Confused on my 403b - Is it an annuity?

Insurance
#1

Hello everyone! I am new to this just finished the course this morning. I am a teacher and currently have a 403b that doesn’t have too much in it since I just started it. Last night after finishing one of Jeremy’s videos I decided to check my account and see what my 403b consisted of since I really had not idea. I just knew it would be good to start. I found out it is with National Life Group.

I logged on and it says Annuity. I quickly checked the course to see if there were any topics in the videos listed as that and didn’t see anything. When I checked the allocations it says

S & P 500 Average Index 45.36%
S & P 500 Ending Index 44.73%
DECL ACCUM Fund. 9.90%

I figured since it says index it should be good. I’m just confused of the annuity part. What does that mean? What does “ending index” mean? Like I said I am so new to this and wish I would’ve taken the course before I started this 403b.

Thank you in advance for any help you can offer.

#2

I a teacher and just learning about investing! I have not even set up my 403b yet! Hope to learn more.

#3

Hi @ARuiz31!

Oh man. This is unfortunately a story I’ve heard way too many times and it honestly makes my blood boil. I assume someone came to your school to help you set this up? Or contacted you through your school somehow? Maybe they were even wearing a suit? That was an insurance salesperson.

An annuity is an insurance product. I don’t know about those exact products, but my guess is they’re extraordinarily misleading names to confuse new investors into thinking they’re index funds. I’m quite confident that they’re not. An annuity is basically a product where you give the insurance company all your money, they they give some money back to you according to some set of rules that they’ve made up. Sometimes it’s based on stock market returns, but even if it is, they’re taking a hefty cut before you get your share back. For every one I’ve ever seen the investment performance is horrific compared to an actual investment.

So, if I were you I’d want to look at those very carefully and figure out how much you have put it, how much you can get out today, and what has been your rate of return. You can compare that to a real index fund to see how badly you’ve been burned, then I’d be focusing on transferring everything away from the insurance company to an investment company like Vanguard.

In my opinion, there’s zero reason anyone under the age of 65 or 70 should even be considering an annuity. And likely not even then. The fact that these insurance companies send salespeople to schools to push these crappy, high fee, low return products on unsuspecting teachers makes me sick. (It happened to a good friend of mine in her twenties and we discovered it at 39… cost her about 15 years of real investing…)

#4

Here’s a great resource on 403bs, and they have an active FB page as well.

https://403bwise.org/

#5

Good luck setting up your 403b. www.403bcompare.com is a useful website where you enter your district name and you can see your options (such as Vanguard, etc.). From there you can see a list of ticker symbols to see what index funds/TDIFs you could buy. You can set up automatic contributions straight from your paycheck and you’ll barely know the money is gone. Set it and forget it! Plus it lowers your taxable income so you kinda make more money that way too.

I was also tricked by an email so I met with someone at my school and I ended up having my money in an annuity earning around 1% interest which is terrible. We all start somewhere.