'This study indicates that owning such annuities may actually worsen a retiree’s financial condition when life event factors are taken into account,' says investments management specialist Jeff Voudrie, CFP® Professional
Johnson City, TN (PRWEB) October 25, 2013
Reichling, a Congressional Budget Office economist, and Smetters, of the University of Pennsylvania’s Wharton School of Business, found that just 10% of households should annuitize any of their wealth, once typical life events are taken into consideration. “We find that most households should not annuitize any wealth. The optimal level of aggregate net annuity holdings is likely even negative.”
Investments management specialist Jeff Voudrie, a financial planner in Tennessee, has been sounding the alarm about the poor deal that annuities give for several years, penning a book entitled Why Variable Annuities Don’t Work the Way You Think. “Retirees need to be wary of the sales pitches,” Jeff Voudrie warns. “There is a tremendous financial incentive (called commission) for ‘advisors’ to tout the benefits of annuities, including those with annuity income riders. This study indicates that owning such annuities may actually worsen a retiree’s financial condition when life event factors are taken into account.”
Voudrie did not come to his conclusion on annuities as the result of this 2013 study. “For years I have pointed out that retirees do not properly factor in life event risk in the annuity purchase decisions,” the investments management specialist noted. What should a retiree do to figure out if s/he should invest an annuity or spread his/her funds into other options? “The first step in an objective analysis is to discuss the likes and dislikes of the client. From there, various scenarios can then be statistically modeled to determine the probability of each meeting the income needs over their lifetime. Typically, examples of scenarios might include 100% use of guaranteed income vehicles to 100% non-guaranteed vehicles and any combination of the two. The results take into account volatility risk as well as return. Armed with that analysis, the client can then choose the scenario that they are most comfortable with.”
“This latest research indicates that, generally, annuities should be targeted to those that already have more than enough money to meet their income needs for the rest of their life, whereas the vast majority of middle-income retirees should avoid them,” Voudrie pointed out. “The key issue is math, and each retiree needs to objectively compare and test the various outcomes under a variety of different types of portfolio investments.”
Voudrie refers to this statistical analysis as “Results In Advance Retirement Planning” because it tests what someone is doing now, whether or not it will work, and how it can be improved. “The scenarios are completely driven by the client,” he said, “the purpose of the test is to give them the information they need to make an informed decision.”
A financial services industry veteran with 20 years’ money management experience, Jeff Voudrie, CFP® Professional, is a new breed of private money manager. Using sophisticated electronic monitoring and software, Jeff works with you to create a personal investments management portfolio that reflects your lifestyle goals and risk tolerance. He specializes in stable growth and prudent profits while applying a robust, patented risk management processes. When you work with Jeff, you have the security of knowing that your life savings is getting the attention it deserves.
Full report available here: https://www.cbo.gov/sites/default/files/cbofiles/attachments/44374_MortalityProbabilities-Reichling_2_0.pdf.
Jeff Voudrie, a financial planner in Johnson City, TN has been interviewed by The Wall Street Journal, CBS MarketWatch, The London Financial Times and the Christian Science Monitor. He is a former syndicated newspaper columnist and the author of two ground-breaking books: How Successful Investors Tripled the Return of the S&P 500 and Why Variable Annuities Don’t Work the Way You Think They Work. He accepts a limited number of new clients in his personal investments management practice. He and his wife Julie live with their seven children in Johnson City, TN. He is heavily involved in his local church and has done missionary work in Hungary and Cambodia.
Common Sense Advisors
105 Keeview Court
Johnson City, TN 37615