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Hi Grape,

“You can always purchase an annuity if you want steady income.”

Yes, that is possible – for a price. What is the price and what are you getting?

Annuities are complex contracts written by insurance companies. Here is a comment taken from one of the links I will provide for you to delve into the complexity and cost of annuities:

“Calling payments from an annuity "income" is a grave misnomer. In fact only a tiny piece of each payment is "income" and the balance is a return of your principal. It is misleading at best to attribute funds paid to the extra cash earned by insurance company on policies where owners die early. Tell the truth, you are mostly getting your own money back after paying hefty fees and commissions.

Another critical piece of information which the buyer should have is how much the salesperson would earn for selling the product. Wouldn't a 10% commission paid be useful information to have?”

The timing of your comment is appropriate. Morningstar provided a well rounded discussion of annuities this week. Below are links to the articles included in the discussion, some of which include additional links and comments from Morningstar members. They are available for you to read and create a more informed decision should you decide to purchase an annuity at some point in time.

I have my own opinion of annuities having been in the insurance industry at one time. But my opinion is not what counts. It is what you can learn from balanced sources in becoming a more informed consumer.

Bob Is an Annuity Right for You? How to Survey the Changing Annuity Landscape 4 Strategies for Combating Low Annuity Yields How Are Annuity Payments Taxed? Five Questions to Ask Before Purchasing an Annuity Pros and Cons of Guaranteed Income Streams The Error-Proof Portfolio: For Annuities, Timing Is Key
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