I was wondering if it would not be better for someone planning to retire in about five years time to invest in Tax Deferred Annuities rather than in conventional CDs. For a minimum of 10K, Vanguard is now offering for their 5 yr plan 5% p.a. guaranteed simple interest, which works out to be 5.525% p.a. effective. ING (S&P rating AA+)is offering for a minimum of 50K and 5 yr period, an annual guaranteed rate of 5.25%, or 5.83% effective. There might be other insurance companies with somewhat lower rating offering even higher rates. I understand, like FDIC insurance for CDs, there is state insurance to cover annuities for up to 100K. Since the current 5 yr CD rates (before tax)are similar, should not those who expect their income tax rate in retirement to be significantly lower be better off investing in TDAs?Any comments?alpha
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