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URL:  http://boards.fool.com/ugh-i-fear-even-sticking-my-toe-into-this-one-as-30732217.aspx

Subject:  Re: Annuities Date:  6/13/2013  9:19 AM
Author:  Hawkwin Number:  72480 of 75534

Ugh, I fear even sticking my toe into this one as this board is knee-jerk against anything with the word annuity in it - is is like a religion here.

That being said, annuities make sense for a small segment of the population - maybe 10-25% of retirees.

There are two types of annuities - fixed and variable. Fixed annuities are fairly straight forward and operate in a similar manner to a tax deferred CD. I won't focus on them for this commentary. There are also immediate annuities that are very similar to annuitizing a lump sum pension but I don't think that is what is being recommended in this case.

The typical retiree that would benefit from a variable annuity:

Previously poor saving habits (not enough retirement dollars saved up to fund their retirement)
No pension
Risk adverse
Has other liquid assets (emergency funds)
Has need of current or future income that could not be guaranteed from investments.

My advice is for her to get multiple recommendations before signing anything. VAs are one of the most complicated retirement tools there are and are easily the most difficult to understand.

The following link would be a decent place to start to understand the terms, features, benefits, and restrictions of what is out there.

http://www.annuityfyi.com/annuityfyi_mission.html
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