PRW News

“Bobby Bonilla Day”, and the Power of Deferred Income Annuities

Any friend of the firm who has received one of our monogrammed‐logo baseballs can probably attest to the importance of America’s national pastime to the PRW team. Two team members hold the distinction of having been drafted by professional baseball organizations (Rick Renwick, CUBS 1979 and Ted Dziuba, METS 2006) prior to their careers in Finance, and although an unfortunate number of Yankee fans roam the halls of Suite 502, it has made for a healthy rivalry around our Boston‐area office with all of the Red Sox faithful on staff.

It is with this fervor for the game of baseball (and for sound, financial planning) that PRW celebrates Bobby Bonilla Day every July 1st!

Who is Bobby Bonilla and what is Bobby Bonilla day?

Bobby Bonilla was a 6‐time Major League All‐Star and 1997 World Series Champion who played for 9 different teams across a successful 16‐year career in the big leagues. His name is familiar to many outside of the game of baseball because of some savvy financial planning that he implemented when he was released by the New York Mets in 1999. Still owed $5.9 Million on his contract with the Mets, an agreement was made to defer that payment for 10 years, with an agreed‐upon annual interest rate of 8%. Mr. Bonilla’s eventual payout would grow to $29.8 Million, which was annuitized to provide annual payments of $1.19 Million per year for the next 25 years.

Although he retired nearly 21 years ago, every single July 1st through the year 2035, Bobby Bonilla will receive a $1.19M check from the New York Mets. All because of a $5.9M contractual obligation from 21 years ago!

Not only does this speak to the guidance of his agent and investment advisor, but it is a powerful endorsement of the fixed annuity as an investment vehicle to create a secure stream of income. A fixed annuity is most similar to a Certificate of Deposit (CD) that is offered by a bank or other‐FDIC insured institution, except that it is offered by an insurance company. Unlike a CD the income is deferred until you start withdrawing from the product and does not need to be reported in your taxes until that time. In addition to providing a guaranteed rate of return for the investment term, fixed annuities, and all annuities, give you the opportunity to turn those savings into lifelong pension‐like income. The fixed annuity guarantee is backed by the financial strength of the insurance company, which is best understood through its financial rating.

This is an example of the many tools that PRW may consider when we examine the best way to help our clients reach their goals.

We hope you and your families are well and enjoy Bobby Bonilla day!

This material is not a recommendation to buy, sell, hold, or roll over any asset, adopt an investment strategy, retain a specific investment manager or use a particular account type. It does not take into account the specific investment objectives, tax and financial condition or particular needs of any specific person. Investors should discuss their specific situation with their financial professional.

PRW Wealth Management LLC is a registered investment advisor (“RIA”) with the U.S. Securities and Exchange Commission(“SEC”). Investment Advisor Representatives offer financial advice through PRW Wealth Management, LLC. Registered Representatives offer securities through Lion Street Financial, LLC; member FINRA/SIPC. PRW Wealth Management, LLC and Lion Street Financial, LLC are not affiliated. PRW Wealth Management, LLC and Lion Street Financial, LLC do not provide legal or tax advice and are not Certified Public Accounting (CPA) firms.

 

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