Dear Bob,

Today is the fifth anniversary of the day I retired and, little brother, I suddenly realized that you only have a little over five years to go until you get the gold watch. To help you avoid some of the mistakes I made I’m putting on my big brother cap to give you some advice (and before you roll your eyes, remember, I did talk you out of buying that Pontiac Aztek).

First, try to create a budget of what you think you’ll be spending after you retire (and don’t underestimate medical expenses). Second, get your estimated Social Security benefit from their website. And third, I know you’re not getting a pension, so buy an annuity to cover at least some of the shortfall between what you think your expenses will be and your Social Security income.

My biggest mistake was not buying a fixed annuity to help provide retirement income. I know, you’ve heard me say that with fixed annuities you don’t get high returns—and I won’t take that back, in the good years my investments do a lot better— but what I didn’t count on was the anxiety I created by not buying one.

Back in 2007 my agent suggested using part of my retirement assets to buy a fixed annuity which guaranteed that not only could Barb and I start receiving a regular income when I retired, but that the amount of the income would increase by a guaranteed amount each year until I started taking it. It was a sure thing and buying one meant receiving a dependable income for the rest of our lives. I didn’t buy one.

The reason was I thought I could do better. Granted, my timing stunk because the next year was the crash, but I hung in there and didn’t sell and by the time I retired in 2012 I had more in the investments than I would have had in the annuity. Win for me, right?

Here’s the problem. I’m supposed to withdraw money each year from my investments to use in enjoying my retirement. But I’ve been saving my entire life to make that pile grow… I just can’t bring myself to make it shrink. That advisor we used says we’re supposed to withdraw the same percentage each year for income. I don’t mind taking money out when it’s coming from gains, but the idea of taking money out when there are also losses really upsets me. I’ve gotten to where even the idea of possible future losses is making me pull less out of the pile. It’s having an effect.

We used to go out the last Thursday of every month with another couple for steaks and wine at the Fox & Foie Gras, but I’ve begged off the last few months. I’ve told the other couple we’re dieting, but the real reason is I don’t want to spend the money. Barb’s not happy—she said her vision of retirement wasn’t an ongoing stream of McDonald’s dollar menu selections and nightly television.

 Actually, that’s not the only reason we’ve stayed home. The other couple bought one of those annuities and I’m tired of listening to them talk about how nice it is to get a steady check that won’t go down regardless of what the stock market does, and how using part of their nest egg to buy the annuity was the smartest thing they did. I don’t want to hear that.

 The bottom line is retirement is supposed to be a time where can you finally relax and enjoy life, but because I’m always worrying about not having enough money for tomorrow we’re not enjoying today. Learn from me and buy that fixed annuity now.

 Your Big Brother 

Jack Marrion

Jack Marrion provides research and consulting services to insurance companies and financial firms in a variety of annuity areas. He also serves as director of research for the National Association for Fixed Annuities and as a research fellow for Webster University.

In 1994 he wrote a book to help banks market investment and insurance solutions to their small business clients. In 1996 he produced the first independent hypothetical return monthly publication comparing all index annuities on the market, and in 1997 created the first comprehensive report of index annuity sales, products and trends, “Advantage Index Product Sales & Market Report” (quarterly).

His insights on the annuity and retirement income world have appeared in hundreds of publications. In 2006 the National Association of Insurance Commissioners asked him to address their annual meeting and teach regulators the realities of index annuities. He was invited back in 2009 to talk to the NAIC about the effects of aging on senior decision-making. He is a frequent speaker at industry functions.

Prior to forming Advantage Com­pen­dium, Marrion was president and owner of an NASD broker/dealer with offices in nine states. Previous to that he was vice president of a life insurance company and vice president of an NYSE investment banking firm. He has a BBA from the University of Iowa, an MBA from the University of Missouri, and a doctorate from Webster University.

Marrion can be reached at Ad­van­­tage Compendium. Telephone: 314-255-6531. Email: ­[email protected].