Welcome to the Stay Wealthy podcast. I'm your host Taylor Schulte, and today we are talking

variable annuities. Insurance products are great and all, but this confusing product was charging

my client $15,000 per year in hidden fees for benefits that she didn't even need. If you own a

variable annuity or you've considered purchasing one to save for retirement, today's episode is

for you. For all the links and resources mentioned, head over to youstaywealthy.com forward slash

63.

There are two basic types of annuities, deferred and immediate.

A variable annuity, the annuity that we're talking about today is a type of deferred annuity.

And with a deferred annuity, you put money in, you give the money time to grow,

and then you use the dollars to help fund retirement at a later date. I usually say 10 plus years

down the road. So what exactly is a variable annuity? Here's my simplest explanation. If you took a

diversified portfolio of mutual funds, you added a small tax benefit, and then you wrapped everything up in an insurance policy, you would essentially have a variable annuity.

That's pretty much it.

Those are the three parts that make up a variable annuity.

One, a basket of mutual funds. Two, a tax benefit, and then three,

insurance. Now, the diversified portfolio of mutual funds is pretty simple to understand. Those

don't look any different than what you might find in your 401k at work, let's say, just a plain old,

you know, list of stock and bond mutual funds to choose from.

And the tax benefit, the second component, is pretty easy to understand too, like a 401k or an

IRA, the money inside of a variable annuity grows tax deferred year after a year.

In other words, you don't pay annual taxes on dividends and interest or capital

gains. It's all deferred until you go to take money out in the future. When you take money out,

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