Retirement planning
One Risk, One Tool: Chris Maduri on Annuities and Paying for Care
Retirement planner Chris Maduri argues that each retirement fear needs its own tool, and explains how a medically underwritten income annuity can help fund care that is needed now.
Episode 99: How Seniors Can Protect Retirement Income with Annuities and Home Equity
Video from Matt Helton.
Generated from the canonical interview transcript and validated against source data by Guests on Air.
How can retirees pay for long-term care and still protect their income?
Chris Maduri matches each risk to a tool: life insurance for a death benefit, long-term care cover for care, and an annuity for income that cannot run out. When care is already needed, a medically underwritten income annuity prices in a shorter life expectancy, so guaranteed income can cover the care gap for far less money.
Annuities and long-term care rarely draw a crowded seminar, yet they sit at the center of the questions seniors worry about most. On the Serving Seniors Podcast, host Matt Helton asked Chris Maduri, retirement planner and coach at Vibrant Retirement, why annuities carry such a poor reputation and what has changed in the products since the early 2000s.
Chris Maduri has spent close to two decades in the industry, starting at a mutual fund company around the time of the financial crisis and then moving to the insurance side. That move meant learning annuities from scratch, then coaching financial advisers, and now working with both advisers and the general public on how money behaves once a career ends.
The heart of the conversation is a simple rule. Each retirement fear needs its own tool, and no single product should be asked to do every job. That rule runs from guaranteed income through to the hardest case of all, a family that has to pay for care now rather than at some distant point in the future.
Key takeaways
- Buy life insurance for a death benefit, long-term care cover for care, and an annuity for lifelong income.
- Many modern income annuities carry fees near 1%, and that fee pays for a guarantee that income never stops.
- A medically underwritten income annuity can cost far less when health is failing, and it helps fund the care gap.
- The best time to plan for long-term care is usually in the fifties, while people are still working and healthy.
1. Why annuities earned a bad name, and what changed
Chris Maduri does not wave the doubts away. Variable annuities were all the rage in the early 2000s and were meant to give tax deferral to people already investing in mutual funds. The problem, as Chris Maduri describes it, was that they came loaded with fees and expenses that dragged on the owner's ability to grow the asset.
Since then, the insurance industry has studied what people disliked and changed the products. Most of the annuities Chris Maduri sells carry fees under one and a half percent, and typically around 1% when a guaranteed income rider is added. That rider exists for one purpose: income keeps arriving even if the account value falls to zero.
That purpose speaks to the biggest fear in retirement, which is running out of money. A paycheck that arrives every month for life removes that fear, and Chris Maduri argues the product is mostly misunderstood. The fair test is an adviser who explains the limits of the contract as well as its strengths, so there are no surprises later.
2. Match each retirement fear to its own tool
Many people want an all-in-one product, and they object that an income annuity leaves no death benefit if the money runs out. Chris Maduri answers that the death benefit is not the point of an income annuity. The goal is to draw enough income over a long life that the insurance company ends up carrying much of the cost.
So the annuity forms a baseline for income, never the whole portfolio. The money held in ETFs, mutual funds or other investments is the money that passes to heirs. Chris Maduri points out that, apart from a pension or Social Security, no other product can guarantee an income stream for however long someone lives.
The rule is easy to remember. Someone worried about a death benefit should buy an insurance policy, someone worried about long-term care should buy a long-term care policy, and someone worried about running out of income should buy an annuity. Each tool then does one job well, rather than one product doing several jobs badly.
3. Paying for care when it is needed now
Chris Maduri sees long-term care as one of the biggest issues ahead, as populations keep aging and cognitive decline becomes a very real concern. The ideal time to plan for care is usually in the fifties, while people are still working and have few medical problems. Many families, though, have waited too long and need care straight away.
Full-time care in a private facility can cost more than 200,000 dollars a year, so even a wealthy household can spend a million dollars in five years. Chris Maduri has started working with a medically underwritten single premium immediate annuity, which turns a lump sum into guaranteed income for life and helps fund whatever the care gap is.
The pricing is what makes it work. A standard income annuity assumes an average life expectancy, but when medical underwriting shows a shorter one, the same guaranteed income costs much less. The money saved can then go to heirs or a favorite charity. Chris Maduri works with about 75 insurance companies to find the highest guaranteed payouts.
