What Does Suze Orman Say About Fixed Annuities: A Comprehensive Guide

Understanding Suze Orman’s Perspective on Fixed Annuities

When it comes to navigating the often-complex world of retirement planning, many Americans turn to trusted financial voices for guidance. One such prominent voice is Suze Orman, a renowned financial advisor, author, and television personality. Her straightforward approach and emphasis on security have resonated with millions. So, what exactly does Suze Orman say about fixed annuities, and how might her insights help you make informed decisions about your own financial future? Let’s dive in.

At its core, Suze Orman’s stance on fixed annuities can be summarized as cautious but recognizing their potential role for a specific segment of the population. She doesn’t generally champion them as a universal solution for everyone’s retirement needs. Instead, her commentary often highlights that fixed annuities might be a suitable option for individuals who prioritize safety and guaranteed income above all else, particularly those who are closer to retirement or already in retirement and are deeply risk-averse. She’s not one to push products, and her advice always seems to circle back to understanding your individual circumstances, your tolerance for risk, and your ultimate financial goals. This nuanced perspective is crucial to understanding her take.

My own journey through the financial landscape has often involved grappling with how to balance growth potential with the need for security. I remember a time when I was exploring options for my parents, who were entering their retirement years. They had worked hard their entire lives, accumulated a modest nest egg, and the idea of seeing that principal dwindle due to market volatility caused them genuine anxiety. This is precisely the kind of situation where the concept of a guaranteed income stream, like that offered by a fixed annuity, becomes incredibly appealing. It was during this exploration that Suze Orman’s advice on prioritizing safety for those who can’t afford to lose money really struck a chord with me. It wasn’t about chasing high returns; it was about peace of mind.

Orman’s primary concern, and one that I share, is ensuring that individuals fully comprehend what they are investing in. Fixed annuities, while offering safety, can be misunderstood. They aren’t always simple, and the fees, surrender charges, and limitations can sometimes outweigh the benefits if not carefully considered. Her emphasis is always on clarity and education. If you’re considering a fixed annuity, you need to know the ins and outs, and you need to be sure it aligns with your broader financial plan. She’s a big believer in avoiding products that can trap your money or come with hidden costs that erode your hard-earned savings. So, while she acknowledges the security aspect, she’s also a fierce advocate for transparency and avoiding unnecessary complexity.

The Core of Suze Orman’s Advice on Fixed Annuities

Suze Orman’s advice regarding fixed annuities often boils down to a few key principles. She consistently emphasizes that these products are best suited for those who are:

• Highly Risk-Averse: Individuals who cannot stomach the idea of their principal decreasing due to market fluctuations.
• Seeking Guaranteed Income: Those who want a predictable, reliable stream of income in retirement, much like a pension.
• Nearing or in Retirement: People who have less time to recover from potential investment losses and need to preserve their capital.
• In Need of Simplicity: While fixed annuities can have complexities, the basic premise of a guaranteed rate of return and principal protection is appealing.

Her approach isn’t about blindly recommending fixed annuities. Instead, it’s about understanding the *why* behind considering them. If your primary goal is capital preservation and a steady income, and you’re willing to accept a potentially lower rate of return compared to more volatile investments, then a fixed annuity might deserve a closer look. However, she’s also quick to point out the potential downsides, which we’ll explore further.

One of the most critical aspects of Orman’s counsel is her consistent warning against what she calls “financial products that sound too good to be true.” Fixed annuities, with their promise of guaranteed growth and income, can sometimes fall into this category if not thoroughly vetted. She implores consumers to ask the tough questions and to fully understand the terms before committing their money. This diligent due diligence is a cornerstone of her financial philosophy.

Fixed Annuities: What Are They, Really?

Before we delve deeper into Suze Orman’s specific views, it’s essential to have a clear understanding of what a fixed annuity is. A fixed annuity is a contract between you and an insurance company. In exchange for a lump-sum payment or a series of payments, the insurance company promises to pay you a fixed amount of money for a specified period, or for the rest of your life. The “fixed” aspect means that your principal is protected, and you earn a guaranteed rate of interest. This rate is typically set by the insurance company and can be for a set term or may adjust periodically, though it usually has a guaranteed minimum.

Think of it as a savings account offered by an insurance company, but with a longer-term commitment and the potential for a guaranteed income stream later on. The insurance company invests your money, typically in conservative, fixed-income securities, to generate the returns needed to meet its obligations. This investment strategy is what allows them to offer the guarantees.

The two primary types of fixed annuities are:

• Single Premium Immediate Annuity (SPIA): You pay a lump sum, and income payments begin almost immediately, usually within a year.
• Deferred Fixed Annuity: You pay a lump sum or premiums over time, and the money grows tax-deferred. You can then annuitize it (start receiving payments) at a future date, or you can take a lump-sum withdrawal.

Orman’s perspective often touches on both, but with a particular emphasis on understanding the long-term nature of deferred annuities and the immediate income guarantee of SPIAs.

Suze Orman’s Cautionary Notes on Fixed Annuities

While Suze Orman acknowledges the safety and income-generating potential of fixed annuities, she is also a vocal critic of certain aspects and potential pitfalls. Her cautionary notes are critical for anyone considering this financial product.

1. Liquidity and Access to Your Money

One of Orman’s biggest concerns with fixed annuities is their lack of liquidity. Once you purchase an annuity, especially a deferred annuity, your money can be tied up for a significant period. If you need to access your funds before the surrender period ends, you will likely face substantial surrender charges, which can significantly diminish the amount you receive. Orman is a strong advocate for having access to your emergency funds and ensuring that your retirement savings don’t become inaccessible when you might need them most. She often advises keeping a portion of your assets in more liquid forms, like high-yield savings accounts or money market funds, for unexpected expenses. With fixed annuities, the surrender charges can be as high as 10% or more in the early years, making early withdrawals very costly. This is a point she reiterates frequently.

I recall a conversation with a neighbor who had purchased a fixed annuity years ago. They were facing an unexpected medical bill, and while their annuity had grown modestly, they found out that cashing it out would cost them thousands in surrender fees. This experience really underscored for me the importance of Orman’s warnings about liquidity. It’s a stark reminder that guaranteed returns come with trade-offs, and sometimes, those trade-offs involve being locked into a contract when life throws you a curveball.

2. Surrender Charges and Fees

Beyond the initial liquidity issue, Orman is a keen observer of how fees and charges can eat away at returns. Fixed annuities often come with surrender charges that gradually decrease over time, typically over 7 to 10 years or even longer. In addition to these, there can be other fees associated with the contract, such as administrative fees or mortality and expense charges, especially if the annuity has any riders attached. Orman consistently advises consumers to scrutinize all fees associated with any financial product. She believes that fees should be transparent and justifiable, and if they seem excessive, it’s often a red flag. For fixed annuities, she emphasizes understanding the surrender charge schedule inside and out and factoring it into your decision-making process. If you anticipate needing access to your funds within the surrender period, a fixed annuity is likely not the right choice.

3. Inflation Risk

Another crucial point Orman raises is the potential for inflation to erode the purchasing power of fixed annuity payments. While the nominal amount of money you receive may be guaranteed, if inflation rises significantly, the real value of that income could decrease over time. This is particularly relevant for long-term deferred annuities or immediate annuities that will pay out for many years. Orman often suggests considering inflation-adjusted options, though these can be more complex and might come with lower initial payouts. For individuals who need their income to keep pace with the rising cost of living, a fixed annuity alone might not be sufficient. She might suggest pairing it with other investments that have the potential to grow faster than inflation, though this introduces more risk, which is precisely what fixed annuities are designed to avoid.

This is a subtle but significant concern. Imagine receiving a fixed payment of $2,000 per month in retirement. If inflation is running at 3% per year, the purchasing power of that $2,000 will diminish over time. What $2,000 buys today will require more than $2,000 to buy in 10 or 20 years. For someone relying heavily on this income, that can be a serious challenge to maintaining their lifestyle.

4. Misleading Sales Tactics and Complexity

Orman is a strong advocate for financial literacy and has often spoken out against financial products that are intentionally made complex to obscure their true costs or limitations. She cautions that some insurance agents might present fixed annuities in a way that overemphasizes the guarantees while downplaying the surrender charges, fees, and lack of flexibility. She urges consumers to be wary of overly aggressive sales pitches and to take their time to understand the contract thoroughly. If a salesperson is pressuring you or not clearly explaining all the details, Orman would likely advise you to walk away and seek advice from a trusted, unbiased source.

In my experience, the financial services industry can sometimes be opaque. It’s vital to remember that insurance agents are often compensated based on the products they sell. While many are ethical, it’s always wise to be your own advocate and do your homework. Orman’s voice serves as a crucial reminder to stay vigilant.

5. Returns May Be Modest

Orman is realistic about the potential returns of fixed annuities. While they offer safety, the interest rates are generally conservative. In periods of low interest rates, the returns on fixed annuities can be quite low, sometimes barely keeping pace with inflation. She often contrasts this with other investment vehicles that, while carrying more risk, have the potential for higher growth over the long term. For younger individuals or those with a longer time horizon before retirement, Orman typically advocates for growth-oriented investments that can build wealth more aggressively, even with the inherent market fluctuations. Fixed annuities, in her view, are less about wealth accumulation and more about wealth preservation and income security for those who need it most.

When Suze Orman Might Approve of Fixed Annuities

Despite her cautions, Suze Orman does recognize specific scenarios where a fixed annuity can be a valuable tool. Her approval hinges on meeting certain criteria that align with her core financial principles.

1. The Truly Risk-Averse Individual

For individuals who are genuinely terrified of losing money – perhaps due to past negative experiences in the market or a naturally conservative disposition – a fixed annuity can offer a much-needed sense of security. Orman understands that for some, the psychological comfort of knowing their principal is safe and their income is guaranteed outweighs the potential for higher returns. She would likely say that if the thought of your savings declining causes you significant distress, then the safety offered by a fixed annuity might be worth its limitations. This is about prioritizing peace of mind.

2. Guaranteed Lifetime Income Needs

When retirement planning, one of the biggest concerns is outliving your savings. Orman often advocates for solutions that can provide a guaranteed income stream for life. This is where an immediate annuity, a type of fixed annuity, can be particularly useful. By converting a lump sum into a lifetime income stream, you effectively eliminate the risk of outliving your money. Orman might suggest this for individuals who have accumulated enough savings to cover their essential expenses and want to ensure they have a reliable income source, regardless of market performance, for the rest of their lives. This guaranteed income can provide a solid foundation upon which other, more flexible investments can be built.

Imagine a retiree who has managed to save enough to cover their basic needs, but they still worry about unexpected expenses or a prolonged period of market downturns impacting their ability to maintain their lifestyle. Purchasing an immediate annuity with a portion of their assets can act as a financial safety net, ensuring that their core expenses are always met. This can free them up to take a bit more calculated risk with the remaining portion of their portfolio, or simply enjoy their retirement with less financial anxiety.

3. Supplementing Other Retirement Income

Orman often emphasizes diversification and having multiple streams of income in retirement. A fixed annuity can be a component of a broader retirement income strategy. For instance, if someone has a pension, Social Security, and some other investments, a fixed annuity could be used to bridge any potential gaps and provide an additional layer of predictable income. She wouldn’t suggest it as the sole retirement vehicle, but rather as a building block within a well-diversified plan. It can add a layer of certainty to an otherwise potentially variable income stream.

4. Understanding and Accepting the Trade-offs

Ultimately, Orman’s approval is contingent on the individual fully understanding and accepting the trade-offs. If you know that you’re sacrificing potential growth for safety, that your money will be locked up for a period, and that inflation could be a concern, then a fixed annuity might be a calculated decision. She champions informed consent. If you go into it with your eyes wide open, understanding what you’re giving up and what you’re gaining, then it can be a suitable choice for your specific situation.

How to Evaluate a Fixed Annuity, According to Suze Orman’s Principles

If, after considering Orman’s advice, you believe a fixed annuity might be right for you, it’s crucial to approach the evaluation process with the diligence she advocates. Here’s a step-by-step guide incorporating her principles:

Step 1: Assess Your True Risk Tolerance and Needs

Before even looking at annuity products, take an honest look at yourself. Ask yourself:

• Can I tolerate market fluctuations with my retirement savings?
• What is my primary goal for this money: growth, preservation, or guaranteed income?
• How long do I anticipate needing this money?
• Do I have a significant need for liquidity in the short to medium term?
• What are my other sources of retirement income (Social Security, pension, other investments)?

If your primary concern is wealth preservation and guaranteed income, and you are deeply risk-averse, then continue exploring. If you are seeking aggressive growth or need frequent access to your funds, a fixed annuity is likely not your best option.

Step 2: Understand the Contract Terms Thoroughly

This is where Orman’s advice is paramount. Obtain the contract and read every single word. Pay special attention to:

• The Guaranteed Interest Rate: What is it? For how long is it guaranteed? What is the minimum guaranteed rate?
• Surrender Charges: What is the surrender charge schedule? How long does it last? Are there any exceptions to the surrender charges (e.g., for terminal illness)?
• Fees and Expenses: Are there any administrative fees, mortality and expense fees, or rider fees? Get a clear breakdown of all potential costs.
• Annuitization Options: If you plan to annuitize, what are the payout options? Are they fixed, inflation-adjusted, or variable?
• Death Benefit: What happens to the contract value if you die before annuitizing or during the payout period?

Don’t hesitate to ask the insurance agent or advisor to explain anything you don’t understand. If they can’t provide a clear explanation, it’s a major red flag.

Step 3: Compare Quotes from Multiple Reputable Insurance Companies

Fixed annuity rates and terms can vary significantly between insurance companies. Orman always advises shopping around. Get quotes from several highly-rated insurance companies. Look for companies with strong financial ratings from agencies like A.M. Best, Moody’s, or Standard & Poor’s. A higher rating generally indicates a greater ability for the company to meet its long-term obligations.

Here’s a table that might help you organize your comparisons:

Fixed Annuity Comparison Worksheet

Feature	Insurance Company A	Insurance Company B	Insurance Company C
Guaranteed Interest Rate (%)	[Rate]	[Rate]	[Rate]
Rate Guarantee Period (Years)	[Years]	[Years]	[Years]
Minimum Guaranteed Rate (%)	[Rate]	[Rate]	[Rate]
Surrender Charge Schedule (Years)	[Schedule]	[Schedule]	[Schedule]
Initial Surrender Charge (%)	[Percentage]	[Percentage]	[Percentage]
Annual Fees (%)	[Percentage]	[Percentage]	[Percentage]
Rider Fees (%)	[Percentage]	[Percentage]	[Percentage]
Financial Strength Rating	[Rating]	[Rating]	[Rating]
Minimum Investment	[Amount]	[Amount]	[Amount]
Withdrawal Options (Beyond Free Withdrawal)	[Details]	[Details]	[Details]

Step 4: Consider the Role of the Advisor

Orman often advises seeking advice from fiduciaries, who are legally obligated to act in your best interest. If you are working with an insurance agent, understand how they are compensated. If they are solely compensated by commission, their advice might be biased. Consider consulting with a fee-only financial planner who can provide an unbiased assessment of whether a fixed annuity fits into your overall financial plan. They can help you understand how it compares to other options, like bonds, CDs, or other retirement income strategies.

Step 5: Factor in Taxes

Interest earned within a deferred annuity grows tax-deferred. This means you don’t pay taxes on the earnings until you withdraw them. However, when you do withdraw the earnings, they are taxed as ordinary income. If you withdraw money before age 59½, you may also be subject to a 10% IRS penalty tax. Orman is a big proponent of understanding the tax implications of any investment. While tax deferral can be beneficial, it’s important to know that it’s not tax-free. If you are in a high tax bracket in retirement, this ordinary income tax can be a significant factor.

Suze Orman on Annuities: A Broader Context

It’s important to place Suze Orman’s views on fixed annuities within her broader financial philosophy. Her core messages consistently revolve around:

• Paying Off Debt: She’s a staunch advocate for eliminating high-interest debt before investing heavily.
• Building an Emergency Fund: Having 3-6 months (or more) of living expenses in a safe, accessible account is non-negotiable for her.
• Saving for Retirement Consistently: Whether through a 401(k), IRA, or other vehicles, consistent saving is key.
• Investing in Low-Cost Index Funds: For long-term growth, she often recommends diversified, low-fee index funds.
• Avoiding Financial Products That Are Too Complex or Have High Fees: This is where her skepticism of certain annuities, particularly variable annuities with their layers of fees and complex riders, often stems from.

Fixed annuities, in her view, can sometimes fit into the “safety” aspect of a well-rounded financial plan, but they are rarely the primary growth engine. She views them as a tool for risk management and income security, not for aggressive wealth accumulation. She would much rather see you in a diversified portfolio of low-cost index funds if you have the time horizon and risk tolerance to weather market downturns. However, if you’re 75 years old, have a substantial sum you cannot afford to lose, and want a guaranteed income for life, she’d likely say, “Okay, let’s look at the best fixed annuity for you, but understand what you’re signing up for.”

Fixed Annuities vs. Other Retirement Options

To better understand Orman’s perspective, it’s helpful to compare fixed annuities to other common retirement savings and income vehicles:

• Certificates of Deposit (CDs): Similar to fixed annuities in their safety and fixed interest rate, but CDs are typically shorter-term, more liquid, and FDIC-insured. Fixed annuities are not FDIC-insured; they are backed by the financial strength of the insurance company.
• Bonds: Bonds offer fixed interest payments and can be considered relatively safe, especially government bonds. However, bond prices can fluctuate, and there is always some level of credit risk. Fixed annuities offer a guaranteed rate and principal protection from the insurer.
• Stocks/Equity Mutual Funds/Index Funds: These offer the potential for higher growth but come with significant market risk. They are not suitable for those seeking capital preservation. Orman often favors low-cost index funds for long-term growth.
• Social Security/Pensions: These are foundational retirement income sources. Fixed annuities can supplement these, providing an additional layer of guaranteed income.

Orman’s position often suggests that if you have the time and tolerance for risk, a combination of diversified low-cost index funds and perhaps a more conservative bond allocation might offer better long-term growth potential than a fixed annuity. However, if you’ve reached retirement and prioritizing capital preservation and a guaranteed income is paramount, a fixed annuity (specifically an immediate annuity) can be a prudent choice for a portion of your assets.

Frequently Asked Questions About Suze Orman and Fixed Annuities

Q1: Does Suze Orman recommend fixed annuities for everyone?

A: Absolutely not. Suze Orman is very clear that fixed annuities are not a one-size-fits-all solution. She advocates for them only for a specific group of individuals: those who are highly risk-averse, prioritize capital preservation and guaranteed income above all else, and are typically closer to or already in retirement. For younger individuals or those with a longer time horizon and a higher tolerance for risk, she generally advises investing in growth-oriented assets like low-cost index funds. Her philosophy is always to match the financial product to the individual’s specific needs, goals, and risk tolerance. She strongly cautions against purchasing any financial product without fully understanding its implications, and this applies heavily to annuities.

Her emphasis is on security. If the thought of losing any portion of your retirement nest egg causes you significant distress, and you’ve done your homework to understand the trade-offs, then a fixed annuity might align with your needs. However, she’s also quick to point out that if you can stomach market fluctuations and are focused on long-term wealth accumulation, other investment vehicles will likely offer better growth potential. The key for Orman is a deep understanding of your personal financial situation and an honest assessment of your comfort level with risk.

Q2: What are the main concerns Suze Orman has about fixed annuities?

A: Suze Orman articulates several key concerns regarding fixed annuities. Firstly, she is very wary of their **lack of liquidity**. Once you commit your money to a deferred fixed annuity, it can be locked up for many years, and accessing it early will likely incur substantial **surrender charges**. This means your money might not be available when unexpected needs arise, which is a significant problem for her. Secondly, she points out the potential for **inflation to erode the purchasing power** of the fixed payments over time, especially for longer-term contracts. If inflation rises significantly, the real value of your guaranteed income could decrease, making it harder to maintain your lifestyle. Another major concern is the **complexity and potential for misleading sales tactics**. She warns that some agents may overemphasize the guarantees while downplaying the fees, surrender charges, and other limitations, leading consumers to make uninformed decisions. Finally, she acknowledges that the **returns on fixed annuities can be modest**, especially in low-interest-rate environments, which might not be sufficient for wealth accumulation goals compared to other investment options.

Her advice is always to be a diligent consumer, ask probing questions, and fully comprehend every aspect of the contract before signing. She champions transparency and wants individuals to be empowered with knowledge, not pressured into products that might not be in their best interest.

Q3: When would Suze Orman consider a fixed annuity to be a good option?

A: Suze Orman would consider a fixed annuity a good option in very specific circumstances, primarily when the individual’s primary goal is **capital preservation and guaranteed lifetime income**, and they exhibit a high degree of **risk aversion**. She often points to individuals who are nearing or already in retirement, have accumulated sufficient savings, and are deeply concerned about outliving their assets or experiencing significant market losses. For these individuals, an immediate fixed annuity (SPIA) can convert a lump sum into a predictable, reliable income stream that lasts for life, offering immense peace of mind. This can serve as a foundational piece of their retirement income, supplementing Social Security and any pensions.

Furthermore, she might see value in a fixed annuity as a way to **diversify a retirement portfolio** by adding a guaranteed income component. If an individual has other assets invested in potentially more volatile vehicles, a fixed annuity can provide a stable, predictable income source that acts as a buffer. Crucially, for Orman, it’s a good option only if the individual **fully understands and accepts the associated trade-offs**, such as the reduced liquidity and potential for lower growth compared to other investments. She would only endorse it if the consumer is well-informed and the product genuinely meets a specific, critical need for security.

Q4: How does Suze Orman suggest evaluating a fixed annuity?

A: Suze Orman’s approach to evaluating a fixed annuity is rooted in thorough due diligence and a critical mindset. She advises consumers to start by honestly assessing their own financial situation, risk tolerance, and retirement goals, ensuring that capital preservation and guaranteed income are truly their top priorities. If that assessment aligns, the next crucial step is to **read the entire contract very carefully**, paying meticulous attention to the guaranteed interest rate, the surrender charge schedule and duration, all associated fees and expenses, and the available annuitization options. She stresses the importance of asking the insurance agent or advisor to clarify anything that isn’t crystal clear.

Orman also strongly recommends **shopping around and obtaining quotes from multiple highly-rated insurance companies**. Financial strength ratings (like those from A.M. Best) are vital indicators of an insurer’s ability to meet its obligations. She also suggests understanding the compensation structure of the advisor you are working with and considering consulting with a **fee-only fiduciary financial planner** for an unbiased opinion on whether the annuity fits within your broader financial plan. Finally, she emphasizes understanding the **tax implications**, particularly that earnings are taxed as ordinary income upon withdrawal, and potential IRS penalties apply if withdrawn before age 59½. Her mantra is to be informed, ask questions, and never feel pressured into a decision.

Q5: Are fixed annuities taxable, according to Suze Orman?

A: Yes, fixed annuities have tax implications that Suze Orman always highlights. The primary benefit is **tax deferral**. This means that any interest earned within a deferred annuity grows without being taxed annually. You don’t owe taxes on the earnings until you begin withdrawing the money. However, Orman is very clear that this does not mean the money is tax-free. When you eventually withdraw the earnings (either as income payments or a lump sum), they are taxed as **ordinary income** at your then-current tax rate. This is an important distinction from capital gains, which are often taxed at lower rates. Additionally, if you withdraw money from a deferred annuity before you reach age 59½, you may be subject to a **10% early withdrawal penalty** from the IRS, in addition to ordinary income taxes. She stresses that understanding these tax consequences is a vital part of deciding if an annuity is the right choice for your retirement income strategy.

Her advice on this front is to consider your anticipated tax bracket in retirement. If you expect to be in a higher tax bracket, the ordinary income tax on annuity earnings could be a significant factor. Conversely, if you anticipate being in a lower tax bracket, the tax deferral could be more beneficial. It’s about looking ahead and understanding how the tax treatment will affect your net returns over the long term.

In Conclusion: Suze Orman’s Balanced View on Fixed Annuities

Suze Orman’s perspective on fixed annuities is one of careful consideration and targeted application. She doesn’t dismiss them outright, recognizing their value for specific financial goals, particularly for individuals who need absolute security and guaranteed income in retirement. Her repeated emphasis is on understanding the product inside and out, scrutinizing fees and surrender charges, and ensuring that the trade-offs for safety are fully accepted.

For those who are deeply risk-averse and prioritize peace of mind over potentially higher returns, a fixed annuity, especially an immediate annuity for income, can indeed be a prudent choice. However, she consistently champions broader financial principles, such as robust emergency funds and diversified, low-cost investments for growth, as primary strategies. Fixed annuities, in her view, are typically a tool for risk management and income security, not for aggressive wealth building.

As you navigate your own retirement planning, remember Suze Orman’s core message: be informed, be vigilant, and always make decisions that are aligned with your unique financial circumstances and long-term objectives. Fixed annuities may offer a secure harbor for some, but only if you steer your ship with a clear understanding of the currents, the costs, and the destination.