting himself or herself, not just to do a good deed. So, you can expect that perhaps 10% of what you’re spending is not going toward anything other than the sales person’s commission.
Of course, commissions aren’t the only fees that take a bite out of your investment. There are annual fees to consider. These fees can vary quite a bit from company to company or based on the type of annuity you choose to buy. You may save some of the annual fees by buying a fixed annuity instead of a variable annuity, but of course there are other trade-offs to consider. Even a relatively-modest 3% annual fee will make an appreciable difference in what your eventual payout will be. You might want to run some numbers with your Alpine will lawyer to see how much you really end up losing in the long run.
Finally, you may find yourself in a situation where you need to access the money earlier than expected. It seems like this shouldn’t be that big of a deal since the money is yours to begin with, but the truth is that you will incur “surrender charges.” The fee you pay will likely be higher the earlier you take the money out, so if you took it in the first year, you might pay 20%, with a lower percentage at year five.
None of this is to say that annuities are a bad idea. Estate planning lawyers in Utah will often recommend them to clients because they’re a good fit. But, it is important to look at all aspects of the situation to make an informed decision rather than being talked into something that won’t benefit you because the sales person is good at his or her job!