In keeping up with the daily articles and posts about retirement, I have noticed discrepancies in the use of the term “annuity”, which has developed into a point of contention. This inconsistency in a clear definition of annuities has plagued these articles, which in turn hurts the reader, the writer and the annuity business.
A recent example of this growing problem arose a few days ago while I was comparing two retirement advice articles from two different sources. In Lisa Hay’s recent article from Market Watch, titled 6 Money Mistakes To Avoid In Retirement, her second warning is “not to fall for an annuity sales pitch”; while in Steve Vernon’s article titled, How Long Will Your Retire Savings Last, from CBS Money Watch, he states, “one way to avoid running out of money before you die is to buy an annuity from an insurance company.”
Do these two writers disagree about the efficacy of a single type of annuity, as the lay reader would assume? No, in fact they’re referring to two totally different forms of annuity.