Mark Henry of Alloy Wealth Explains Why You Should Consider Annuities

People have different opinions when it comes to annuities and retirement, but Mark Henry, the CEO and founder of Alloy Wealth, believes that the naysayers are largely misinformed. Drawing on more than 30 years of experience in wealth management and retirement planning, Mark Henry and his team at Alloy Wealth help clients build investment portfolios, but he also understands that Wall Street returns are not always consistent—and that retirees need guaranteed income after they stop working.

This is where lifetime annuities can provide an attractive solution. These financial products deliver a guaranteed income each month for the lifetime of the investor, ensuring their financial well-being and providing confidence that they can weather the ups and downs of the market.

Mark Henry and Other Experts Back Lifetime Annuities

Several high-profile retirement experts and financial planners agree with Mr. Henry on this point, as he explained in a recent video on his popular Living Large Retirement YouTube channel. For example, best-selling financial author Suze Orman has been misunderstood as being “anti-annuities,” but she recently clarified that she is only against variable annuities, because they can involve high fees and inefficiencies related to taxes. She has made it clear that single-premium fixed annuities with a guaranteed minimum interest can provide predictable returns with lower fees than variable annuities. 

Likewise, Ben Bernanke, the former chair of the US Federal Reserve, recommends moving IRA and 401(k) funds into pensioned annuities. In fact, he backs the move so strongly that he personally took this action to prepare for his own retirement, so that he would have a predictable income source. His largest holdings are two annuities managed by TIAA-CREF—a fixed annuity plan and a variable annuity plan. While all annuities provide investors with regular payments, the payments can vary with variable plans, while they remain the same each month with fixed plans. 

A number of Nobel laureates also agree that annuities are a great choice for the average retiree. Robert C. Merton, a Nobel Prize-winning economist from the MIT Sloan School of Management, has published numerous papers on the use of annuities for the establishment of lifetime income for retirees. He has suggested that middle-class retirees combine reverse mortgages with annuities to maintain their standard of living after they finish working. Meanwhile, William Sharpe, who also won a Nobel Prize—and who created the Sharpe ratio, an industry-standard metric to assess the performance of an investment compared to a risk-free asset—said that “annuities are a potent and sensible instrument” and that “the only solution to longevity risk in retirement is some form of lifetime income product like annuities.” 

In addition, Wharton professor David Babbel has co-authored numerous studies showing that annuities improve retirement outcomes by reducing longevity risk and market risk. Based on an analysis of research by 70 other economists, he concluded that lifetime income annuities should play a “substantial” role in most people’s retirement plans.

Finally, Christine Benz from economic research giant Morningstar and Wade Pfau, founder of Retirement Researcher, also agree that annuities are a great option for most retirees, recommending “especially the very vanilla annuity types…just a single-premium immediate annuity where you’re getting that stream of income over the rest of your life.” 

Living Large with Annuities

The ultimate goal of retirement for most people is to have confidence in a stable, guaranteed income and maintain a quality standard of living for the rest of their lives. Annuities are a great way to accomplish this, which is why Mark Henry of Alloy Wealth—plus many of the world’s leading economists and financial experts—suggest including them in retirement plans.

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