By Brent Matthew
Annuities are popular investments for a reason. They provide a reliable income stream in retirement, and they can be customized to fit your situation. However, not all annuities work the same way, and they’re not meant to be set-and-forget investments, either.
If you’re not sure how your annuities are performing, here’s a look at how an annuity review might help you keep your retirement plan on track.
The Reality of Annuities
It can be tempting to think of an annuity as a zero-maintenance investment. But the truth is that an annuity is a contract with moving parts that shape your income stream in retirement. These features are especially important:
- Income elections
- Timing requirements
- Fees and riders
- Payout structures
If you never take the time to conduct an annuity review, you’re blindly trusting that your annuity has been perfectly set up from the beginning. In my experience, that’s a dangerous assumption.
Why You Need an Annuity Review: A Cautionary Tale
Every so often, one of my clients expresses doubt that they need an annuity review, especially if they purchased the annuity many years ago. They might reason that because they haven’t changed anything, there’s no need to revisit their purchase.
I often tell these clients about a real-life example of someone I met who had to deal with unnecessary stress because of an issue with his annuity. This investor had purchased an annuity several years back. He had an important monthly obligation, and he was planning on using income from the annuity to cover it.
However, when the time came, the investor didn’t see the income he expected. After doing some investigation, he realized that the expected annuity income was never properly activated within the required window. He had to scramble to cover the obligation on very short notice.
The whole scenario could have been prevented with an annuity review.
What Actually Happens in an Annuity Review?
When I conduct an annuity review for a client, I’m not just looking for things that have been overlooked. I’m also evaluating your annuities in the context of your broader financial road map. That way, if your situation, finances, or goals have changed, we can make adjustments now.
Here are a few elements I pay special attention to during an annuity review.
Income Timing
When you purchase an annuity, you must make a specific election to start receiving income at a certain time. I verify that your elections have been completed properly and that they still match your financial plan.
Fees and Riders
When you buy an annuity, you may be able to purchase optional features. I can review your coverage and help you decide whether it still makes sense to pay for riders.
Beneficiaries
A common misconception is that annuities pass on to family members after your death. This is sometimes the case, but not always. I can help you understand how your annuity contract is structured and what that means for your beneficiaries.
Ready for an Annuity Review?
When it comes to annuities, it pays to be proactive. An annual annuity review can help you identify potential issues and address them before they cause problems. As a fiduciary firm, Scottsdale Wealth Advisory acts in your best interests when helping you plan for retirement.
If you want to review annuities you already have or are looking for guidance before you buy one, contact us today. To schedule your complimentary financial coaching session, call (480) 247-9090, email info@SWAFirm.com, or book directly at calendly.com/BrentMatthew.
Frequently Asked Questions About Annuity Reviews
What is an annuity review, and why is it important?
An annuity review is a process of evaluating your annuity contract to confirm it aligns with your current financial goals, income needs, and retirement plan. Regular reviews can help identify missed elections, unnecessary fees, or features that no longer fit your situation. As a fiduciary firm, Scottsdale Wealth Advisory works with clients to review these details and help ensure their annuities support their broader retirement strategy.
How often should I conduct an annuity review?
It’s generally a good idea to conduct an annuity review at least once a year or whenever you experience a significant life or financial change. This helps verify that your income timing, beneficiaries, and contract features are still appropriate.
Can a financial advisor review an annuity I already purchased somewhere else?
Yes, an advisor can review an annuity you already own, even if it was purchased elsewhere. At Scottsdale Wealth Advisory, we regularly analyze existing annuities to help clients better understand how their contracts work and whether they still fit their overall plan.
What should I look for during an annuity review?
During an annuity review, you should evaluate income elections, fees and riders, beneficiary designations, and how the annuity fits into your overall financial plan. Working with a professional can provide additional clarity, and Scottsdale Wealth Advisory helps clients assess these components as part of a comprehensive, personalized financial plan.
About Brent
Brent Matthew is the founder and CEO of Scottsdale Wealth Advisory, a fiduciary retirement planning firm specializing in tax-efficient financial plans and smart asset allocations for pre-retirees and retirees. He is currently working toward his CFP® designation and holds his Series 65 license and Arizona Life and Health Insurance Producers License.
Advisory services are offered by Scottsdale Wealth Advisory, LLC, an Investment Advisor in the State of Arizona. Insurance products and services are offered through Scottsdale Wealth Advisory, LLC. Scottsdale Wealth Advisory, LLC is not affiliated with or endorsed by the Social Security Administration or any government agency, and is not engaged in the practice of law. Be sure to consult with a licensed financial professional to confirm the accuracy of the insurance product you are considering.
