People sometimes ask me, "Greg, how do you decide what to recommend?" Fair question. So let me show you exactly what I look at — every single time.
1. The income gap.
What do you need every month, and what do Social Security and any pension reliably cover? The difference is the gap. If there's no gap, you may not need an annuity at all — and I'll say so. If there is one, that number tells me how much money should be doing the "show up every month" job and how much can stay invested.
2. The time horizon.
When does the income need to start, and how long does the money need to stay put? If you need every dollar in three years, most annuities are the wrong tool. If you can set aside a portion for five to ten years, the picture changes. I'm matching the product's surrender schedule to your real timeline — not the other way around.
3. The carrier.
Who's on the other side of the contract, and will they be there in 25 years? I look at financial strength ratings (A- or better from A.M. Best is my floor), how long they've been paying claims, and their reserves. A great contract from a weak company isn't a great contract.
What's not on the list.
Notice I haven't mentioned caps, bonuses, or which product has the flashiest brochure. Those come last, and only after the first three line up. If someone starts with the product, they've skipped the part that matters.
If you'd like me to walk through these three with your numbers, that's exactly what a first call is.
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Author of Indexed Annuity Secrets and founder of Pacific Ridgeway Insurance Solutions in San Diego. Navy veteran. Licensed financial professional, CA #4132743.
Fixed indexed annuities are insurance products, not investments. Guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. This article is for educational purposes only and is not financial, investment, tax, or insurance advice.