We're contemplating transferring current IRA, IRA roths, Money Market, etc.. monies into a fixed annuity. What is your opinions, good or bad, about annuities in general if you have any experience or knowledge of them. Things like hidden fees and penalties, how hard to get money if you want it, how difficult for succesor Living Trust heirs to get to it upon our deaths, etc. I'm looking up all I can about it, but this forum is a gold mine of experience in most matters so thought i'd ask you fine folks, too. My wife and I have been retired for about ten years. Thanks in advance for any help here.

Right this minute they are not great IMHO. The guaranteed interest rates are too low and your principle varies up & down. I own two of them but I bought them many years ago when the guaranteed interest rate was north of 5%. They keep calling me and offering me cash to give them up - NOPE!

I like Triple Tax Free Muni's. In my State I can still buy new issues (at Par) at 3.8% - 4.5% as long as I am willing to go down to A or A2 rating. The ones I buy are ALWAYS revenue generating bonds, which mean if they get into trouble they raise the tolls, subway fares, etc. For that rate I have to go out 20 - 25 years but I am interested in the interest income, not buying or selling so I don't care what happens in between. While 4% or so may not be great - remember - THEY ARE TAX FREE!! Depending on income bracket, that could be equivalent to 6 - 7% taxable income.

I am sure some others will tell you differently, but YOU need to do what works for YOU.

My mother had an annuity when she passed at the beginning of May. She did not have a “pay on death” stipulation so the annuity went to her estate. As executor, I’ve been battling with those people for two months. Since it went to the estate, all the funds will be released at one time, whenever that is. I don’t have the option of parceling it out over time to lesson the tax hit on the heirs. Taxes will be due on the entire amount come tax time.

This is just me talking, but I would avoid annuities.

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A gun has no brain.. use yours

WARNING the sellers primary purpose is getting a COMMISSION.

Ask if he will sign a form confirming a FIDUCIARY DUTY to you.

Simply this means he will always ast in YOUR BEST INTERESTS.

If he says NO - keep looking.

Ask about FEES - initial and recurring.

If he talks about the great yield - BEWARE. No one can guarantee any future profits.

Are you paying too much for your annuity?
Know your annuity costs

With an average expense ratio of 0.54%, the Vanguard Variable Annuity’s costs are more than 70% below the annuity industry average of 2.26%.** That difference can save you an average of $1,700 a year in fees for every $100,000 you invest.

The Vanguard Variable Annuity offers a diverse lineup of stock, bond, and money market portfolios, many of which are index-based. The low expense ratios of the underlying investments help to keep your costs down.

Are you paying too much for your annuity? | Vanguard

Recently Warren Buffet recommended Vanguard for investments. Partly for LOWER than average EXPENSES.

How much more are you willing to pay a "good old boy" in commission and fees ??

Ask for ANY claims in WRITING.

Bekeart

If you don't need the money they are great.

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Mike
S&WCA #3065

I wouldn't buy one.
I have Exchange Traded Funds, Mutual Funds and Bonds in my cash and retirement accounts.
Lately I have I been buying NM Muni Bonds.
Yes, we have a State Income Tax here.
Since I have less than the $5+ millon size estate,
The things I own will go to my kids without estate tax at the Market value when I cross over.
Step up basis.
Ambient Temperature is the best tax avoidance strategy known to man or woman!

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NRA LIFE MEMBER

My former employers had our 401Ks with Vanguard - one of the best firms in the retirement investment business. That said, the things mentioned above about what to ask, etc.,are sound no matter what direction you go.

Remember, OJ's annuities were all in Florida where no one can touch them.

I looked into them years ago and decided they were not a good deal when compared to mutual funds, municipal bonds, and selective stock purchases.

Another satisfied Vanguard customer here. My account is not tax free, but it has earned money every year I've had it.

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Release the Kraken

Variable Annuities should generally be avoided. Brokers handling them love 'em - they make great commissions for selling them. Seriously, do a little internet research, as there are numerous sites explaining exactly why they are largely sucker bets for the unwary customer. There is a huge array of indexed ETFs available that are much more worthy of your attention. Fortunately, there is a staggering amount of information about all them available on the internet for research. Watch out for the service charge, most have an annual fee ranging from less than 0.1% to several percent. Most are below 0.5%, and I wouldn't advise going any higher.

Don't know if it makes a difference, but O/P asked about a fixed annuity.

Another happy Vanguard guy here.

What specific goal is this going to accomplish for you?

If you can't give a simple answer to that question walk away. There's times when an annuity is appropriate. If you're talking about a portion of your assets going into an immediate annuity in order to provide some stability and security to your retirement income then maybe...yeah. But if you can't tell us why you're buying it then it's probably not for you.

I have some money in an annuity that has a guaranteed 6% annual return. It also is indexed to the S&P so the return could be higher in some years, but it cannot be lower. The upfront fees were sizable, but the return makes it worth it over time for a PORTION of my retirement funds.

I would NEVER put 100% of my retirement funds into any one place. It's okay for a piece of the pie, but not for everything.

I also have a 401k through Vanguard that's invested in five different mutual funds and a brokerage account with Fidelity that is invested in two other mutual funds. Index funds are the best place for most people. They have very low fees, and the returns follow the market over time. As we get older we should shift more of our funds out of high risk funds and into lower risk investments keeping in mind that lower risk generally means a lower rate of return in an up market. It also generally means less of a decline in a down market.

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Or something like that . . .

Tex gave some sage advice. Never put all your eggs in one basket. Diversify. Even if I somehow found the greatest annuity on earth, I would nver let it exceed 25% of my total investment portfolio. The balance would mostly be in low-fee indexed stock, bond, and real estate ETFs.

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~ S&W aficionado in training ~

Before you make any decision about annuities, it would pay you to look at this web site and listen to what Ken Fisher says about them:

Annuity Insights | Fisher Investments

'People don't buy annuities, they are sold annuities."

As far fetched as it may sound, if the company you buy an annuity from goes under, you are out the money. Note the caveats they all give in their ads.

I am a retired banker. The general opinion I hear from peers is that they are certainly not for everybody. For someone who lacks the ability or desire to learn how to manage their personal finances, they could be an answer. At a cost.

If you must dive in, Vanguard is a great company.

Personally, I prefer to manage my retirement funds mostly through indexed
stock mutual funds. I never rolled over my 401K which is 95% stocks. After over 14 years I still have about 91% left after using it as a major source of income. The key is to only sell when the market is high and have sufficient cash reserves to ride the down market.

Looked at annuities many years ago when I was much younger. I am now 63. They have changed a great deal over the years. Yes, they can be expensive but do not have to be if you shop around. I recently looked at them again and while I had questions I could see where if someone purchased this particular one when they were a little younger, it would actually pay off well and give you that guaranteed return for life I assume you are loking for. As stared earlier most do not advise putting all your retirement in them. There are so many fine print what ifs with them as well. Where does your principal go, can you pass it on and does it have a life insurance piece to it? The old ones were a combination of life insurance and investment vehicle which I hated. There is a reason many life insurance companies offer these. Look at the rating of these companies. Go with an investment company like vanguard if you go this route. They are big and keeps costs low.

You already have an annuity - it's called social security.

My God Wyatt! Don't look for advice about your retirement money from ANY forum.
Would you go to the 7-11 for advice on your guns?
Seek, and if necessary, which it usually is, pay for expert advice on what's going to carry you over to your grave.

Define your EXPERT.

The good old boy down at the local insurance or brokerage office is interested in HIS commission.

A paid financial adviser with a Fiduciary Relationship Agreement - MIGHT be an Expert - depending on on his training.

I am not sure if the original poster got any answers that satisfied him. But, he sure got some questions to ask before parting with his money.

Since we ( the members of this forum) are not EXPERTS maybe we should not ask auto questions either.

Bekeart

Many years ago the first time I ever heard about Annuities I was surprised and confused that they were sold by insurance companies.
Investment products are set up and sold by investment companies.
Insurance products originate in Insurance Companies.
Vanguard Annuity? Sold by Vanguard, low cost , probably one of the better ones.
Comes from where?
Trans America Insurance Company.
Now for some Vanguard Web Site small print-

*Product guarantees are subject to the claims-paying ability of the issuing insurance company.

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NRA LIFE MEMBER

Our financial adviser tried to get me into one but another explained it this way that is easy to understand the bottom line is CV this is what you get if you want out, it may be a lot lower than what you think. We have stayed away from them but I have a friend that loves them. But some times insurance companys go away. (CV is the current value) Jeff

Buy insurance from an insurance company. Seek investment advice elsewhere.

My understanding is that the classic pros/cons of annuities are:

Pros
* Guaranteed income stream (assuming the company stays in business)
* Drop-dead simple once they're implemented: You get a check - like when you're working. Nothing to manage.
* Guaranteed return. Protected from market downturns.

Cons
* Expensive. Typically (from a reputation) they cost a lot.
* You don't get the upside of good returns when the market is doing well.
* Did I say they're expensive?

The best one-sentence summary I've ever heard: When you buy an annuity you're buying an in income stream.

I recently looked into whether a short-term annuity would be a feasible alternative for short-term money (~1-5 yr horizon) as a way to get better than the current lousy returns being had on those types of funds. Based on the model I built it was better to not use the annuity. I came out ahead by keeping it out of the annuity and managing it myself.

I just put half of my six figure 401k into a more secure fund. If the market goes south I still have half my savings. But I'm thinking of taking half of it and roll the dice into a high risk investment. Life's a gamble. Being retired I have two other good incomes to rely on. I worked two and three jobs all my life. I did nothing but saved for retirement. I started saving at 35yo so it's never too late to start saving.

I got upset once when my company matched 401k took a dive in a recession. I was told by a old co worker to sit tight everything we lose money we're buying more for less. I noticed it doubles when it comes back. Roll the dice.

Annuities are about fees and commissions. Get the commissions and total long term and exit fees in writing. Then call Vanguard and explain your financial goals. The contrast will be enlightening.

I retired from the gubmint about a year ago. I get a pension and I have a chunk of change in TSP (Thrift Savings Plan), which is the govt 401(k).

As I neared retirement I magically got regular solicitations to move my dough out of TSP into various other pots, mostly annuities of one kind or another. My eyes glaze over at financial stuff, but I planned to pull it out.

When I actually retired, I got two good pieces of advice. 1) You've managed your dough just fine til now, why switch? 2) The main goal of a financial advisor is to turn your money into his.

I realized the truth of this when I actually went to a financial advisor and sat in his office. Once when I was a kid I wasn't careful zipping up and endured a few seconds of excruciating pain. This was like that, but for 45 minutes.

I left my money in TSP. Not only that, I parked it in the sleepy G fund, which is guaranteed not to lose money. Last year it made about 3%, no big deal but I don't have to sweat it out when I turn on the news in the morning. All that scratch is still mine, not in the hands of a company somewhere. And the fees are ridiculously low.

If TSP ever tanks it means the US government has collapsed and I'll have bigger problems.

Some guys like moving money around, but it makes my head hurt.

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“What you got, ain’t new.”

i would NOT convert your roth ira into an annuity..........roth ira is free of federal income tax...you may lose this benefit if you convert these funds into an annuity....

why are you wanting to change to an annuity from an ira??

we created an annuity when options for additional funding to iras was closed to us...our annuity acts similar to an ira, but the fees are slightly higher....we can draw out funds after 5 years without penalty and all funds are in an estate trust, which is delivered to beneficiary at our death.....

you need to review the policy of the investment company you are going to open the annuity with...different companies have different rules and fee structures..........ask question of the investment company and be sure you understand all factors before transferring any funds

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There's nowt so queer as folk

Sheriff Burp, take half of the money you would put into the annuity, take your best guess at which guns will appreciate the most in the next 10 years, and buy them.
Chances are you'll make money AND have fun.

I'm wondering if there are any of you who manage to exist on Social Security only. I get a small SS payment every month but my situation is different from others. I didn't work long enough to get anywhere near the max amount and my major income now is through a Federal annuity.

I do have another small annuity that I purchased some years ago that guarantees a fixed monthly payment for life. Got this through Prudential and it transfers to the beneficiary I named. So far so good but not big enough, just sort of supplements my major annuity.

I fully agree. Also a retired fed from another three letter agency but "people like us at NIH/NCI" !!! I fully agree with the TSP. Mine is also parked in the G fund and even though I pull out the RMD, the G fund keeps rolling along and roughly 50% of what I take out, goes back in in interest. Dave_n