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One of the suggestions was to put our money into a variable annuity with a guaranteed minimum withdrawal benefit. He explained it all to us, but I need to research this so that I can understand it. ...

How would I compare this with other types of investments so we are doing the exact right thing for our retirement?


Many of the posts here have already addressed the fundamental problems and benefits with annuities already. In short, the problem being that they tend to have high profit margins for the sales people and annuity companies and low returns for the investors. The benefits being that they trade uncertainty for certainty and they trade something you may not care about (your money after you die) for something you may (your guaranteed money now).

But I wanted to address one of your questions directly. How do we compare this with other types of investments?

The long and the short of is it that you can't. I don't want to be too harsh, but variable annuities are pretty much specifically designed so that they are relatively hard to compare. If you knew exactly what the market would do, you might be able to make the comparison. But that is, of course, impossible. With floors and ceilings and windows and guaranteed withdrawals and other fine details it's moderately hard to even compare the benefits costs of two different variable annuity products. Comparing against traditional equities and bonds? Nearly impossible. You will, I'm sure, be given a document that compares "Unhappy Jane" who invested her hard earned money into a 100% bond portfolio right before bonds plummeted and is in the highest income tax bracket, and a "Happy Mary" who invested her money into a variable annuity. But it tends to make really poor comparisons (such as 100% bond portfolios) and with a lot of hindsight about what years to compare.

You might think from the above that I'm against annuities. To some extent, I am. But they do have a role. But, at least in my opinion, annuities are best when you buy them in their most boring format. Need to include some guaranteed income in your portfolio? Need to avoid uncertainty? Don't need to leave an inheritance, but want income? Get a fixed annuity. Variable annuities are sort of the worst of both worlds. They have the high fees of annuities but still have the unpredictability of an equity.
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