The real scam, currently being levied against baby boomers that no one is talking about, is the irresponsible manner in which financial journalist confuse and misconstrue fact, with their attempts at sensationalism. It seems that the only thing that is important to journalists, who write about the financial marketplace, is to hit the current “hot topics” and use rhetorical buzz words and phrases as many times as possible. Just like popular financial periodicals love to sell magazines with covers claiming to have the scoop on the "TOP TEN” mutual funds every investor should own, newspapers and dot com journalist are more concerned about getting attention to their articles, than factually representing their information.
USA Today published an article in 2001 by Sandra Block entitled, "An annuity could protect savings." This article discussed the common concerns held by many retirees that they could outlive their money, and then went on to explain how annuities can be used to guarantee a lifetime of income, using whatever amount of assets someone possesses. Ms. Block even described an immediate annuity as a good substitute for the lack of a company pension plan. Her summary indicates that if a retiree is “risk-averse,” or expects to live a long time, an immediate annuity is ideal for them. Remember that in 2001, the stock market was dropping like a rock, and retirees were scrambling to salvage whatever elements of safety they could for the declining balances of their nest eggs.
Today I read a new article in the USA Today online, by Kathy Chu, that "Baby boomers make rich targets," where she states that annuities, (with no distinction of type), are inappropriate for seniors, which she lumped together with oil and gas investments and promissory notes, and later implies that annuities are marketed deceptively by high pressure salespeople using the dreaded “free lunch seminar.” Her generalizations also put annuities in the same category as investment fraud, Ponzi schemes, and scams such as “fake contests”
In five short years, USA Today writers have gone from recommending annuities for seniors as an excellent tool for safely managing assets and guaranteeing lifetime income, to condemning them and all who sell them as “inappropriate for seniors.” What has changed to cause this new perspective by the journalists? While fixed and indexed annuities have evolved somewhat in recent years, they are still the same, safe insurance products they were when Sandra Block so highly recommended them for seniors. The only thing that has changed here are the whims and the attitude of the financial news media. Their beloved stock market is much healthier now than it was in 2001, and the current media trend is to bash annuities, so these journalists are just mindlessly following the leader, whoever that might be.
Fortunately for the baby boomers, they are not the bumbling idiots these financial journalists make them out to be, sitting with pockets full of money, just waiting for someone to take advantage of them. This generation did not accumulate the largest block of private capital in the nation by being stupid or being easily led astray. Baby boomers are as savvy and as well informed as any other, and the fact that the sale of annuities only continues to rise is an indication, not of the increase in strong armed sales tactics by insurance salespeople, but rather, it is a validation of the truth that Sandra Block spoke clearly, five years ago. Annuities are extremely appropriate for seniors to use in their retirement planning if they want to avoid the uncertainty and risk of securities, and provide the only private means to insure that no matter what their life expectancy, their annuity can provide them an income they can never outlive.
Friday, August 11, 2006
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