The MFGS Chronicle – May 2015
Annuities Are More Popular Than You Think
It seems to happen all the time. A product or service is an unknown, and then suddenly everyone has it.
For example, it wasn’t that long ago that we were using film to take pictures. Then suddenly, everyone had a digital camera. This has happened with technology after technology – cell phones, the Internet, social networking websites, you name it!
You may think that no one owns annuities. You may not even know what annuities are. But annuities are more popular than you think.
Let’s compare annuities to something more familiar: your bank. According to the FDIC as of December 31, 2009, if we added up all the domestic deposits in U.S. banks – checking accounts, savings accounts, money market accounts, CD’s, and so on – from all their customers, both individuals and businesses, it adds up to $7.7 trillion. Needless to say, that’s an impressive number, and it reflects the banking industry’s massive investment in local staff and branch offices.
So, where would you think annuities come out? Maybe a $0.1 trillion? Maybe $0.5 trillion, at best? After all, it seems like nobody knows much about them.
Try $2.2 trillion, per the American Council of Life Insurers. That’s right: despite the fact that you may know very little about annuities, a lot more people own them than you think.
Why are they so popular? Annuities are attractive financial products that offer certain advantages over bank products. Annuity products tend to offer a very appealing combination of safety features and higher interest crediting potential, a combination that many consumers desire for their retirement savings.
Ask me about how annuities can help you prepare for retirement. You might be surprised.
Wayne McLeod, Safe Money Adviser
Affiliated with National Brokerage