Jill on Money with Jill Schlesinger

Episode: My Planner Is Suggesting I Buy an Annuity
Date: August 18, 2025

Episode Overview

In this episode, host Jill Schlesinger, CFP®, fields a listener call from Mary, a 73-year-old psychotherapist in Washington facing a big financial decision: her new advisor is recommending she purchase a fixed index annuity using her retirement savings. Jill breaks down what annuities are, the complexities and costs involved, and gives actionable advice on what Mary (and listeners in similar situations) should do next. The conversation is jargon-free, honest, and supportive, offering clarity around annuities and the importance of skepticism before committing to complex financial products.

Key Discussion Points & Insights

1. The Listener’s Situation: Mary’s Financial Snapshot

• Mary: 73 years old, single, still working as a private practice psychotherapist.
• Income: About $100k/year from her practice, plus ~$43k/year from Social Security.
• Expenses: $5,000–$8,000/month in the Pacific Northwest but comfortably covered by current income.
• Assets:
  • Vanguard SEP IRA: $181,126
  • Vanguard Roth IRA: $110,518
  • High-yield savings: $23,808
  • Home: Value $700k–$750k; remaining mortgage ~$45k at 3.5%
• Recent decision: Under pressure from a new financial planner, Mary has already transferred money to buy a Delaware Life fixed index annuity (True Path Income), but is within the “free look” cancellation window.

2. Understanding the Annuity Recommendation

• Mary’s new planner pitched a fixed index annuity with features like “downside protection” and “guaranteed income for life,” as well as a chronic illness multiplier rider.
• Jill’s initial reaction:
  • “Recommended is always a funny thing. So you were pitched?” (04:12)
  • Annuity product is framed as “protecting money from market downturns” and “tax-deferred growth.”
  • The planner proposed tapping both SEP and Roth IRAs for the purchase.
• Mary’s worry: Fear about “having too little money saved” and anxiety around outliving her assets.

3. Jill’s Dissection of the Annuity Pitch (08:32, 10:35)

• Complexity & Costs:
  • “Protect your money is a very funny term to use when you’re talking about an investment… They’re not protecting anything, right? It’s still risky.” (08:32)
  • The protection comes from expensive riders and fees.
  • Complex products often benefit the seller more than the buyer.
• Tax Deferral Is Redundant:
  • “The idea of paying for an annuity to give you a tax-deferred product makes no sense because this is already tax deferred.” (09:16)
  • Roth should never be used to fund an annuity.
• Liquidity & Flexibility:
  • Annuities tie up money and limit flexibility.
  • You can make monthly withdrawals from IRAs directly—no need for an annuity to “create a private pension.”
    • “You could just take some money out of your SEP account every month… Easy peasy.” (12:37)

4. Actionable Advice: Pause the Annuity (13:18–15:59)

• Exercise the ‘Free Look’ Right:
  • “I think you should stop right now. I think you should get your money back and say, ‘I’m exercising my free look ... I want the money back. I want more time to think about this and I’m going to get a second opinion.’” (11:22)
  • “You can still do this. … But I am not convinced this is the only way to get there. And I’d feel a lot better if you had somebody who is a fee-based financial planner look at this product and see whether or not it made sense for you.” (14:09)
• How to Handle the Call:
  • Write an email asserting the wish to cancel.
  • Read the email on the phone if nervous.
  • Insist on written confirmation.
  • “If you get a runaround, hold firm… ‘I may come back to you, but I’m not ready to proceed right now.’” (15:40)

Memorable Moments & Notable Quotes

Mary (04:01): "I was just recommended to buy an annuity from a new financial planner that I was. That I'm working with."

Jill (04:12): “Recommended is always a funny thing. So you were pitched?”

Jill (08:32): "Protect your money is a very funny term ... They're not protecting anything, right? It's still risky. ... The way they do that is they charge you a lot of money for the product."

Jill (09:16): "The idea of paying for an annuity to give you a tax deferred product, that makes no sense because this is already tax deferred and your Roth has already been taxed. So I would never put my ... Roth money in an annuity at all. No way."

Jill (12:37): "You could just take some money out of your SEP account every month. Like someone can help you do that."

Jill (11:22): "I have this rule in life which is the more complex it is, the less I'm interested in it."

Jill (14:09): “I’d feel a lot better if you had somebody who is a fee-based financial planner look at this product and see whether or not it made sense for you.”

Key Timestamps

• 03:56: Mary introduces her situation and the annuity pitch.
• 04:35: Financial overview (age, income, assets, housing).
• 07:45: Details on self-managing investments and concerns about adequacy of savings.
• 08:27: Mary summarizes the annuity pitch and product features.
• 10:35: Jill’s breakdown of annuity marketing vs. reality.
• 12:24: The “private pension” myth debunked.
• 14:09: The importance of an independent, fee-only second opinion.
• 15:20: Step-by-step instructions for exercising the free-look cancellation.

Tone & Takeaways

• Jill’s Voice: Direct, empathetic, practical, protective of the listener’s interests.
• Central Theme: Be wary of being “pitched” complex financial products, especially annuities, under the guise of protection and security. Simplify where possible; don’t mix tax-advantaged accounts like IRAs and annuities. Always pause and get an independent, preferably fee-only, second opinion before committing.
• For Listeners:
  • There is no shame in backing out of a financial commitment if you’re unsure.
  • Use the “free look” period and do your own research or seek fiduciary advice.
  • You can create a private pension-style drawdown from IRA accounts without expensive products.
  • If you feel pressured, or if a product seems overly complex, pause and seek objective help.

Additional Guidance

• Jill wraps up (16:01–16:32): Encourages Mary (and listeners) to act promptly and not be embarrassed to change their mind. Offers further support and invites more listener questions.
• Closing tip: Before signing up for an annuity or similar products, consult a fee-only financial planner.

Summary prepared for listeners seeking a thorough, actionable recap of the key insights from this episode of Jill on Money.