FreeMarket, you asked:

<< I've heard that Annuities are a bad idea for retirement . Do variable annuities share the problems with annuities? >>

Which "problems" would that be?

Essentially, the only difference between Variable Annuities and Fixed Annuities is that you get to choose just how the money is invested. In effect you have the costs of an insurance product (an annuity) tied in with the cost of mutual fund investing. A life time income from an annuity can be a very strong point if you feel you're quite likely to live a long time. If you have a family history of not living a long time, them an annuity may not be something to give much priority to.

<< I'm trying to figure out how mutual funds and variable annuities will affect me differently. Currently, a little more than half of my retirement is going into CREF variable annuities (most of the rest is going into large cap index mutual funds) and I want to be sure I am making the right choice while I am young >>

If tax deferral is of paramount importance to YOU, then variable annuities can make very good sense. But as you plan for your retirement, if you want to be sure that your heirs will receive the most from you estate, you'll want to be sure that you use income from the annuity(s), and any other tax deferred account, FIRST. Annuities can be very effective in one's retirement planning. But one needs to fully understand the issues as they apply to one's own personal plans and objectives so that inadvertent land minds are not created.

Annuities with there expenses, various features and tax issues surrounding them make them something that should not be dealt with without good knowledgeable help. For the most part, annuities are not something that a typical consumer should try and deal with on their own . . . especially Variable Annuities. It can get very complex when trying to determine which annuity, if any, would be the best match for YOUR particular set of issues. So, as you do your retirment planning, you might want to give some serioius consideration on using some expert help. . . ???