SavingsTalk.com

natali

I know most say to not touch annuities because the high fees , but what do you think of one from fidelity, all no load funds in them, reasonable expense fees, around .6% then a .8% annuity fee, that is better than alot of mutual funds<br /><br />what would you think of someone who is 32 investing in one, say 5k now and a small amount per month like 50 bucks, for 30 years to retirement?<br /><br />or is the main benefit of them the tax advantage and would you just use an ira? <br /><br />i just am thinking of it as a supplement to my 401k, what i would like is to instead of seeing the balance only, i want to see the monthly income i would have in retirement from it, and i know 5k and 50 a month wouldnt add up to alot but it would supplement a social security income that may or may not be there in 30 years<br /><br />what income that would give me per month? i did a little looking and it looks like 5800 a year or so, am i way off? i could probably earn that in a roth off interest, but a gauranteed income would be nice<br />http://personal.fidelity.com/research/annuities/?bar=c<br />i know what an annuity is, and i think the main time to get one is an immediate fixed income annuity at retirement if needed, but the main thing i hear bad about them is the fees and commission, troweprice and fidelity have them for about the same price as a mutual fund, and you can go in some aggressive funds inside them, it isnt just money markets, so the bad things i hear just didnt seem to apply as much <br /><br />but i do think that a roth ira is better, but just looking into a no load low fee annuity and wondering what the drawbacks are<br /><br />i actually have a two year finance degree so i know the different options,but never really have looked into the low expense/ fee annuities from these no load companies and was wondering about them a little<br />just adding again, i work at a bank (credit union) we have a nice 401k and i am adding 25% of my check on top of the 10% they add, so i am getting my tax advantage there, i also have a roth ira , though i should put more into that i suppose, this was just something i was thinking of learning a little more about<br />

BOB+

I invested a small amount in an annuity at Vanguard, which similar to Fidelity, has no load funds with very low annual expenses. Mine, however, is a variable annuity rather than a fixed. I only chose this option because my husband and I both max out of 401ks and IRAs every year and we also contribute money to a 529 (not maxed out) for kids we don't have yet.

Because of the typically higher fees associated with managing an annuity (you also have the insurance premium deductible which may be listed separately from the fees), I would advise you max out all tax advantaged options first before you buy an annuity. If you qualify for a Roth IRA, that would be preferable because you would not pay taxes when you withdraw. With annuities, the tax is deferred until retirement and if you have lots invested, you may still have a hefty tax bill.

Since you are young and have time before retirement, you can invest your tax advantaged vehicles in more aggressive options (like equities) that may increase your principal over time, giving you more monthly income.

Sorry for the lengthy response, max out your IRA options first and then consider the annuity...

avitse1341

The ONLY suitable buyer for an annuity is an old person who needs a reliable stream of income.
Buying one at age 32 is a DREAM for the seller! Why not just put all your money in a shoebox (it'll be &quot;safe&quot;, LOL) and throw 1.4% of it down the toilet periodically?

Buy an aggressive growth mutual fund with no load from someone like Vanguard. If you invest $5K up front, add $50/month, and average a return of 10-12% (which is easy over 30 years), it'll be worth roughly a half-million or so.

A typical annuity under similar conditions will have a &quot;guaranteed value&quot; of about $23,000!

Your choice!

200pips

OK. Here is the deal. Annuities are tax deferred that is true. But when you take your money out you have to pay tax at the full tax rate.

Here is the best of both worlds. Tax deferment and tax at the capital gain rate when you do remove the funds. And low fees. One or more index funds. Since they are unmanaged there are little or no realized capital gains. Dividends are at the low tax rate. Expenses normally are in the 0.20 to 0.40% ball park. Fidelity has a few and Vanguard is the father of the index funds. FFONX would be a fine choice.

alien

I use a low-cost variable annuity with Vanguard. Vanguard and Fidelity are the only two firms that I recommend for purchasing variable annuities. Their costs are low enough to justify using them.

IMO, you should consider a low-cost variable annuity only after you have maxed out your company-sponsored retirement account and your IRA. This is because you won't have &quot;mortality fees&quot; with those accounts, and those accounts are already tax-deferred.

Yes, if your time horizon is long and you wish to put more than $19,500 ($15,000 in 401(k) and $4000 in IRA) into your retirement funds in 2007, then a low-cost variable annuity is the next logical step. Tax deferment helps your money grow and makes investing so much easier. Imagine if you invested in a taxable account and then had to calculate a tax basis and capital gains tax for 30 years of investing when you eventually sell those shares to generate retirement income. A freakin paperwork nightmare. No thanks. I'll gladly take the slightly higher fees with my annuity.

jeff

First, nearly all annuities use no-load funds..

Second, Fidelity family funds are likely comparably priced to the funds offered within thier annuity.

If the annuity does not have a living benefit (like aGMWB), you have to ask what are you asking for. 95% of all variable annuities never actually annuitize. People withdraw from them before turing it into a steady stream of payments.

The tax advantages are non-existant, unless it is a qualified plan. If it is non-qualified, you get tax deferral, but you also will get tax taxed later at a much higher rate (as income rather than as capital gains).

SO what are you paying the 80 basis points for? Not much.

Also, but not putting money in an annuity, you have the added benefit of flexibility, being able o access the money whenever you need it without suffering any surrender charges or tax penalties.