People who are nearing retirement face a volatile stock market on the one hand and historically low returns on their savings on the other. Fixed annuities offer a guaranteed stream of income, but often come with high fees. Meanwhile, people who pay a lump sum for an annuity and die soon after lose the cash they invested. Economist Brett Hammond of TIAA-CREF discusses how an annuity can fit into a diversified portfolio, and some pitfalls to avoid.

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October 12 2011 at 3:22 PM Report abuse rate up rate down Reply

Financial advisors do what they do to make money. They make their salaries by taking your money and charging you fees. I'm not being cynical, just stating the truth.

There are pros and cons to both variable and fixed annuities. Either will cost you in fees, but both can offer you a steady stream of income. I'm 55, and either way (variable or fixed) if I live past 85, I'll come out ahead, the way I figure it.

October 03 2011 at 12:55 PM Report abuse rate up rate down Reply
Jade Rossback

What a joke. Very misleading. VARIABLE annuities are the one's with HIGH FEES! You failed to mention that! Clarifying the different TYPES of annuities would be the proper thing to do instead of skewing the facts for one's gain, TIAA-CREF, etc. You are so far off on what was covered I need to stop or this will become a novel. Don't believe this garbage!

September 21 2011 at 8:44 AM Report abuse +2 rate up rate down Reply
1 reply to Jade Rossback's comment

I agree with Jade. All of the "benefits" of annuities, come with a price. So you wanna pass on whatever is left over after you die--you'll pay for it. Want inflation protection--you'll pay for it. Want to surrender the policy after you discover it is just way too expensive--you'll pay for it. Want a good interest rate---forget it. There may be straight forward annuities out there, e.g., fixed, immediate annuity, but even these have high fees. Depending on the age of the annuitant, these instruments, while meaning well and providing a certain level of security, should be fully vetted by anyone seeking to purchase one. Does your state insure the company providing the annuity? What is the credit rating of the sponsoring company? All of these are important questions to ask BEFORE being sucked-in. On the other hand, there are satisfied customers who have the right product for their needs. So, not all annuities are bad. Deferred, variable annuities, look long and hard. Immediate, fixed--worth a try for some people.

September 21 2011 at 1:19 PM Report abuse +1 rate up rate down Reply
Kevin Morrison


September 21 2011 at 1:12 AM Report abuse +2 rate up rate down Reply

No matter where you put your money, it will be worth NOTHING if the FED doesn't quit printing trillions.

September 20 2011 at 9:52 PM Report abuse +4 rate up rate down Reply

Hmmmm....Not a lot of truth in these postings or articles. I handle fixed and fixed indexed annuities that have no yearly fees and no commission charges to the clients. They are not considered " investments" because they are insurance. They have guaranteed growth and can be turned into a lifetime stream of income and still guarantee that your beneficiaries can receive the "leftovers". Since I handle them, and I know this is the truth, I wonder what the motivation of the people posting the opposite is.

September 20 2011 at 8:01 PM Report abuse +1 rate up rate down Reply
2 replies to shaggycsb's comment
Jade Rossback

Right on Shaggy!

September 21 2011 at 8:45 AM Report abuse -1 rate up rate down Reply

@shaggycsb, when you say "guaranteed growth", do you mean that as opposed to a guaranteed lifetime stream of income? My understanding is that for a variable annuity, I can get a minimum gauranteed lifetime stream, but the initial investment doesn't come with a guaranteed growth.

October 03 2011 at 12:58 PM Report abuse rate up rate down Reply

many years ago, I worked part time for a great company. We showed people who were sold trash policies like WHOLE LIFE, VARIABLE LIFE, ETC. how to buy term and investment the difference. It was a great concept, and it worked for me. Yes, Annuity's have a great deal of up front commisions. Believe it or not, common stocks over the long haul performs the best. The key is when your young to invest in more aggressive stocks, or mutual funds. As you get older shift your investments to safer funds, or bonds. I'm just a high school grad , and if I can do it I know anyone can. Read, and study for yourself, and don't believe everything you here. Especially insurance agents. May God Bless Your day

September 20 2011 at 7:27 PM Report abuse +1 rate up rate down Reply
1 reply to maggiemoe1950's comment
Jade Rossback

How are your bonds doing with this low interest rate environment? Have they been called yet?

September 21 2011 at 8:47 AM Report abuse +1 rate up rate down Reply

Annuity's are an way for the insurance industry to hold YOUR money for a long period of time.
I had a whole life annuity and Nation wide was not on my side. After losing most of the initial investment they took another 1400 dollars when I told them no more and cashed out. Safe..hardly.. good % payback Stock market is better, yet has higher risk. Be informed and read the small print. Insurance companies are for themselfes. Its the nature of the game.

September 20 2011 at 7:03 PM Report abuse +1 rate up rate down Reply

I'm not sure I understand. I just purchased a variable annuity not a fixed annuity. Yes it is expensive but it appears to me that both parties have skin in the game. I am guaranteed a fixed annual income, I can cancel the agreement at anytime with no penalty, if the guarantor does not invest well I still get my income for life and if the investments do well my principal increase at 5% increments , all for life. Also, if I am sent into a LTC facility the annual payout doubles. When I die, all remaining proceeds go to my heirs. Seems win win to me. The market has been stagnant for so long I'm not sure if I could stand another long downturn. I do understand that this may not be a good plan for anyone that has time to wait out the ongoing/next market dive.

September 20 2011 at 5:24 PM Report abuse rate up rate down Reply

People buy stocks but are sold annuities, that should tell you all you need to know. The person selling the annuities makes a lot of money with no risk, the costs of an annuity are high, the buyer is at all the risk.

September 20 2011 at 2:22 PM Report abuse +2 rate up rate down Reply
1 reply to thescot's comment
Jade Rossback

But an advisor charging fees of 1-1.5% per year while they LOSE money in the market makes sense???

September 21 2011 at 8:49 AM Report abuse +1 rate up rate down Reply