What would be the right questions to ask re an annuity? I've read many conversations here and understand that many people don't like them. What might be problems with one which guarantees 5-6% for life but would pay more, say 1% less than the Dow, if the Dow does better than that? We have no kids, and no problem with dying with only enough $$ to be "disposed of". Will have wills, but only for what happens to remain.
You're talking about a variable annuity with a GMIB (Guaranteed Minimum Income Benefits) Rider. You don't have enough information to make a deciision. You shouldn't buy it, you need more information. Focus on the actual benefit to you more than the nuts and bolts. They will turn, the features of the contract will not. Also be sure to ask yourself, do you want single or joint life? Single may be 1%, Joint will be 1.5% expense, does your spouse need the income to continue, or will the death benefit be sufficient for her?
You could buy Vanguard Total Bond Market Index Fund and get 3.17% and just draw down on principal for the additional needed and cross your fingers and go for it. It's only lost money twice in 23 years. However it's never seen a rapidly rising rate environment so we don't know what happens then. Do you have a palate for cat food?
That said, there is no simple answer.
If I were retired I'd split my money into 3 buckets and fill each before I earmarked for the next:
Must Have: This is the money that must absolutely be there no matter what. Expenses for food, shelter, healthcare etc.
- Asset classes for this include social security, pension, and annuities
Want to Have: Extras in retirement.
- If I didn't understand individual stocks & fixed income, I would use a mutual fund asset allocation program. If I did do individual stocks & fixed income, I'd manage half, and farm out the other half
Legacy: Doesn't sound like you're concerned. Nothing further needed.