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Originally Posted by 2B
Annuities are masterfully constructed with many pages of small print that are designed to hide fees and penalties. Everyone I've looked at is a byzantine work of art.
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Can't argue with you there, I have a finance degree and struggle to read them at times.........
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Fixed annuities are only worthwhile for those incapable of managing their own affairs that have no competent person available to do it for them (IMHO).
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I disagree, people buy them when the rates on them are quite a bit higher than CD's. They are still quite popular. You must not know a lot of older retired folks like I do. Many of them own them, and although I don't sell them, and you and I never would own them, it doesn't mean they are a)incompetent, or b)too lazy to find someone competent to help them.
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The best deals in fixed annuities are available only to those able to sort through the options available to find the lower fee options. If you just let yourself be "sold," you'll be skinned and gutted.
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Show me the "fee structure" in a fixed annuity,and we can talk. The only "fees" are the fact they have to be held for a certain number of years and some companies pay more than others. There is NO M&E charged, and no "ER expense". You give the annuity company money, and they keep it for a number of years........
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Variable annuities never "give" you anything. What may be an increase in value at the time of purchase is taken away in fees during the life of the contract. If the contract is terminated, all of the "gifts" are more than fully recovered.
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The reasons VA's are "bigger than they have ever been" are the following:
1)Virtual elimination of all defined benefit plans.
2)Development of living benefits that guarantee income streams to the owner.
3)Uncertainty about Social Security going forward.
Like I always say, the REALITY on this forum is NOT the reality with the general populace. Here's an example: Just because the folks on here are able to manage their own affairs and that of their older family members, doesn't mean average Joe American does. I'm sure Scott Burns and Clark Howard and others have radio audiences of 2 million or so. However, there are about 170 million adults in the USA, so I don't think the message is being received by the masses........
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VAs are very lucrative to the person that sells them. That's why they are pushed so hard. If you ever want to stop someone from selling you a VA ask about their commissions and fees. Force them to be specific. They won't be but they will go away.
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I see Fidelity is offering a "low cost"living benefit VA, there's always that option.......
I for one agree that they are not cheap. The "cheapest" one I know of is 2.5% all inclusive, most are around 3%..........
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there are numerous FAs that are contributors to this forum. Some may mean well. I hope they do and aren't just salesman justifying their line of work. I can assure everyone I don't make any money if you don't buy a fixed or variable annuity. Also, I do own companies in my index funds that make lots of money when someone buys an annuity so I'm here telling you to not buy something that would increase my personal wealth (an infintesimal amount).
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I appreciate your opinion. I find a lot of what I do on here is provide additional info on financial topics. or instance, there was a LONG thread last month about "loads" on mutual funds. A fair number of folks on here were CONVINCED that whether you invested $1000 or $1,000,000 into "load" mutual funds, you paid 5.75%. That is simply NOT the case. I don't mind folks on here being critical of my industry, it comes with the territory. However, there is a lot of misinformation out there, and I try to provide clarity, whether folks on here believe that or not...........
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