Why Sophisticated Investors Are Turning to the Safety of Conservative Annuities to Invest in Stocks Now?
As a financial advisor, I’ve noticed a growing trend: seasoned investors are turning to conservative annuities - not because they’re unsophisticated, but because they understand something important.
While DIY investing is popular, I often compare it to DIY surgery - technically possible, but rarely advisable. The data is clear: the single biggest drag on portfolio performance is often the investor themselves. It’s human nature to remember our winners and forget our losers. But the markets remember everything.
Investors aren’t trained to manage the emotional roller coaster of fluctuating portfolio values. And what we do know with certainty is that the market will decline again. That’s what markets do.
Consider these historical drawdowns:
- 1970: -36%
- 1974: -48%
- 1980: -17%
- 1982: -27%
- 1990: -20%
- 2002: -49%
- 2009: -57%
- 2020: -34%
For retirees who don't want to return to work - or who simply want peace of mind - conservative annuities offer an attractive solution. A $1,000,000 portfolio dropping by $400,000 can be more than unsettling. It can be life-altering. Annuities, when used appropriately, can provide the assurance many people are looking for.
That said, as with anything, moderation matters. Annuities aren’t a cure-all. A thoughtful approach - backed by math, experience, and personalization - is critical.
The best starting point for any retirement plan is understanding your expenses. From there, we build a foundation: covering essential costs with guaranteed income sources such as Social Security, pensions, and, when appropriate, annuities.
I often remind clients: the tax man never forgets me, and my property tax bill arrives right on schedule. It’s a powerful feeling to know you have reliable income to meet those obligations. Once we get beyond the $10 million net worth level, we can begin addressing systems risk, currency exposure, and broader macro concerns - but the basics must come first.
If you have any questions about how to guarantee income in retirement - or would like a second opinion on your plan - please don’t hesitate to contact me.