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Annuities can be a valuable tool in estate preservation and planning
Annuities
Annuities have two characteristics that differentiate them from bank CDs.  
1. The interest earned on them while they are not paying the interest to the investor is tax deferred.  
2. They can be structured to provide an income that cannot be outlived.
There are two general types of annuities, fixed and variable.
1. Variable annuities are essentially a tax-deferred basket of mutual funds, and can lose principal.
2. Fixed annuities cannot lose principal, and interest is credited based on two general methods.
a. Fixed interest rate, sometimes guaranteed for a specific period of time
b. A financial market index, such as the Standard and Poors (S&P) 500

GAO Report—a strong statement
 In June 2011, the Government Accountability Office (an arm of Congress) published a thought-provoking report on
 the topic of retirement income. The GAO surveyed financial “experts” and came to two recommendations in its 
analysis, titled Ensuring Income throughout Retirement Requires Difficult Choices:
• Most Americans should put off taking Social Security benefits until they hit full retirement age.  
• To address lifetime income needs, middle-income retirees should invest some of their savings in a 
                  pension-like annuity (or alternately,  choose a gradual payout option offered in a pension plan instead 
                  of a lump sum).

Annuities and US Treasuries Have A History Together! 



US Treasuries go back to this country’s independence. The Revolutionary War was fought against Great Britain by 
the colonies as a united front but funded and manned by each individual state.
The end result of the war was an overall debt of over $80 million, more than the states could afford due to the 
breaking of the American economy and the temporary loss of our biggest trading partner, Great Britain. The newly 
formed government made two very critical decisions which set the path of our country and our basis of trust in the 
country on a road of success. The annuity industry started based on guarantees and safety.

The Federal Government absorbed all debt from the Revolutionary War. ($80 million) This freed states from over-
taxation and allowed the economy to begin anew, fresh from overbearing and disastrous debt. It also allowed the 
states to provide basic services from state collected taxes instead of paying for long ago spent funds (war). The 
US Treasuries were sold to foreign sovereigns who wanted to expand trade with the colonies, The United States 
of America.
The first annuity product was introduced in 1735 when the Presbyterian Church created an income fund for 
retiring ministers and their families. It was guaranteed in the beginning by each and every church member. Once 
again, an underlying guarantee.
Alexander Hamilton created the first real debt management system when he created the funding vehicle to pay 
the $80 million, he created US Treasuries. The whole country was obligated, not just individual states. The debt 
was sold mostly to our largest trading partner at the time, France. (France had already loaned the US money and 
ships, due to the influence of Benjamin Franklin.) By buying the debt, France gained an advantage over Great 
Britain in the form of docking rights and tariff relief. We have a long history of borrowing from our trading partners.  
Over the past 220 years the safest possible place on Planet Earth to keep your money is in US Treasuries.