Financial Planner: Variable Annuities Not Good For Seniors?
An article in last Sunday’s Miami Herald offers advice about variable annuities from financial planner Meg Green. She believes that variable annuities, even those with a guaranteed minimum income benefit (GMIB) are not suited to most seniors already in retirement.
According to Meg, these products can have certain pitfalls for retirees:
- Many variable annuities require you to wait a certain period of time (e.g. 10 years) before the GMIB income stream kicks in.
- The annuity insurer keeps any remaining principal after the annuity period ends (by death in the case of lifetime benefits.)
- The annuity income will be taxed.
- A GMIB can add up to 3/4 of 1% in fees to the cost of the annuity.
However, she says that tax deferred annuities can be suitable for extra retirement savings, if that time is far away. Always make sure that you understand the annuity products you are buying.
