07/15/2026
We've been meeting with more and more investors who were put into very conservative investments - life insurance, annuities, portfolios with little room for growth. Many of these clients are near or in retirement. Some insurance-based products can be valuable tools when used appropriately. However, it's important to understand the costs, restrictions, and growth potential before making them a significant part of a retirement strategy.
Here's the problem. Cumulative inflation during the last decade is close to 40%. If your portfolio hasn't grown along with that, you've lost real purchasing power, even if your statement never showed a loss. The attached chart illustrates this by comparing a diversified 60% stock, 40% bond portfolio to a typical fixed annuity over the past ten years, with inflation as the benchmark. The annuity provided a guaranteed rate, but it didn’t keep up with inflation.
Investors are often told the stock market is too risky, but the chart shows that sitting out of the market can carry risk too. Even near retirement, growth has an important role in a portfolio. Retirement can last 25 or 30 years, and your money needs to keep working that whole time.
One more thing we'd add: insurance and investing don't always combine well into a single product. When the two are bundled, the tradeoffs, like higher fees, limited upside, and reduced flexibility, can be harder to see. It's worth understanding exactly what you're paying for and what you're giving up.
If you’re confused by what you own or your portfolio hasn't kept up, it's worth taking a second look.
