I haven't read through ALL the replies, but I was surprised at many of the responses. Here's my two cents:
1. Annuities are an amazing tool if you need that particular tool. When you hear about fees and "byzantine language" that generally refers to variable annuities and FIA's (fixed index annuties). Often rebranded with company's own name. The annuities that are considered the "good guys" are: MYGAs (multi year guaranteed annuities, basically insurance company sponsored CDs that get a percentage point higher interest, but levie much more brutal surrender charges. You don't pay interest on earnings until you take it out and you can often take all the interest or a percentage of total out each year if you choose. DIA: deferred income annuities. You plunk down 192K but don't get payments for 10 years and get 1,900 per month instead of 1,000. Caveat, if you change your mind during the "holding period" you just get your 192K back. SPIA. This is the one you're probably talking about ... single premium immediate annuity. You plunk down 192K, get 1,000 per month for life. Now you're comparing the 6.72% to the stock market but that's about as apples to oranges as you can get. These are intended for the withdrawal stage of life. Compare your 6.72% to the SWR of 4%. So these are really designed to eliminate the possibility of running out of money on the particular pile of money you give the insruance company. Say you have 3 Million. 1 million will get you 62K for life at age 60 which happens to be your "core expense nut". Shoot. I wouldn't dare draw 62K a year out of 1M if that's all I had.
Now, nobody in their right mind would plunk down 192K knowing if they walk out of their house and get hit by a bus the next day, they'd lose all their money, so they have a feature called something like "x year certain" which means "you get this for life, but if you die before 10 years, whoever you name continues to get payments until the 10 year clock expires". So if you plunk 192K down, assuming it's joint between your wife and you, you die year 2, she dies year 4, your beneficiary continues to get your payments for 6 years. The payout difference between plain "life" and "life with 10 years certain" is insignificant, because insurance companies know that nobody's going to buy the "plain naked life" version. You can make it 20 year certain, but htat DEFINITELY makes a noticeable difference.
So, again, these absolutely shouldn't be looked at as investments. You're buying an insurance product which, if you stick to the DIA, SPIA and MYGA, are dead simple, fee-free (company pays the broker, no fees that I'm aware of on consumer end. that's reserved for the murky world of variable annuities which gave annuities a bad name).
My wife and I have 150% of what we need and we're STILL going to plunk maybe 25% of our wealth into immediate annuities.
Check out "STan the Annuity Man" which is SUCH a cheesy name I don't know how anyone trusts him. But he's the real deal. He himself recommends NOT using DIA's because of the "change your mind" caveat. Use MYGAs for the portion you know you're going to annuitize, then use a 1035 exchange (like a 1031 but for annuities...many FAs and CPAs have never heard of this) and slide it into an SPIA when it matures.