Wolf&Grayson EditorialAnnuity sales are running hot, and that is exactly the problem. Record demand for registered index-linked annuities and fixed-indexed annuities has pulled a product category into the center of retirement conversations, where it does not always belong, and the pressure runs in one direction: toward the sale. Gregory “Greg” Matthews, a financial planner with 35 years and several full market cycles behind him, argues the sequence most advisors use is backwards. The contract should be the last part named, not the first. Before any product enters the room, a client’s objective, time horizon, liquidity position, tax status, and legacy intentions need to be on paper. Skip that work and the annuity becomes a solution hunting for a problem, which is how a reasonable instrument ends up in an unreasonable plan.
Three Answers That Have To Come First
Matthews frames discovery around three questions that decide whether the conversation goes any further. The first is the primary objective: does this client need guaranteed lifetime income functioning as a personal pension, protection of principal against market downturns, or tax-deferred growth? Those are three different jobs, and they point to three different structures. The second is the time horizon, which Matthews treats with more precision than most intake forms allow. Immediate income within 12 months is a different engineering problem from deferred income starting five to 15 years out. Get the horizon wrong and the client either surrenders a contract early or sits on capital that should have been working elsewhere.
The third question is the one that gets skipped most often, and it carries the sharpest trade-off. Legacy priorities have to be clarified up front, because maximizing lifetime income frequently reduces or eliminates the death benefit. That is not a disclosure buried in a prospectus. It is a design decision the client makes, and it cannot be unmade later. A retiree who wants the largest possible monthly check and a retiree who wants to leave a meaningful balance to beneficiaries are asking for structurally different contracts. Resolving that tension in discovery, rather than at the point of signature, is what separates a plan from a transaction.
The Numbers That Decide Whether It Belongs
Once objectives are clear, Matthews moves to a diagnostic built on four inputs. Net worth and liquid assets come first, because the test is not whether a client can afford an annuity but whether enough liquid cash remains outside it to absorb an emergency. Then comes the income gap, calculated by mapping existing guaranteed income such as Social Security and pensions against essential monthly living expenses. The gap, not the account balance, determines the size of any income solution. Tax status matters next: funds coming from a 401(k) or traditional individual retirement account behave differently in distribution than after-tax savings, and that distinction dictates the shape of the payout. Risk tolerance rounds it out, measured honestly as the volatility a client can sit through without panic-selling.
Matthews’ own view has shifted considerably across those 35 years, and he is candid about why. The disappearance of private pensions, changing interest rate regimes, and genuine product innovation have moved planners away from treating annuities largely as high-fee tax shelters and toward using targeted structures as longevity insurance and bond replacements. That reframing narrows the use case rather than widening it. Four situations clear his bar: closing an essential income gap with a low-cost single premium immediate annuity (SPIA) or deferred income annuity (DIA) when guaranteed sources do not cover basic expenses; insuring against extreme longevity with a qualified longevity annuity contract (QLAC) or deferred income annuity when family history or health suggests life into the late 80s or 90s; replacing conservative bonds with a multi-year guaranteed annuity (MYGA) when predictable certificate of deposit (CD)-like growth over three to ten years beats taxable fixed income without daily price volatility; and managing behavioral risk, where a guaranteed income floor or registered index-linked annuity (RILA) buffer keeps a retiree from selling equities at the bottom. Everything outside those four cases deserves scrutiny.
A Closing Window For Executives
The planning environment over the next two to three years gives high earners a specific opportunity, and Matthews wants executives to treat it as time-sensitive rather than permanent. For tax year 2027, the top 37% federal income tax bracket rises to $793,650 for married couples filing jointly and $661,375 for single filers, while the federal estate and gift tax exemption climbs to $15.48 million per individual. Those figures create a stretch of predictability in top marginal rates, and predictability is the raw material multi-year planning runs on.
His recommendation is to use that window deliberately: model multi-year Roth conversions and lifetime wealth transfers while the rates are known rather than assumed. The point connects directly back to discovery. An executive’s tax status in retirement is not a fixed input; it is a variable that can be managed in advance, and managing it changes what any future income solution should look like. A client who converts aggressively over several years arrives at retirement with a different tax profile, a different income gap, and a different answer to the question of whether an annuity belongs in the plan at all. That is the discipline Matthews is arguing for. The product question is downstream of everything else, and advisors who lead with it are answering a question they have not yet asked.
Follow Gregory “Greg” Matthews on LinkedIn for more insights on retirement income planning, annuity suitability, and tax-aware wealth transfer.
