My Financial Advisor Wants Me to Buy an Annuity—Is That a Good Idea?

Summary

Ramsey Everyday Millionaires: "My Financial Advisor Wants Me to Buy an Annuity—Is That a Good Idea?"

Date: April 29, 2026
Hosts: Dave Ramsey, Chris Hogan
Caller: Bill from Detroit, Michigan

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Episode Overview

This episode tackles a core concern facing many approaching retirement: Should you buy an annuity if your financial advisor recommends it? The hosts walk through a real-life scenario with Bill, a 62-year-old listener with substantial retirement savings. The discussion breaks down the pros and cons of annuities, mutual funds, Roth conversions, and what trustworthy financial advice should sound like—arming listeners with practical, honest guidance.

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Key Discussion Points & Insights

1. Bill’s Situation and Annuity Concern

• Bill has about $850,000 spread between his 401(k) and other investments and is two years from planned retirement.
• His advisor is pushing him toward an annuity, sparking his uncertainty.

2. Ramsey’s View on Annuities

• Dave Ramsey immediately cuts in with a strong stance: No to annuities.
  • “Nope. Your advisor probably does because they make a lot of money off of annuities. Not saying that he's a bad guy, but you...” (00:45 - Dave Ramsey)
  • The consensus: Annuities generally benefit the seller through hefty commissions, often at the client's expense.
  • A rare exception might be if all other retirement options are fully maxed out—but that’s not most people’s case.

3. Where to Invest Instead

• Mutual Funds are favored over annuities, focusing on four core categories for diversification:
  • Growth
  • Growth and Income
  • International
  • Aggressive Growth
• Dave: “Just keep them in mutual funds. You'll get a better rate of return, lower fees and...it's just a better way to invest your money than being stuck in an annuity.” (01:36 - Dave Ramsey)

4. Tax Questions & Roth Conversions

• Bill asks about rolling some savings into a Roth IRA.
  • Dave explores Bill’s numbers ($117,000 in an IRA, $60,000 in savings).
  • It's often beneficial to start a gradual Roth conversion, cash-flowing tax payments over several years—especially given Bill’s emergency fund.
  • “There is a tipping point...depending on tax bracket, everything, that it may not be worth it. But for a lot of time, it is worth it to start rolling over, even if it's a little bit each year.” (02:50 - Dave Ramsey)

5. Emotional Readiness & Choosing the Right Advisor

• Chris Hogan acknowledges Bill’s anxiety about retiring single:
  • “Bill, I've never met somebody who thinks he's doing so bad.” (02:41 - Chris Hogan)
  • Reassurance: Bill is well-prepared, and his caution is healthy.
• Key Advice: Advisors should teach, not sell.
  • “You want to understand everything so that you're not feeling alone and scared...the right financial advisor, you're going to go, oh, I know exactly what I should do and when I should do it, why I should do it, how. And I'm calling the shots.” (03:55 - Chris Hogan)
• The hosts steer Bill to a Ramsey SmartVestor Pro—trusted advisors who prioritize teaching and transparency.

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Notable Quotes & Memorable Moments

• “Nope. Your advisor probably does because they make a lot of money off of annuities. Not saying that he's a bad guy, but you...” (00:45 - Dave Ramsey)
• “Just keep them in mutual funds. You'll get a better rate of return, lower fees and...it's just a better way to invest your money than being stuck in an annuity.” (01:36 - Dave Ramsey)
• “Bill, I've never met somebody who thinks he's doing so bad.” (02:41 - Chris Hogan)
• “Advisors that we recommend...they have a heart of a teacher. They'll be able to sit with you and really look at this and dig into the numbers.” (03:20 - Dave Ramsey)
• “Have a couple conversations and move to somebody that you feel really, really good with that they're teaching you, not selling you.” (03:55 - Chris Hogan)

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Important Timestamps

• 00:18 – Introduction to Bill’s question and financial background
• 00:45 – Dave firmly says “No” to annuities; explains his reasoning
• 01:36 – Discussion of mutual funds and the four recommended categories
• 02:22 – Bill asks about Roth rollovers; Dave breaks down Roth conversions
• 02:41 – Hosts reassure Bill about his retirement prep
• 03:20 – Why SmartVestor Pros are different; focus on educational approach
• 03:55 – Final advice on finding an advisor who teaches, not sells

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Summary Takeaways

• Don’t buy financial products you don’t fully understand or that primarily benefit your advisor.
• Annuities are rarely the best option unless all other investment avenues are already maxed out.
• Stick with diversified mutual funds for better returns and flexibility as you approach retirement.
• Consider Roth conversions thoughtfully, cash-flowing any tax consequences over several years.
• Find advisors who teach transparently, empowering you to make your own informed choices about your money.

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For listeners nearing retirement or feeling pressured to buy “hot” financial products, this episode delivers direct, actionable wisdom—backed by empathy and decades of experience.

Transcript

[Dave Ramsey]

Foreign.

[Chris Hogan]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor all right, let's go to Bill in Detroit, Michigan. Bill, how can we help?

[Bill]

Hey, how you doing? Ken, Rachel, thanks for taking my call.

[Dave Ramsey]

Absolutely.

[Chris Hogan]

What's going on?

[Bill]

I have about 850,000 in my 401k and my other. Other investments. And my advisor wanted me to. I was like, I don't know if that's good or not. I'm 62. I want to retire in a couple years, and my advisor is wanting me to invest in an annuity. Is that something I should think about? Don't do that.

[Dave Ramsey]

Nope. Your advisor probably does because they make a lot of money off of annuities. Not saying that he's a bad guy, but you.

[Chris Hogan]

Yeah.

[Dave Ramsey]

No annuity. Yeah. Not a great product. I mean, there's var, variable, and fixed variable. There's certain times that maybe. But that's after everything is maxed out and you have no other options for retirement because you have so much and everything else. And maybe you want to do a little thing over here, but no, The. The short answer is no, I wouldn't. I think you. You have it in a good spot. Is. Are they in mutual funds within the 401k?

[Bill]

Well, I don't think. I think I gotta. I gotta pay taxes on all that stuff. I'm sure. I. I think it's in a. I got a mutual fund in a bank, and I've got a couple different styles, I guess, and the ones are just through work. It's a 401k regular work. 401k where they match and stuff like that.

[Dave Ramsey]

Yeah. Yeah. Okay. Yeah. Well, I would. Yeah. Just to look in. Because retirement is coming up for you to make sure that what everything is invested in feels like a good spread. You know, we kind of always talk about four different types of mutual funds so that you have enough diversification. So there's growth growth and income, international and aggressive growth. So those are kind of the four buckets that you can look at within the mutual fund space, which is great. But. No, I would just keep them in mutual funds. You'll get a better rate of return, lower fees and. Yeah, and it is. It's just. It's. It's just a better way to invest your money than being stuck in an annuity.

[Bill]

Okay. I shouldn't look into rolling over into a Roth or anything like that. How some people do that.

[Dave Ramsey]

Okay, well, so that for the. I. Yeah. So for the IRA. How much is in the IRA versus the 401k?

[Bill]

The IRA has 117,000.

[Dave Ramsey]

117. Do you have cash available to pay the taxes?

[Bill]

Oh, yeah, yeah. If I have 60,000 in my savings account, which is dumb, I know but.

[Dave Ramsey]

No, no, no, it's not dumb. That's like good emergency funds.

[Chris Hogan]

Bill, I've never met somebody doing who thinks he's doing so bad.

[Bill]

You're. Well, I'm by myself and I'm pretty scared about retiring.

[Chris Hogan]

You're doing wonderful.

[Dave Ramsey]

Really good, Bill. Yes, yes. Well, I would look to see. Yeah, I mean, the Roth conversion. There is a tipping point of if you have too much and depending on tax bracket, everything that it may not be worth it. But for a lot of time it is worth it to start rolling over, even if it's a little bit each year. So I would still keep some cash on hand. That's your emergency fund. And you may need less than 60. I don't know. But you could use some of that. I would contact the smartvestor pro, Bill. They're advisors that we recommend and they probably will not be pitching annuities and all that. So they'll be able just to look at your situation and really help from a strategic perspective with okay, your money where you are to help kind of guide the next step. So I really would. So check out our a SmartVestor Pro, one that's in your area. Cause they will be able to have. They have a heart of a teacher. They'll be able to sit with you and really look at this and dig into the numbers. But I'd say no to annuity and yes, probably start rolling over to a Roth. Maybe cash flowing, some of the taxes.

[Chris Hogan]

Yeah. And Bill, thanks for the call and Christian will help you find that information on the website where you can find some smartvestor pros in your area. Not a fan of your financial advisor because they're selling you a bad product. And remember on this you want to understand everything so that you're not feeling alone and scared and the right financial advisor, you're going to go, oh, I know exactly what I should do and when I should do it, why I should do it, how. And I'm calling the shots. And so that's why we want you. That's your homework assignment. Have a couple conversations and move to somebody that you feel really, really good with that they're teaching you, not selling you.