In episode 7 of Greenstream, Marcus Schafer and Pat Collins unpack why annuities, especially those labeled “deferred” or “variable”, often fail investors. Through the lens of the Rosenthal family’s costly mistake, they explore why annuities are so complex, how high fees and opaque terms work against consumers, and when (if ever) annuities make sense. From fear-based sales pitches to hidden tax pitfalls, this episode is a must-listen for anyone considering annuities as part of a retirement plan.

00:00 The Bad Reputation of Annuities¹ – the Rosenthal Family’s foundation lost money, despite stock markets doubling, while the salesperson got rich

04:02 Insurance Isn’t Bought, It’s Sold – how simple sales pitches mask 500+ pages of legalese even Pat struggles to understand

10:04 Annuities’ Intended Purpose² ³ ⁴ ⁵ – longevity insurance has a role and has existed since Ancient Rome

18:46 The Annuity Puzzle³ ⁴ ⁵ – if annuitization solves retirement risks, why don’t more people buy them?

21:09 Deferred Annuities as Accumulation Products – most annuities sold today are hybrids of costly, complex investment/insurance vehicles

28:23 The Hidden Costs of Annuities¹ – how one client underperformed the S&P by 7% per year over 18 years

37:00 Variable Annuities Are the Most Missold – what “guaranteed” riders actually mean when you unpack the contract

42:56 When Annuities Make Sense – only in their purest form (SPIAs), and under guidance of a 100% fee-only, 100% fiduciary advisor

49:25 Tax Implications and Wealth Transfer – ordinary income taxes, no step-up in basis, and painful outcomes for heirs

The Best of What We Researched

¹A Couple Won the Powerball. Investing It Turned Into Tragedy (WSJ, 2024)

²The History Of Annuities in the United States (Poterba, 1997)

³2024 Retail Annuity Sales Power to a Record $432.4 Billion (LIMRA, 2025)

⁴New Evidence on the Money’s Worth of Individual Annuities (Mitchell, 2001)

⁵The Value of Annuities (Wettstein, 2021)

Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. It is not intended as the primary basis for financial planning or investment decisions and should not be construed as advice meeting the particular investment needs of any investor. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.