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Never have understood why people buy annuities.

First define 'annuity'

Investopedia...and the classical definition....define an 'annuity' as a series of equal payments made at specific intervals over a specified period of time. This definition was later modified to include accounts with 'a promise to pay' at a future date from a retirement savings plan. Eventually, the term 'annuity' encompassed any savings plan offered by an insurer that could eventually be annuitized.

Using the strict definition of a series of equal payments over one's life expectancy through a contract with an insurer, this is the simplest form and is often used by retirees to provide long term reliable income from an initial lump sum payment. I have recommended these in the past to those retirees I determined have an 'annuity personality'. Now, I don't mean this in a patronizing or derogatory way, just a factual one. As an example, my oldest sister, when her husband died, needed reliable income from the life insurance she received. She had zero....that's ZERO! interest in investing in any form....she just wanted a deposit in her checking account at the beginning of each month. So I sat down with her and we looked through several direct-purchase life annuity options and finally selected for her the best fit. This is something I would NEVER do for myself, but it worked well for her.

As to savings vehicles, this is truly non-understandable. Why would anyone pay ongoing annual mortality expense fees on a savings plan where there is no obligation to eventually annuitize it? Why pay ANY on-going charges such as sub-account fees, rider fees, Admin/overhead fees or Fiduciary fees, along with (usually) much higher mutual fund fees than can be had just about anywhere else?

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