Are Multi-Year Guaranteed Annuities a Smart Choice in a Rising Rate Market?

In this episode, Jason Gabrieli, a certified financial planner at HFM Investment Advisors, discusses the increasing interest in multi-year guaranteed annuities as interest rates rise. With more clients and insurance agents inquiring about these products, Jason dives into the pros and cons, potential pitfalls, and considerations to make before adding them to your financial plan. If you’re curious about annuities or have received pitches recently, this episode will provide you with essential information to help you make informed decisions.

Tune into this episode to also learn:

• How higher interest rates impact financial products like annuities.
• The differences between various types of annuities and their specific uses.
• Key considerations for incorporating multi-year guaranteed annuities into your financial plan.
• Potential disadvantages of annuities, including tax implications and reinvestment rate risks. 

What we discussed

• [00:00:30] Introduction to the episode and topic of multi-year guaranteed annuities.
• [00:01:32] Overview of how rising interest rates impact savings and investment products.
• [00:02:37] Explanation of multi-year guaranteed annuities and their function compared to CDs.
• [00:05:32] Pros and cons of multi-year guaranteed annuities, including principal protection and fixed rate benefits.
• [00:08:30] Tax implications of annuities and how they differ from other investment vehicles.
• [00:09:32] Inflexibility and surrender charges associated with early withdrawals from annuities.
• [00:10:35] Reinvestment rate risk and considerations for long-term financial planning.
• [00:11:40] Determining if an annuity fits into your financial plan based on the purpose of the money.
• [00:13:30] Final thoughts on choosing financial products that align with your financial goals.

3 Things To Remember

1. Annuities can provide principal protection and fixed returns but are not always the best fit for long-term investments.
2. Understand the tax implications of annuities, especially when withdrawing growth before principal.
3. Evaluate your financial plan carefully to ensure the products you choose align with your short-term and long-term goals.

Memorable moments:

(00:02:59) “It’s like the insurance industry’s version of a CD basically.”

(00:07:03) “Annuities are tax deferred vehicles… so you don’t get a 1099 every year saying it grew by this much.”

(00:09:22) “If you try to take that money out beforehand, the insurance company is going to take a charge on the back end and only give you part of it back.”

Useful Links

Connect with Jason Gabrieli: jgabrieli@HFMadvisors.com | LinkedIn 

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HFM Investment Advisors, LLC is a registered investment adviser. All statements and opinions expressed are based upon information considered reliable although it should not be relied upon as such. Any statements or opinions are subject to change without notice. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. All investments involve risk and are not guaranteed. Information expressed does not take into account your specific situation or objectives and is not intended as a recommendation appropriate for any individual. Listeners are encouraged to seek advice from a qualified tax, legal, or investment advisor to determine whether any information presented may be suitable for their specific situation. Past performance is not indicative of future performance.