The Biggest Investment Risk of Your Life

One of your biggest investment risks in retirement is not knowing what retirement will look like. What I have found in working with retirees is that their initial idea of what retirement will look like is far different than how it turns out to be, for better or worse. That’s why it’s smart to give yourself financial options and that’s one of the many drawbacks of annuities. In addition to their high fees and high pressure sales pitch it’s the locked in forever nature of annuities that can be most harmful to your family’s well-being.

A former Government adviser said many people would have to live until they are 90 before their annuity becomes good value, and that the policies were so dangerous they should carry a risk warning.

Ros Altmann, a pensions expert, said thousands of annuity holders had no idea their husband or wife may not get their money if they die because their policy may not cover a spouse or partner. And she urged regulators to “wake up” and address the “current market failures.”

She said: “Far from being a low risk purchase, buying an annuity could be the biggest gamble you ever take in your life. An annuity purchase is a long-term investment decision, which risks losing much or all of your money, yet people are given no risk warnings about the dangers of buying.

“If you die soon after you buy a standard, single-life annuity, your pension fund will go to the insurance company, not your loved one.”

She added: “Buying an annuity is considered the ‘safe’ thing to do when reaching retirement. This is misguided. The ‘safety’ only refers to the fact that the amount of income will be set for the rest of your life. But the capital itself is at risk.”

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E.J. Smith - Your Survival Guy

Preparing your investments and family for when disaster strikes.

E.J. Smith is the Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention. E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com. Sign up here to receive all the best content from Richardcyoung.com each week.