Category: Standards of Advice

This article is for general education. It is not a recommendation about your specific situation, and it is not a substitute for a conversation about your own numbers.

Most people treat Social Security as a personal decision. When do I turn mine on. What is my number. Should I take it at sixty-two or hold out. Those are the questions people bring in, and they are the wrong frame for anyone who is married, because the choice one spouse makes is quietly a decision about the other one’s income for the rest of their life.

Here is the piece almost nobody gets walked through. When one spouse dies, the survivor does not keep both Social Security checks. They keep the larger of the two. The smaller one stops. That single rule turns the higher earner’s claiming decision into one of the most important numbers in the household, because the check that person locks in shapes the floor the survivor lives on, often for another fifteen or twenty years.

The decision inside the decision

Say a husband is the higher earner and he turns his benefit on as early as he can, at a reduced amount, because a check in hand feels safer than a bigger one later. He has not only made his own income smaller. He has set much of the number his wife will live on if she outlives him, which the odds say she will. There is a floor built into the rules, so she is not necessarily stuck with the exact reduced check he took, but claiming early still drags down what she is left with, long after he is gone and long after the reasoning that felt sensible at the time has been forgotten.

Now run it the other way. The same husband holds off and locks in the largest check he can. If he lives a long time, good, he collects it. If he does not, that larger check is what protects the person left behind. Either way the bigger number does a job. This is why the claiming decision for a married couple is not really about the person claiming. It is about building the strongest possible floor under whoever ends up alone. One more piece belongs in the picture. The survivor’s own timing counts too, because a surviving spouse who claims this benefit before their own full retirement age takes a further reduction, so the floor is set partly by the higher earner and partly by when the survivor turns it on.

Most couples never see it framed this way. They each look at their own statement, pick an age that feels right, and never put the two records side by side to ask the only question that matters for the long run: when one of us is gone, what is the one who remains actually living on.

Why this gets missed

The rule is not hidden. It is written down, the same for everyone, sitting in plain sight on the Social Security website. It gets missed because of how the decision usually gets made.

People decide Social Security on a story. A brother-in-law swore that claiming early was the only smart move. A friend was certain that waiting was the smart play. A coworker had a strong opinion at lunch. None of that is analysis. It is a secondhand account of somebody else’s situation, applied to yours as if the details match, and the details almost never match. Whether a story fits you depends on your health, your savings, your other income, and, if you are married, whose record is larger and who is likely to outlive whom. The person who gave you the confident answer over dinner knew none of that.

There is a second reason it gets missed. People confuse being told a number with being shown the math. You can walk into the Social Security office, and the people there can tell you what your check would be if you claimed today. That is a real service and they are usually glad to help. But they are not looking at your spouse’s record, your taxes, your savings, or your health, and they are not there to tell you what you should do with all of that in view. So people get told a number, mistake it for advice, and turn the switch on. A number is not a plan. It is one input into a plan you still have to build.

What actually settles it

Social Security is unusual among retirement decisions because the answer is mostly a calculation rather than a judgment call. The rules are public, the credits for waiting are fixed, and the trade-offs can be run out on paper. You are not guessing at a market or trusting anyone’s forecast. You are doing arithmetic you can check.

That is the part worth holding onto. You do not have to take my word or anyone’s. Before you turn on the biggest income stream of your retirement, you can pull your own statement, free, from the Social Security website. It shows your estimated benefit at the early age, at your full retirement age, and at the latest age worth waiting for. Those numbers are the receipt almost nobody bothers to pull before making the call.

If you are married, pull both. Put the two records next to each other. Find out who has the larger benefit, because that is the one carrying the survivor’s future, and look honestly at what the person left behind would be living on under each choice. That comparison, not a neighbor’s opinion, is the actual decision.

What you should be able to answer

You do not need to become an expert in benefit formulas. You need to be able to answer a short list of plain questions before you make the call, and if you cannot answer them yet, that is the work to do first.

Have you pulled your own statement and looked at the real numbers, or are you going on what you think they are? If you are married, do you know which of you has the larger benefit, and have you looked at what the survivor would actually be left with under each claiming age, including the survivor’s own? Have you thought about the fact that part of the check can be taxed, so the real figure is smaller than the letter suggests? And the one that decides everything: are you making this on the math, or on a story somebody told you at a family dinner?

The rules here are written down and the math is knowable. That makes this the rare retirement decision you can settle without trusting anyone, including me. Pull the numbers. Put both records side by side. Decide it on what you can check.

Deric Scott Ned is an income planner based in Pasadena, California. He works with clients on retirement income planning under a Best Interest obligation, meaning he is legally required to act in his clients’ best interest. Physical gold and silver broker. Twenty years in both industries.

This article is for general education. It is not a recommendation to buy any specific product, and it is not a substitute for a conversation about your own situation.

When they work, when they don’t, and what to ask before you sign anything

Annuities generate more confusion than almost any other product in retail finance, and most of that confusion comes from where people get their information. Insurance companies market them as a guaranteed solution to every retirement fear. Critics dismiss them as a scam built on hidden fees and high-pressure sales. Both versions skip the part that actually matters: what the contract says, what it guarantees, and whether those terms fit your specific situation. Here’s the honest version.

An annuity is a loan to an insurance company, not an investment in the market

The most common misunderstanding about annuities is treating them like a market product. In a fixed or fixed-indexed annuity, you hand a sum of money to an insurance company, and the company contractually agrees to pay it back on specific terms: a floor that prevents your credited balance from dropping in a bad year, a ceiling (called a cap) on how much you can earn in a good one, and, if you choose it, an income stream the company is obligated to pay for the rest of your life regardless of how the underlying account math works out.

None of that money is invested in the stock market on your behalf. An index may be used as a benchmark to calculate what you’re credited, but you never own it and you’re never exposed to its losses. That distinction explains both what an annuity guarantees and what it can’t. A strong market year won’t be fully reflected in your return, because the product was never built to track the market. The insurance company’s ability to make good on the contract is what backs the guarantee. Market performance isn’t part of the equation.

Variable annuities are the exception here and behave much more like market investments, including the ability to lose principal. The rest of this article is about fixed and fixed-indexed contracts, which is where most of the public debate actually lives.

The product’s reputation problem traces back to two specific weaknesses

Annuities carry a worse reputation than most financial products, and the reasons are identifiable.

First, the licensing bar is low. The relevant state exam has a pass rate in the neighborhood of seventy percent, meaning roughly three out of four people who take it are licensed to sell the product. Passing demonstrates minimum competency, and a significant volume of annuity sales happen through organizations built around high-volume recruiting, with commission structures that reward bringing in new sellers as much as serving clients well.

Second, the paperwork gets skimmed. Insurance regulations require carriers to disclose the surrender schedule, the crediting formula, the rider costs, and the full year-by-year illustration, and carriers generally do disclose all of it. The material is dense and written in industry language, and most buyers glance at it and stop reading. The gap between technically disclosed and actually understood is where most bad annuity experiences originate.

Today’s contracts are meaningfully different from the ones that built the industry’s reputation

Interest rate history is usually left out of the annuity conversation entirely, and it matters. For roughly three decades leading up to 2021, the Federal Reserve kept interest rates low, and savings accounts and CDs paid almost nothing. Insurance carriers didn’t have to compete hard for retirement money, because the alternative was worse by default. Contracts written during that period tended to carry higher fees, lower caps, and no signing bonuses.

Starting in 2021, the Fed raised rates for the first time in a generation, and by 2023 and 2024, banks were offering CDs paying four to five percent. Banks became real competitors for retirement money, and carriers responded with better contracts: no-fee options, higher participation rates, and signing bonuses that didn’t exist on older paper. A contract written before 2021 and one written after it can carry the same product name and behave very differently.

Annuities solve for protection, not growth, and buyer’s remorse usually traces back to that mismatch

The most common source of dissatisfaction with annuities isn’t a bad contract. It’s a goal that was never actually protection in the first place. An annuity’s core function is limiting downside in exchange for limiting upside. If the real goal is still market-level growth, an annuity will underperform in strong years, and no amount of product quality changes that outcome. Annuities make sense for money earmarked for guaranteed lifetime income or principal protection. They make less sense for money meant to keep growing aggressively. Settle that question honestly before comparing any specific contracts.

Five questions determine whether a specific contract is fair

These aren’t exhaustive, but they’re the minimum before signing anything:

• Carrier credit rating. Ask for the rating from at least two of Moody’s, Standard & Poor’s, and Fitch. It should be A or better. You’re extending a long-term loan to this company, and its ability to pay matters more than any feature on the contract.
• Carrier age. A company that has written insurance for a century has been tested by the Depression, multiple recessions, and the 2008 financial crisis. A ten-year-old company hasn’t.
• The illustration, not the brochure. The illustration is the year-by-year contract math under multiple scenarios, on the carrier’s own letterhead. The brochure is a marketing summary written to sell the product. If someone won’t produce the illustration, that alone is disqualifying.
• Every fee and limit, explained in plain terms. The cap, the participation rate, the rider fees, and the annual costs, translated into what they mean for your specific numbers.
• The exact cost of leaving early. The surrender schedule should be walked line by line: what you’d receive in year one, year three, year five, and when the fee reaches zero. A “10-year annuity” means leaving inside that window costs a shrinking fee. It doesn’t mean you’re locked in for ten years.

The most useful second opinion answers a different question than most people ask

Most people who seek a second opinion on an annuity ask the wrong version of the question. They ask another advisor to review the specific contract they’ve already been shown, comparing rates and bonuses against a competing pitch. That’s a narrower question than the one that actually matters.

The more useful second opinion asks whether an annuity is the right category of product at all, given the full picture, everything you own, your income needs, your timeline, and your other goals, separate from any specific contract being pitched. That’s a suitability opinion, not a pricing comparison, and it should come from someone with no stake in whether you buy this contract or any contract. Anyone eager to jump straight to comparing rates and bonuses is skipping the decision that should have come first.

The bottom line

Annuities are not inherently good or bad. They are a contractual loan to an insurance company, with terms that vary enormously from one contract to the next and one company to the next. The real question is whether these specific terms, from this specific company, fit this specific goal. That question has a factual, checkable answer. Most people are simply never shown how to check it.

Deric Scott Ned is an income planner based in Pasadena, California, working with clients on retirement income planning under a Best Interest obligation, meaning he is legally required to act in his clients’ best interest. This article reflects his own views and general education. It is not personalized advice.

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