Investing over decades of time has usually beaten annuity products even if you live to 90-95.
this annuity sounds fabulous .
it is the prudential bond index deferred annuity with a guaranteed 5.50% growth rate .
so lets look under the hood .
this annuity is linked to a bond index .
it will give you the higher of what the index does or a guaranteed 5.50% .
sounds sweet .
so we see if we give them 100k at age 55 and let it grow for 10 years that with a 2.50% expense , there is no way the bond index will beat the guarantee of 5.50% which includes expenses .
so basically the index is for show .
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we see below if we give them 100k at age 55 and defer to 65 to start , we have the 100k compounding to 180,209 .
you really did get 5.50% . but now watch how that goes away .
you cant take that 180k nor can heirs get it . it sits in a virtual account not your account and it is used only as a base for your annuity draw .
so you gave them 100k at age 55 , you start drawing money at 65 .
it takes until age 76 to get your own money back out . that is 20 years at zero return .
you see the first penny of their money at 77 . your return for 21 years is now .44% .
even if you lived to 90 you saw less than 4%
so because they control how much of the virtual account you actually see they can guaranttee you anything and it does not matter .
if you notice while you are deferring and growing out of the 5.50% each year you get they are only allowing you to see 1/10% more of it
by the way , what your heirs get is your actual account balance less all the money drawn out over the years , less the 2.50% expense each year .
after a number of years that is likely zero and you are running only on the virtual account balance no one can touch
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