When it comes to planning for retirement, annuities often sound like a dream: guaranteed income, tax advantages, and downside protection. But like most financial products, the devil is in the details. In the latest episode of Leibel on Fire, financial expert Leibel Sternbach peels back the layers on the true cost of annuities—and what every retiree needs to know before signing on the dotted line.

The Illusion of Simplicity

At first glance, an annuity seems simple: you give an insurance company a lump sum, and in return, they promise you a predictable stream of income for life. But these contracts are rarely straightforward. Many are 80+ pages long, filled with technical language and embedded fees designed to protect the insurance company—not you.

Let’s Talk About Fees

While all fees are technically disclosed, they are often buried in complicated language or hidden in fine print. One of the most misunderstood is the mortality and expense charge, which is essentially the cost for insuring your life and administering the contract. Add to that administrative fees, investment rider fees, and other optional add-ons, and your annuity can start looking less like a safe haven and more like a high-cost trap.

Some fees might seem minor—say $25 a year—while others could be 1.5% to 2% of your contract value annually. Over time, these fees can eat away at your returns and drastically reduce the benefit you were hoping to get from the product.

Fixed, Indexed, and Variable: What’s the Difference?

Each type of annuity has its own cost structure:

• Fixed Annuities offer guaranteed returns but may have lower growth potential and surrender fees.

• Indexed Annuities promise market participation with downside protection but often limit upside gains and reset participation rates.

• Variable Annuities provide more market exposure but come with higher risks and complex fee layers.

The key takeaway? The product’s performance can vary wildly after the first year. Many retirees are shocked to find that renewal rates decline significantly after year one—and they’re stuck with a product that no longer serves their needs.

What to Ask Before You Buy

You may never know the full cost of an annuity upfront, especially since terms can change year-to-year. But there are smart questions to ask:

• What is the guaranteed minimum value in a worst-case scenario?

• What are the fees for each rider or add-on?

• How often can the insurance company adjust the terms?

• If I earn zero returns, what am I still paying?

These questions won’t just help you make a smarter purchase—they’ll also protect you from signing up for a lifetime of regret.

Already Own an Annuity?

If you already have an annuity, it’s not too late. There may be ways to reduce fees, restructure your policy, or even exchange it for a better option. But you need an expert to guide you through the process.

That’s where we come in.

Schedule a free consultation with Leibel Sternbach to review your annuity and ensure it fits your retirement goals: https://www.yields4u.com/pages/book

Don’t leave your future up to chance—or to a contract you don’t fully understand. Get the clarity and confidence you deserve.