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Author: mclaus Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76082  
Subject: Are variable annuities a reasonable option? Date: 5/13/1998 4:26 PM
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Hi -

Here is my situation

-38 years old, married, no children and no plans for them
-Both my spouse and I have fully funded out 401(k)'s and our IRA's.
- Our income level is high enough to exclude us from Roth IRA's
- I have about $400K in after tax money as a result of diligent savings and a small inheritance
- We are saving/investing about $600-$700/monthly after tax.
- We have a mortgage balance of about $275K. Fixed rate @ 7% for two more years, then variable annually tied to the Cost of Funds Index.

I'm wondering if a variable annuity might be a good place to put some of the after tax money? Although fees are pretty high (Vanguard offers a relativly low fee flavor), at least it eliminates some of the annual tax bite I face now.

Taxes are a major problem - all our income come directly from two employers and as such is reported directly to IRS - no place to shield their prying eyes. Same with dividends and capital gains from the after-tax investments. Definitely at 31% or higher each year.

Another question - should I just pay off the mortgage or is that money better kept invested. FYI - the house is located in a current "hot" real estate market (Raleigh-Durham NC) and has appreciated approx. 6% annually for the last few years)

I know annuities are generally frowned upon by the Foolish crowd for their fees, but do you think my situation might be what they are best suited for?

- mclaus
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