White sunglasses, miniskirts, and bell-bottoms all had their glory days and time in the sun; if you held onto these items long enough, then maybe you got to take them out of the closet for one more wild ride. Movie stars, politicians, athletes, and musicians also have their decade, their golden age, their time in the sun.
Fashion and fads come and go with the times, but wisdom and good ideas stick around and never get old, even after 2,000 years. Annuities are one such idea that is still fashionable and still keeping up with the times. They were embraced by President Abraham Lincoln during the civil war, used by Andrew Carnegie to establish pensions for educators, relied on by savvy investors during the Great Depression, and they have been used by some pretty famous people, dating all the way back to the 1700s.
You might say that annuities in America had holy beginnings. Some of the earliest ones were paid out in 1759 to retired clergymen and their surviving spouses who invested prudently while serving the church. They were first offered to the public in 1812 by a Pennsylvanian insurance company, and one of the most famous people to first leverage their benefits was one of our Founding Fathers, a signer of the U.S. Constitution, and a flyer of kites.
Famous Politician: Benjamin Franklin
Upon his death, Benjamin Franklin requested that the $2,000 Sterling he earned as Governor of Pennsylvania from 1785 to 1788 be divided equally between Boston and Pennsylvania because he wanted the money to be disbursed as a legacy. Two-hundred years later in the spring of 1990, the balance in the Philadelphia account was valued at $2 million, whereas the balance in the Boston trust was $4.5 million, the difference attributed to the handling of the investment.
Sometimes called “Franklin’s IRA,” the money in the Boston trust was invested using a new take on an old idea: the annuity. Using a tax-deferred indexed variety, the money was able to benefit from exposure to stock market growth without stock market loss. That allowed the trustees of the Franklin Institute in Boston to turn an estimated $4,400 into $5.5 million even while it was paying out an income for 200 years.
Famous Athlete: Babe Ruth
Known as the “Sultan of Swat,” Babe Ruth came into his glory days during the roaring twenties, and his manager was worried that he was blowing through all of his money without putting any of it away. He introduced Babe to an insurance agent from the Equitable Insurance Company (now AXA Equitable). From 1923 to 1929, the slugger contributed more than half his salary annually, purchasing between $35,000 to $50,000 worth of annuities each year.
The Great Depression hit the country hard in October of 1929. Babe Ruth was forced to retire from baseball in 1935 due to health reasons. He was unemployed during the worst time in history, but Babe Ruth had his income annuity. It’s been reported that he received an income of $17,500 a year which would translate to an annual salary of more than $290,000 using today’s dollars.
Famous Musician: Beethoven
The social luminaries of Vienna wanted to keep Ludwig von Beethoven from leaving their country, and so in 1809, two princes and an archduke guaranteed the musician a generous annuity. All he had to do was stay in Vienna and compose and perform his music. His benefactors have supposedly been quoted as saying something along the lines of, “only a man free of worries can create with such genius.”
Interestingly enough, Vienna also saw its time of economic downturn, and one of the annuity’s guarantors tried to stop paying Beethoven, claiming financial hardship. Beethoven sued, won, and continued to receive his annuity payments. Perhaps this is what inspired the literary genius of Jane Austin whose character Fanny observes in Sense & Sensibility (published in 1811), “people always live forever when there is any annuity to be paid. . . An annuity is a very serious business; it comes over and over every year, and there is no getting rid of it.”
Famous Retiree: YOU
You, too, can have the freedom to retire and live forever without worry by taking advantage of the benefits offered by today’s indexed annuities. They can give the individual investor the same kind of advantages enjoyed by the luminaries of days gone by such as:
- Exposure to stock market growth without the downside risk.
- A more generous return than bank CDs or savings accounts.
- Tax-free growth on your money.
- A guaranteed income payment for the rest of your life.
- A guaranteed minimum return that in some cases can be as high as 6–8%
To make sure you get the right kind of annuity, be sure to shop around and compare before you buy. If you have questions about how to get the stability and guarantees your portfolio needs, feel free to reach out to us or call us directly at (888) 440-2468. We can answer any questions you might have with no pressure and no strings attached, and that’s the Annuity Gator promise.