Podcast Summary: Suze Orman's Women & Money (And Everyone Smart Enough To Listen) Episode: Suze School: Fortifying Your Financial Freedom and (Again) Understanding Annuities
Release Date: May 25, 2025

Introduction

In this episode of Women & Money, Suze Orman and her co-host, Suzio, delve into the importance of financial security and provide an in-depth exploration of annuities. Balancing personal reflections on Memorial Day with practical financial advice, the episode offers listeners actionable steps towards achieving financial freedom and a comprehensive understanding of various annuity products.

Section 1: Memorial Day Reflections and Financial Freedom Steps

Honoring Sacrifices and Building Financial Security

The episode opens with Suzio reflecting on Memorial Day, emphasizing the significance of honoring the sacrifices of military personnel. She shares a heartfelt tribute to veterans, highlighting the true cost of freedom and inspiring listeners to take meaningful steps towards financial security.

Three Steps Towards Financial Freedom

Suzio introduces three actionable steps for listeners to fortify their financial freedom:

1. Reflect on Your "Why"
   [02:54]
   Suzio encourages listeners to write down the personal freedoms they value most, whether it's providing for children, supporting a cause, or achieving peace of mind. She prompts them to delve deeper by answering, "Why do these freedoms give you the fuel to stay committed?"

2. Take Empowering Action
   [03:53]
   Listeners are urged to commit to a single, concise financial action. Examples include automating retirement contributions, reviewing beneficiary designations, or setting up essential legal documents. This step serves as a tribute to those who sacrificed for their freedom.

3. Honor Through Generosity
   [05:01]
   Suzio emphasizes the importance of giving back during Memorial Day. Whether through donations to veterans' organizations or volunteering, acts of generosity resonate with the spirit of service being commemorated.

Notable Quotes:

• "Freedom isn't free. It's earned through the bravery, commitment, and selflessness of others." — Suzio [01:09]
• "People first, then money, then things." — Suzio [49:26]

Section 2: Suze School on Annuities

Understanding Annuities: Types, Benefits, and Drawbacks

Suze Orman leads an extensive discussion on annuities, their types, and her perspectives on their suitability for different financial situations. She clarifies misconceptions and provides a nuanced view of how annuities can fit into one's financial strategy.

1. What is an Annuity?

An annuity is a contract with an insurance company where the investor (annuitant) receives tax-deferred growth on their investment. Annuities can be qualified (held within retirement accounts) or non-qualified (held outside retirement accounts).

• Qualified Annuities: Funded with pre-tax dollars within retirement accounts.
• Non-Qualified Annuities: Funded with post-tax dollars outside retirement accounts.

2. Types of Annuities and Suze's Perspectives

a. Single Premium Deferred Annuities

• Description: A lump-sum investment that grows tax-deferred over a specified period.
• Pros: Guaranteed minimum interest rates, suitable for those planning to reach age 59½ during the surrender period.
• Cons: Potential surrender charges if funds are withdrawn early.
• Suze's Take: "Single premium deferred annuities are usually far better for people who know they are going to turn 59 and a half or older in the year that the surrender charge is up." [27:00]

b. Variable Annuities

• Description: Investments tied to mutual funds, offering potential for higher returns but with more risk.
• Pros: Tax-deferred growth, flexibility in fund selection.
• Cons: High fees, surrender charges, mortality and expense fees, taxable earnings upon withdrawal.
• Suze's Take: "Variable annuities also come with surrender charges, and if you take money out before the age of 59 and a half, the 10% penalty by the government." [38:33]

c. Indexed Annuities

• Description: Linked to market indexes like the S&P 500, offering a balance between fixed and variable returns.
• Pros: Potential for higher returns than fixed annuities, some protection against market downturns.
• Cons: Complex terms, capped returns, can be difficult to understand.
• Suze's Take: "Many people like indexed annuities. You can do that if you want. They have less risk than a variable annuity." [41:26]

d. Income Annuities (Immediate Annuities)

• Description: Provide guaranteed monthly income for life or a set period, starting immediately after purchase.
• Pros: Reliable income stream, suitable for retirement.
• Cons: Inflexible, potentially lower total returns, no access to principal.
• Suze's Take: "I do not have a problem with you doing that right now. Just look at the ins and outs of them." [42:43]

e. Qualified vs. Non-Qualified Annuities

• Qualified: Held within retirement accounts, offering tax-deferred growth.
• Non-Qualified: Held outside retirement accounts, also offering tax-deferred growth but with different tax implications upon withdrawal.
• Suze's Take on Qualified Annuities: "Variable annuities within a retirement account is absolutely, in my opinion, just stupid." [44:53]

3. Key Considerations with Annuities

• Surrender Charges: Fees for early withdrawal, typically decreasing over the surrender period.
• Tax Implications: Ordinary income tax on withdrawals, 10% penalties if under age 59½.
• Insurance Company Stability: Annuities are not FDIC insured; state guarantee associations provide limited protection.
• Investment Alternatives: Suze advocates for investing in mutual funds or ETFs outside of annuities for greater flexibility and tax advantages.

Notable Quotes:

• "Don’t generalize on Suze just hates annuities. You can generalize on I hate variable annuities because I don't understand them at all." — Suzio [07:59]
• "The spirit of service, which is really what we're commemorating tomorrow, is what I want you to do today." — Suzio [05:59]
• "Most annuities pay a very hefty commission to the financial advisor who is selling you that annuity." — Suzio [15:36]
• "People first, then money, then things." — Suzio [49:26]
• "Personal finance is personal to every single person." — Suzio [46:54]

Conclusion: Tailoring Financial Strategies to Individual Needs

Suze Orman and Suzio emphasize that financial decisions, especially regarding products like annuities, should be personalized. While annuities can offer benefits in specific circumstances, they may not be suitable for everyone. Listeners are encouraged to thoroughly understand the terms, fees, and implications of annuities and consider alternative investment options that align better with their financial goals and circumstances.

Final Takeaway: “There’s no such thing as Suze hates everything. Personal finance is personal to every single person. So don’t try to take somebody else’s advice and make it be beneficial for you.” — Suzio [46:45]

Additional Resources

• Women & Money App: Access past episodes, ask Suze questions, and engage with the community.
• YouTube Channel: Watch official content for more insights and tips.
• Ask Susie: Submit personal finance questions via email for potential discussion on future episodes.

Note: This summary is for informational purposes only and does not constitute financial advice. Consult with a financial advisor for personalized guidance.