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Sep 19, 2017 by |

California and Alameda County Annuity and Financial Elder Abuse Attorneys: Annuities for Retirement


Understanding the Downside

Hidden Costs

When deciding whether to buy a deferred annuity with your retirement savings, ask yourself whether you need another annuity, because you already have one in the form of Social Security. And if you’re fortunate enough to look forward to a pension at work, you may already have two. If the combination of the two checks is still less income than you think you’ll need in retirement, don’t assume that a deferred annuity is the answer. We at Evans Law Firm do not give investment or tax advice, but we have years of experience with annuities and financial elder abuse and caution you to consider all the facts before you purchase an annuity. There are significant downsides with these complicated investments especially for seniors and agents and advisors often prey on seniors in marketing these products. If you or a loved one has suffered a loss from an unsuitable annuity or other form of financial elder abuse in Alameda County or elsewhere in California, call the Evans Law Firm at (415)441-8669 and we can help.

Insurance agents and advisors promote the tax deferral benefits of deferred annuities. Tax deferral is highly beneficial but experience shows that commissions, fees, and surrender penalties in annuities may eat up all the upside of deferral. Always consider that IRAs and 401(k) plans are similarly tax-deferred without so many hidden fees. Deferred annuities may not be the best vehicle for tax deferral. And every time you purchase any kind of annuity or life insurance, the producing agent makes a big commission. Commissions are paid out upfront and it takes a long time (and a healthy return) to recoup that money. Annual fees and extra charges for additional benefits (known as “riders”) under deferred annuities add up too.

The biggest downside, however, may come in the form of surrender penalties under the contract. With any deferred annuity, your money is tied up for a long time and any early withdrawal is subject to hefty surrender charges. This is especially dangerous for seniors who may need their money before their policy matures. Even if you hold out to the end and refrain from early withdrawals, the fees and expenses in these accounts, together with the upfront sales commission, will erode your return significantly if not wipe it out. Bottom line is, beware. Deferred annuities are extremely complicated, and this is just a brief overview. Always seek the advice of an advisor who does not stand to gain from any purchase and always consult your tax advisor. There may be significant tax consequences for rollovers, purchases and withdrawals.

Some of the major annuity and life insurance providers in California are:

Contact Us

If you or a loved one has suffered loss on an unsuitable annuity or paid surrender charges on a deferred annuity or any other annuity or has been the victim of financial elder abuse in Alameda County or any California county, contact the Evans Law Firm annuity attorneys at (415) 441-8669, or by email at Our attorneys have experience with complex financial contracts and large insurance companies. We can help guide your case through a FINRA arbitration, jury trial or toward an equitable settlement. We handle cases involving physical and financial elder abuse, qui tam and whistleblower law, nursing home abuse, whole life insurance and universal life insurance, and indexed, variable, and fixed annuities.

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